Entrepreneurship Is Both Job Creator and Job Alternative
As of June, the U.S. unemployment rate stands at 6.1 percent, a far cry from the highs the country saw during the Great Recession, and certainly a welcome sign for the recovery. But if you compare this most recent downturn to past shocks, our current recovery is still the slowest the country has ever been in returning to full employment after a recession.
It's no wonder, then, that more people than ever are opting out of the whole mess. Even with all that stagnation and gloom, sole proprietorships are the one area of the economy that is actually growing faster than ever before. We’re in the midst of a new economic revolution. The path to entrepreneurship is open to a wider swath of the workforce than ever before. The entrepreneurial set is seeing a greater share of new economic growth.
Here are the facts:
- Proprietors have steadily increased every year since 2000, in terms of a percentage of total US employment. From 2000 to 2011, the number of returns filed by sole proprietorships rose by 30 percent, while the amount of income reported by those proprietorships rose by 37 percent.
- Between 2000 and 2012, the US labor force lost more than a million private wage and salary workers while, simultaneously, 10 million working proprietors entered the marketplace. Furthermore, 21 percent of working Americans receive at least part of their income through self-employment.
- Enterprises with more than 1,000 employees shed more than 1 million workers between 2002 and 2012, while enterprises with fewer than 25 people gained more than 1.5 million employees. Nearly half of those 1.5 million employees are with enterprises that had five or fewer total employees.
Here are some ideas how would-be entrepreneurs can take advantage of the bottom-up economy and take control of their careers:
1. Crowdfunding. For a consumer-facing business just starting out, a crowdfunding campaign is one of the smartest things you can do.
Crowdfunding sites are a deft way to handle a whole host of “just starting out” problems, starting with raising money without taking out a loan or signing away your ownership to an investor. Crowdfunding lets you validate your idea against the needs of the market before you waste a lot of time on a non-starter. If someone will donate to your campaign, chances are they’ll buy what you're selling.
Crowdfunding gets you a viable online presence without spending time and money building and marketing a website. A successful crowdfunding campaign is instant credibility that you’ll need when you’re telling your story to potential customers, investors and media.
Marketplaces. It used to be that getting customers online meant throwing money at SEO and search advertising in hopes of attracting a few people that would buy. The modern economy of marketplace sites connecting buyers and sellers has changed that dynamic.
Modern marketplaces target specific types of buyers. You can bet that if you’re a jewelry maker, the person browsing Etsy is your target customer. What’s more, marketplaces aren’t just for finished goods anymore. Marketplaces for services are one of the fastest-growing segments of the industry. Bottom line, there’s never been more marketplaces to help you find your specific customer online. Think beyond just listing on eBay.
Business tools. Managing a small business is a headache -- tracking receipts and expenses, maintaining inventory, issuing invoices and landing on people who don’t pay you in time. That’s especially true for freelancers, who need to spend time lining up their next job rather than doing the tax accounting for the last one.
In the past, your options for business software were limited and expensive but the cloud has really turned this on its head. Some companies actually combine marketplaces with business tools. A good example is Care.com, which gives caregivers a way to market themselves to customers, plus scheduling and payment tools and features to simplify their tax accounting.
APIs. For the tech savvy, it’s never been easier to create a software business. Many existing tech companies are releasing APIs that let developers easily integrate features which they’d have to spend years developing on their own previously.
Just recently, Uber launched its API which allows for businesses to quickly get customers to and from your doorstep. Uber's API, much like WePay's API, means that local commerce can now benefit from instant ecommerce and extend end-to-end customer experience from payments, transportation and hospitality to customers.
Online platforms make it easier than its ever been to start and run a successful business at a time when there’s never been more need for an alternative to the stagnant traditional job market.
Related: The Entrepreneur Economy
Bill Clerico is CEO and co-founder of WePay, where he drives the company's vision, strategy and growth. WePay’s payments API is built specifically for platform businesses like marketplaces, crowdfunding sites and small business software. These platforms empower millions of sole proprietors to start and grow their businesses.