The Great Resignation
According to the Bureau of Labor Statistics, every month since July 2021 at least four million Americans have quit their jobs. While most of them left to go to another employer, there has also been a significant increase in the number of new business applications, according to the U.S. Census Bureau. As a matter of fact, in 2021 there were 5.4 million new businesses started. And the expectation is that this will continue to grow throughout 2022.
The Great Resignation has pushed many former employees to seek out new options that help them address the issues they didn’t like at their last job.
According to Pew Research Center, the top three reasons why employees quit their jobs in 2021 were low pay, no opportunities for advancement, and feeling disrespected at work.
If those were the reasons, what in the world would drive these former employees to start a new business? Think about it – what are some key characteristics of being an entrepreneur? You typically start with no pay, and the only path to advancement is the one you create for yourself. Not to mention that we are often our own harshest critics. So really, quitting a job to start a new business doesn’t do much to solve those issues.
But these recent “Great Resigners” saw opportunity in the disruption around the pandemic and decided it was time to give entrepreneurship a try. Certainly, there are advantages – but plenty of risks as well!
The U.S. Census Bureau divides new business formations into two categories – those with a “high propensity” to create jobs, and those that are more likely to be one-person businesses. As you can see from the chart below, the job creators (blue line) only make up about one-third of the total new business creations (orange line). The remainder are likely to be solopreneurs, or freelancers, or self-employed, or whatever term you prefer.
Source: U.S. Census Bureau
There has been a slow but steady uptick in the number of freelancers in the United States in the past years. And research from Statista indicates that by the year 2027, the majority of the U.S. workforce will be freelancing.
We are certainly seeing a rapid increase in opportunity and software services to serve this audience. From options like Etsy and Uber, to websites like Fiverr and Upwork, more and more people are able to either run a “side gig” while employed or get launched as a small business at a relatively low expense.
So let’s first welcome our new freelancers to the community of entrepreneurs and small business owners!
How can you set yourself up for success? Consider some of these key lessons that your fellow solopreneurs have observed over the years:
- Act like a business. Form an LLC. Get business liability insurance. Reserve a domain name. Track your income and expenses separately from your personal finances.
- Look like a business. Create a brand, with a logo and a clear message or tagline. Be very clear on who your target customers are, and where you can find them (or they can find you). Consider your image – both in person and online.
- Plan for your business. Set goals and break them into doable tasks. Always be learning. Always be networking. And find your fellow peers to go through the adventure together.
The Job Creators
Cheers to the job creators! You’ve got an idea that can help employ others while offering you the opportunity to have more control over your life. This is more and more rare these days, as so many people elect the freelance route instead.
Let’s celebrate the growth of small businesses! The small business owners I know focus first and foremost on valuing their employees and their customers. It feels very different from the giant corporations that have prioritized quarterly earnings and will lay hundreds of people off on a massive Zoom call.
How can you avoid being part of the one in five business owners who fail in the first year? Some top tips from the years I’ve spent working with new entrepreneurs:
- Seek out free help. Find your local Small Business Development Center, talk to volunteer mentors at SCORE, take a class – anything you can do to be sure you know the ins and outs of starting and running a small business before you get too far along.
- Focus on customer validation. Don’t invest too much time or money until you have talked to lots of your potential customers. Do your research – online and in person – to better understand who your ideal customers are, where they are, and what problem you’re solving for them.
- Know your numbers. Make sure you know the difference between an Income Statement and a Balance Sheet, and why cash flow is so important.
As giant companies merge and take over more and more industries, it has become increasingly important that we small business owners stick together. That might mean making a commitment to buy local rather than from a big box store or Amazon.
So this is a call to those of you who already own existing small businesses – help out the new and aspiring entrepreneurs in your community. Serve as a mentor. Introduce them to your network of connections. Meet for a one-on-one over coffee or Zoom.
Help these “Great Resigners” who are new entrepreneurs learn all about the good and the bad of owning your own business.
Why is it that nearly every small business owner I’ve ever spoken to has said they would never go back to working for a big company? There are clearly risks involved in starting a business – and even more so in hiring employees whose salaries you are responsible for. But the rewards tend to outweigh the risks.
What are some of the best rewards?
- Control over your own career path and the direction of your business
- Direct connection between the business success and your success
- Flexibility in how and when to work as compared to large corporations
- Pride in growing a business that supports multiple employees and their families
- Creating something sustainable that helps your customers do their job better
Let’s all come together to welcome the new entrepreneurs to the world of business ownership!
How can you help?
Do you know someone who is starting a new business? One way to help is to direct them to the Learn page of my website where they can learn about free resources available to help them get going.
Hey new and established small business owners – how do you find time for strategic planning for the future of your business? Consider a Business Owner Roundtable Group! These groups are an excellent way to meet your peers and focus on growth and accountability.