Elaine Pofeldt, CONTRIBUTOR
I cover the growing wave of one-person businesses and their ecosystem
Opinions expressed by Forbes Contributors are their own.
Angela Geiss, 35, has built the ultimate career of the future. She works full-time as a project manager for a healthcare provider. In her time off, the mother of two runs a small business that rents photo booths—like the ones you see in malls—as a novelty for weddings in Northern California.
Geiss bids on jobs at weddings through Thumbtack, an online platform for service professionals. Instead of working the equivalent of two full time jobs, she relies on six part-time contractors to manage the six booths she owns at Moments to Memories photo booth Rental. Her business generates six-figure revenue.
“I started out with one photo booth,” says Geiss. “We were just doing it on weekends, whenever I could get clients. Then it started to get really busy.”
While Geiss is still very much a part of the world of W-2 jobs, she also has a foot in the world of self-employment, too. That gives her an income security that people who depend solely on full-time jobs don’t have anymore.
At a time when the presidential election has put the future of work front and center, independent work like Geiss’s in enabling far more Americans to pay their bills than many people—or policymakers—realize. And that trend is likely to tick up sharply, as new technologies and other trends make it far easier to hang a digital shingle.
Intuit just predicted in its Future of Small Business report that the number of small businesses in the U.S.—most of them solo operations—will grow from about 30 million in 2014 to about 42 million in 2026. The annual growth rate will rise to 3.3%, up from 2% annual growth from 2004 to 2014, according to the financial and accounting software company. Intuit prepared the report with Emergent Research, which studies independent work.
Many factors will drive the faster pace of growth, among them the expansion of online marketplaces; a proliferation of on-demand talent; the availability of cost effective online advertising; access to better business infrastructure, such as cloud computing; and the growing abundance of useful data, Intuit found. There were more than 280 on-demand companies in 2016, according to a new white paper by Manta, a social network for small business owners.
Consumer trends are also playing a role, with more Americans gravitating to niche products. For instance, craft breweries made up almost 20% of the beer market in 2015, up from less than 5% in 2008, said Alex Hood, vice president of product management for the company’s small business group.
As a result of these trends, the advantages big companies have because of economies of scale are shrinking. “Now small businesses can compete and be very flexible in how they scale up or scale down their business,” Hood said. “The cost structure big businesses used to use as an advantage is breaking down.”
In this new environment, small businesses can be very effective without hiring a large team. As Hood pointed out in a presentation at the Smart Hustle small business conference in New York City, the average size of small businesses in America shrunk from 6.5 employees in 2001 to 4 in 2014.
Although many people have lost traditional manufacturing jobs as plants rely more on robots, technology has also brought new opportunity for small players in the field and even individuals. New online intermediaries are making it easier for those without the financial capacity to operate their own factory to enter the industry. As Hood pointed out, Maker’s Row—an online marketplace that connects small business with factories and other resources needed to turn their ideas into products—is now enabling very small businesses to compete.
New technologies are also making it possible for one-person and ultra-lean businesses to operate far more efficiently than in the past. As a result, the owners can scale what they can accomplish dramatically and earn more.
Recently, for instance, I spoke with several music teachers who were using an online platform called Lessonface to teach their students. Lessonface relies on a high definition video platform called Vidyo to enable them to teach their studies on video without experiencing problems like sound delays that disrupt the music.
Yonit Spiegelman, who teaches bass, guitar and voice, used to fight traffic in Los Angeles so she could teach her students at their homes. “I had to drive 45 minutes to teach one student for 30 minutes,” she recalls. When she tried Lessonface, she says, “my life completely changed.”
Now based in Brooklyn, N.Y., Spiegelman today teaches students located from Memphis, Tenn. to Turkey and Afghanistan on Lessonface—without leaving her home. By cutting down on local travel to lessons, she has more time to teach. And when she is touring as a performer, she doesn’t have to cancel her lessons.
“The work comes with me,” she says. “It gives me the financial security I need.”
Tanya Svec, a music teacher in Salem, Va., who teaches band and orchestra, moved onto the Lessonface platform a little over a year ago as a temporary measure, when she needed to relocate to a new building. She, too, soon discovered that teaching online allowed her to take on distant students from other areas of the country and Canada. She also found that her local students rarely had to cancel lessons when strep throat or other illnesses were going around or while their families were on vacation. She and her students loved working on video so much that she even had a recital online.
“We can actually talk to composers that have written music we’re doing on our recitals,” says Svec. “We can have them log in and coach our students. That would not be an option because they are so far away.”
But it isn’t only new technology that is driving the growth of microbusinesses. It is also the desire of employers to switch from permanent hiring to using flexible talent. Like it or not, unless you are among the junior employees whom employers can pay the least, employers increasingly do not want to keep you on staff full time. Workers hired in other capacities must generally operate as businesses when tax time rolls around, whether they think of themselves as business owners or not—unless they get W-2 paychecks as temps or part-timers.
In another new survey being released today, Ardent Partners, a Boston-based research and advisory firm, found that “non-employee” workers now make up 38% of the workforce, up from almost 35% last year and about 29% in 2011. The firm surveyed 275 business professionals at companies of all sizes. Ardent Partners counted contingent/contract workers, temporary staff, gig workers, freelancers, professional services and independent contractors as “nonemployees” in the survey, “The State of Contingent Workforce Management 2016-2017: Adapting to a New World of Work.”
Those percentages are in the same ballpark as recent studies by the Freelancers Union and Upwork and by McKinsey, which each used their own methodology for defining workers who don’t have traditional full-time jobs.