Monday, October 15, 2007

"Portage salarial or umbrella companies": risk free entrepreneurship*

The next session I attended at the "Salon de la Micro-Entreprise" in Paris on October 9th was sponsored by, a portage company which basically offers to employ people who aspire to create their own business, but are not quite ready to do it on their own.

Main services provided by "Portage companies":

  • Employee status, with public and private health insurance and means of contributing to a pension scheme.

  • Compensation is based on business contracts that the employee-entrepreneur lands, which corresponds to a net pay of about 50% of contract money (after deduction of the portage company charges (10%) and the health insurance and pension deduction (40%). Please note that the net pay is before tax, as in France, tax are due one year after income was earned.
  • Professional insurance and judiciary protection
  • Invoicing and accounting services
  • Network of entrepreneurs and potential clients
  • Portage seems to be an appealing proposition to intellectual workers who would like to start a business of their own, test a new idea, product or service, while minimizing risks. They are still considered as employees, which in France, ensures maximum protection in case their business is not as successuf as anticipated.

From what I've seen the main domains of application are strategy, human resources, training and information services.

What's in it for potential clients?

Well, companies looking to offer them one-off missions that require specific skills, can do so with the assurance that they will get a highly qualified consultant, backed by the portage companies' reputation, at a very competitive cost.

Alternatives for them would be to 1) hire a person either temporarilly or permanently with all the overhead of the recruiting process or 2) call upon a temp company (of the like of Manpower) at a high cost.

Who are these "umbrella companies" in France?

There were a number of portage companies present at the "salon", in addition to Freelance .com (formerly and Valor Consultants). Others present were:

Public services (part of Départments' Chambers of Commerce and Industry) also offer structures to host and help would be consultants. It's very well worth checking with your local administration, if you live in France.

What personal insights did I gain from this presentation?

The formula looks vey appealing to rapidly gain knowledge about how consultants operate and to help get a network of people (competitors and potential client). It seems like a good way to validate a project and speed up getting to a profitable situation. So my plan is to investigate further by contacting several of these companies, probably towards beginning of next year.

* I could not find a suitable translation for the French expression "portage salarial". I'd appreciate any clue... Update: thanks for the tip. I'll adopt "umbrella company" as a translation.