Happy Independence Day week!
As we celebrate the independence of our nation, let’s also celebrate and salute business owners who operate independently. The United States and independent business owners have a lot in common! Entrepreneurs and independent business owners follow the values that our founding fathers put in motion all those years ago.
Think about it. What are some of the key traits that we celebrate as a nation?
Freedom, pursuit of happiness, self-governance (no kings or big bosses), autonomy to create our own path, and a spirit of innovation and creativity. Sound familiar?
Many of these traits can apply to small businesses with employees as well as those who are solo, but let’s take a moment to really celebrate the true independents this month – the solopreneurs, freelancers, consultants, gig workers, independent contractors, sole proprietors, and the like.
A growing trend
Did you know that over 80 percent of the 33+ million U.S. small businesses (those with less than 500 employees) are actually solo business owners (no employees)? That amounts to just over 27 million people doing their own thing.
That’s a pretty substantial number, and it is trending upward. Ten years ago, the number of new business applications (a measure of new business growth) found that about 55% of these applications were for “applications other than high propensity”. In Census-speak that means that over half of the applications were for businesses not likely to hire any employees, while the remaining 45% (high propensity) were likely to have payroll and grow larger than the no-employee businesses.
That rate has increased from 55% in 2013 to 63% in 2018 to 68% today. And the expectation is that this rate will only continue to grow. Why is that?
In the past, your first job out of college (or high school) was potentially for the only employer you ever had. Individuals worked their way up the ladder, with clear job stability, paths for advancement, generous employee benefits (remember pension plans?), and definite company loyalty.
Oh how times have changed! Big firms are much more inclined to only hire for their core services and outsource the rest (HR, IT, Custodial, etc.). And they seem to be more focused on short-term stock growth than investing in their employees over the long term. Individuals who are laid off without a friendly word, perhaps by Zoom or email, are not so inclined to want to find another giant company that could do the same to them in another year or two.
A changing world
The more the big businesses outsource, the more independent contractors have popped up to fill the jobs that once were filled by employees.
But it’s not just the shift in big business that is driving this move to independence. So much else has changed over the years that makes it easier than ever to create your own path and control your own destiny.
Some of the top shifts:
- The Gig Economy – Even if you don’t want to create your own business out of nothing, there are currently many opportunities to find ways to earn money without a traditional job. Some are admittedly lower paying options, like Uber driver or Instacart shopper. But there are others that offer higher rates of pay.
- Gen Z – The new generation of students graduating from high school and college are not interested in a traditional path and seek autonomy. They don’t want their work to define them, but instead want to be able to fit their work around their other passions.
- Job Insecurity – Big Tech firms have been laying off quite generously to boost their bottom line (and perhaps because they over-hired during COVID). This leaves many former employees interested in a path where they control their own destiny.
- Technology – Software services and the cloud are making it easier than ever to be a “7-figure small” business that can operate online and serve many customers with a combination of personal service and automation. And don’t forget the fact that the internet didn’t even exist (!!!) back in the 80s and 90s. All of this technology allows us to work from anywhere (digital nomads) and on our own time schedule.
Hiring Independents
No matter their title (solopreneur, freelancer, contractor, etc.), this surge in independent workers offers tremendous value to other small business owners. For example, small businesses who have ‘outgrown’ a bookkeeper but don’t have the funds or the need for a full time Chief Financial Officer can hire a fractional CFO. And those without a dedicated marketing person marketing can contract with a solopreneur who specializes in digital marketing, or hire someone on Fiverr or Upwork to create the graphics for a new marketing campaign.
Independent businesses can also help small businesses with hiring gaps. A recent Fast Company article said that “78% of companies reported that they are inclined to fill staffing gaps with freelancers in 2023.” This is a great way to cover overflows when you need extra help but aren’t ready to commit to another full-time employee. Or to cover certain skillsets that are only needed occasionally for projects, but not enough to bring someone on full-time.
Independent business owners also benefit from working with other independents. Think about how you spend your own time. If you can bill at a rate of $250 an hour for your services, then perhaps it makes sense to pay a bookkeeper to handle accounts receivable and payable at a much lower hourly rate, so you can concentrate on increasing billable hours.
Finally, consider the value of partnerships and collaboration among small business owners. Other small business owners are not your competitors. Focus on your ability to work together, referring business to each other when you are swamped – or if it’s not quite the right fit. And look for opportunities to market complementary services to the same target audience.
Happy and Independent
Right now, about one-third of the world’s working population brings in money through independent work. That rate is only going to grow, with the same study predicting that by 2027, the United States will have more gig workers than non-gig workers.
Again, while some of these jobs are low paying, low-skill work, there has been a surge in independent professionals choosing to go it alone. According to Upwork, one-quarter of U.S. freelancers have a post-graduate degree. And 43% of Gen Z professionals and 46% of millennial professionals have freelanced in the past year.
Another Upwork study showed that the skills in greatest demand for freelance or independent contractors include sales & business development, data entry, accounting, and 3D animation.
Not only that, but a recent survey by payroll-services provider ADP discovered about three-quarters of independent workers felt they were paid fairly, compared with 68% of full-time staffers.
And it turns out, independent workers are pretty happy with their gig. According to Pew Research, 62% of self-employed workers are extremely or very satisfied with their job, as compared to 51% of those not self-employed. Independent workers also feel that their jobs are more fulfilling than employees, and both less stressful and less overwhelming.
We still have some work to do in this world, since the same research showed that “self-employed workers are more likely than U.S. workers overall to be male, White and foreign born.”
The Future is Independent…
And female.
Expect to see more women making the decision to go “freelance” – not just because they value the benefits that men do (be your own boss, have your own business) but also because they are much more interested in working from home, want flexibility in their schedule, feel burned out, and want to avoid a toxic work environment.
And BIPOC.
Minorities are also more likely to experience micro-aggressions or a toxic work environment, which is why there is a greater interest in remote work and independent work.
And tech-savvy.
Moving into the future, with an uptick in technology like Artificial Intelligence, only about one in ten independent workers are worried that AI or other technology will replace their work in the next five years. Overall they are more optimistic than concerned about advances in technology, thinking that AI and other tech options will help support rather than replace their services.
And young.
Gen Z has seen the ideal of working hard for an employer fall apart for Millennials as they get laid off. After the pandemic and its economic fallout, this new generation no longer trusts anybody else to take care of their future. The idea of a traditional 9-to-5 job doesn’t hold much appeal. These 20-somethings think more in terms of side hustles, multiple revenue streams, and a focus on flexibility and freedom.
And optimistic.
Employees working for larger employers no longer feel secure in their positions, after the massive Big Tech layoffs and the constant threat of recession. As a matter of fact, independent workers “have a positive outlook about their careers and feel well-positioned to withstand an economic downturn.” In addition, they feel more secure working for themselves then they did working for an employer.
Maybe it’s for you?
Happy Independence Day!
It’s no coincidence…
Over the course of nearly 20 years, I have supported (and been supported by) small business owners and solopreneurs. Small business owners are the backbone of our country and the lifeblood of our towns. They are the originators of innovation and the supporters of the community residents. Anyone who puts on an entrepreneurial hat has my respect and appreciation. That’s why I love to put my skills to use supporting them through environmental scanning like my free Five for the Future weekly videos, market research, business owner roundtable groups and futures-focused accountability programs.
