Side Gigs Are a Thriving Part of the Economy That Economists Probably Aren't Measuring Very Well
We know side gigs are a way for people to make extra money outside of their main income, but they also provide us with valuable insights to what consumers want and key trends across our economy.
People who take on side gigs are often responding to a demand in their community for a service or product. They are usually active in their community, whether it is in real life or online. Side-gig entrepreneurs keep their ear to the ground to stay attuned to what’s going on around them. They usually pick up on trends quicker than established businesses, which are geared towards the safe bet of servicing known markets rather than exploring the frontiers of unmet demand.
Enabled by the smartphone and online business tools, entrepreneurial people can get their ideas to market quickly and at minimal cost. One interesting aspect of this boom in side-gig entrepreneurs has been how they have identified opportunities overlooked or hidden from bigger, established businesses. This shows great ingenuity and business sense, but it’s also notable because these opportunities often appear at the edge of conventionally recognized economic activity.
Measuring the value of side-gig activity.
There’s academic debate about how to record this activity and how much impact it’s having on the economy. Is the gig economy adequately measured by something like the gross domestic product (GDP)? Are measures invented for the industrial age adequate for measuring a digital age economy? Is the true picture of entrepreneurial value creation being captured?
As discussed in this briefing article in The Economist, key areas of economic growth and market expansion over the past couple of decades have come from the digitalization, customization and refinement of goods and services. “For today’s rich economies, dominated by made-to-order services and increasingly geared to the quality of experience rather than the production of ever more stuff, the trickiness is raised to a higher level,” the article notes.
Our economy has become more fragmented and complex. The demands of consumers have become more varied and individualized.
The article goes on to say: “In a world where houses are Airbnb hotels and private cars are Uber taxis, where a free software upgrade renews old computers, and Facebook and YouTube bring hours of daily entertainment to hundreds of millions at no price at all, many suspect GDP is becoming an ever more misleading measure.”
Beyond these "unicorns," you can find many examples of side-gig entrepreneurialism that illuminate the creative buzz going on at the transformational edge of the economy. Sectors like home services, professional consulting and pet services all provide good examples of side-gig entrepreneurs bringing products to consumers hungry for new, different and specialized products. This activity can be both complementary and disruptive to traditional industries.
How side-gig entrepreneurs create value.
Side-gig entrepreneurs are creative, lateral thinkers in tune with trends and what people around them want. They generally use three methodologies to generate their business ideas:
Refine and improve: “Surely I can do this better.”
Customize and individualize: “How can I make this relevant to me or my family and friends?”
Transpose and adapt: “This idea works elsewhere. Why not try it here?”
These methodologies are applied to all sorts of industries. Customers of my company, Invoice2go, are especially active in home services, professional consulting and pet services.
Home services is booming, with the value of the U.S. market estimated at around $400 billion and growing. This sector takes in a broad range of products and services, primarily covering work on residential homes. The scope of opportunity is huge. Homeowners are eager to improve, update and customize their homes, which allows for all kinds of specialist businesses to flourish. And whether it’s with tiny homes or smart ones, entrepreneurial home services providers are finding new ways to bring value to homeowners.
Professional consulting is also fertile ground for side-giggers and small businesses. It’s estimated to be worth upwards of $1.7 trillion, with close to nine million Americans drawing an income from the industry. While big firms dominate, solo consultants often make a lucrative living by providing services that go beyond what the big firms offer.
It’s estimated more than 43 million households own a pet dog and more than 36 million have a pet cat. Then there are the millions of households with birds, fish, reptiles and other assorted critters. The pet services industry has boomed in the past 10 years as more people get pets and spend big money on them. That money is going into things like dog walking, grooming and training services, which are all activities that in many ways were pioneered and developed by side-giggers.
Directions in value creation.
Side-gig entrepreneurs often work at the edge of industries, blurring lines, innovating, disrupting and creating value. They see things before big companies do and digital tools have empowered them to move fast; usually far more swiftly than big businesses. If you want to see the directions our economy is moving in, watch what side-gig entrepreneurs do. They provide a valuable indicator of our economy’s health and to the business of value creation.