Defying debt
A project exploring how sole proprietors in Norway can escape the trap of debt
1 in 5 users of NAV’s (The Norwegian Labour & Welfare Administration) debt counselling service have most of their debt from sole proprietorships (NAV Gjeldsfloken Presentation)
A Sole proprietorship is a company run by an individual with full personal legal responsibility. Here the owner and company are considered as the same legal entity. From a debt perspective this means that sole proprietors who go into debt through their business activities, are personally responsible for the debt of the business. Due to their high representation among NAV’s debt advice clients, there is a need to look into the system around sole proprietorships to see what can be done in order to prevent debt in this group.
Through collaboration between Stimulab by DOGA & Brønnøysund Registrene / Master's course / 2019
Using gigamapping as a method to visually uncover systemic relations caused by debt
Design proposal
Defying debt aimed at proposing a two part systemic intervention to help reduce the chances of going into debt through a Sole Proprietorship in Norway. The first intervention suggests introducing a formal checkpoint in the registration process along with a clearer process of sharing information. The second suggests a more proactive role for the Norwegian Labour & Welfare Administration to prevent cases of severe debt.
Design suggestions
SUGGESTION 1
A Sole Proprietor License:
Nudge to decision makers to formalise registration process with support
Today, one requires a high level of knowledge in order to run a Sole Proprietorship successfully. This requirement is in contrast with how easy it is to get a license to start up. The information available on public websites can lead to people feeling anxious and frustrated about the system. We suggest to introduce a ‘test’ to gain a ‘license’ to become a Sole Proprietor. The license is a way to nudge decision makers to consider introducing a checkpoint in the registration process.
A three part support system to prepare people for the test includes —
Making information accessible
Transforming the information into tacit knowledge
Sharing a Sole Proprietor Starter backpack
With these small interventions in place, a newly registered Sole Proprietor should be informed about the risk of personal debt, and also know about which public services they can access.
Low-fidelity prototype for design suggestion
SUPPORTING Key finding
Lack of understanding of the system – unable to make informed decisions
“No one understands anything and everyone is afraid”
— Freelance designer
It’s too easy to start up Many register as Sole Proprietors before they start reading up on the system, and don't have a full grasp of their responsibilities and what is expected from them. There is no control post that checks whether a person knows what he/she needs to know before embarking on the Sole Proprietor journey Information about Sole Proprietorships’ personal risk of debt might not be fully understood,
Unaware of system flexibilities
Advance tax is automatically calculated from the income of the previous year. With a drop of income the following year, this advance tax bill would be too high in comparison to the tax collected so far. For some people this would be impossible to pay without lending money. It is possible to adjust the basis of the calculation of the advance tax as many times one would like, but this is not common knowledge.
System seems more complex than it is
The lack of understanding is sometimes tied to a feeling of anxiety when one tries to understand the system. People find it hard to create an overview of what they need to know. Lack of understanding the rules around VAT and taxes. Informational pages on the websites to the Tax Office and Altinn can seem overwhelming Unaware of consequences of not following the system. Prefer advice from friends rather than using "expert channels". False information can circulate.
1. Making information accessible
Tangible visuals for an intangible system: Our first suggestion for an intervention is to make information more accessible through holistic visualisation of the system, and provide simple explanations of specialised terms.
2. From information to tacit knowledge
We also suggest to create a game that visualises typical scenarios that Sole Proprietors might find themselves in. In order to help ensure that any person who wants to start a Sole Proprietorship has absorbed the required knowledge, we would like to suggest to implement an obligatory test as a part of the registration process.
3. The Sole Proprietor Starter Backpack
A possible user journey through the suggested design intervention:
SUGGESTION 2
NAV takes a proactive role:
Nudge to decision makers to consider providing support early on
Finally, if a Sole Proprietor gets into economic distress, we suggest that NAV takes up a more proactive in their role as debt advisors. We imagine that this is possible through the debt register that was recently implemented. In a more proactive role, NAV could help people before they realise that they are in debt, and the problem solving could start before the debt becomes severe.
Process & Challenges
Build an understanding from scratch
In order to understand how sole proprietors go into debt, we needed to understand the system around sole proprietors and how this is experienced. The lack of previous studies on this subject and access to experts in Sole Proprietorships prompted us to start researching from scratch.A sensitive subject
Since money management is a delicate topic, we struggled to find an approach to get hold of interviewees. Our solution was to interview friends and acquaintances that run sole proprietorships to map their subjective experience of the system, and parallelly map the economic systems that they have to follow up on. Through the insights we constructed scenarios and talked with case workers on NAV Gjeldstelefon to get insights of common pitfalls that lead to debt for sole proprietors.A non-representative user sample
Several of the people we interviewed, belong to the creative field, and were preoccupied with keeping the profit from crossing the VAT limit. This might have given us an impression of sole proprietors that might not be representative for the diverse group that it is. We think however that the most valuable information came from the NAV case workers, and in this sense, we covered that main aspects that lead to debt.Our giga map was validated by a caseworker.
“First, I want to say you have done a great job! The visualisation is easy and to me it looks just right. You point out problems that most people can come up with”
Tabula rasa (when we are born, our mind is a blank slate)
We chose the Debt entanglement project to learn more about economic systems. The motivation was that we had no prior knowledge in this field, and this of course turned into a challenge. As designers we are bound to meet design challenges in fields where we are blank canvases. Compared to previous projects, this topic has been harder to grasp than others. Financial systems and debt are both highly specialised and abstract in themselves. To start mapping this out without any mental hooks was difficult.
Conducting semi-structured interviews
Exploring system oriented design tools
The road ahead
The project was presented to the project contact persons from Brønnøysund Registrene and NAV. It was well received and gave them ideas of how to look at the system and make improvements.