New Trends in small businesses: An article by Anita Campbell based on U.S. census 2005 highlights the growth of Single Person Businesses at rates four to five times the population growth rate of USA during the three years beginning 2002. Looking at this data, the first and foremost question that comes to my mind is whether the new single person businesses are managed by people who earlier were employees or partners of larger units or are all of them fresh entrepreneurs. Since the growth percentage of small businesses heavily out numbers the overall population growth rate one would logically assume that a larger proportion of the new single person businesses are managed by people who were earlier attached to a larger business in one capacity or the other. Is it a sign of the larger businesses disintegrating due to desertion by skilled individuals?
What motivates people to go for self managed businesses? Obviously the freedom to work the way you like and expectations of higher returns for your skills may be the main incentives for preferring self managed business over working for or with others. Independence of working style, sole right on the returns, fewer constraints on self and familial conveniences and promises of shining are all incentives to run a self managed businesses. Despite all these lures, it is a huge decision for anyone to play solo. Of course you need to have enough confidence and skills to manage the show singly. Before you start, you should thoroughly look into the feasibility of sustaining single person businesses. Once you sport this endeavour, not only do you lose the economy of scale of a larger business, you also miss the complimentary skills that your co-workers have been providing in running a business. If you are currently part of a larger business, take a comprehensive note of every activity that goes on in running the business. You would need to run all these activities yourself. Evaluate your skills and identify areas that you may need help on. Once solo, you would be managing every aspect of the business from sales and marketing to accounting and customer support. At the risk of sounding apprehensive, I must that say that the risks are no less discouraging.
Notwithstanding the aforesaid apprehensions, entrepreneurship is on the rise which is great news. This substantiates the fact that people like to take the challenges of solo businesses head-on. Despite all the benefits of economy of scale and efficiencies of complimentary skills, larger businesses with several employees suffer from the unavoidable constraints of limited freedom and flexibility. These constraints inhibit the inherent capabilities from showing up and performing. This ultimately leads to under utilization and consequently suboptimal individual performance. Dissatisfaction and disappointment are the natural corollaries. Another human factor for the suboptimal performance of larger businesses is decidedly the growing lack of tolerance among the people working together.
The basic fabric of our economy is changing in a way that supports the survival and growth of solo businesses, and it is a symbiotic effect as these businesses support each other in a direct or indirect way. In a sense, while the freelancer community has grown multi-fold, so has the number of small projects and work items. Such small businesses cannot afford to (and do not need to) employ full time for various specialized work items that fall outside of their core competency.
This is phenomenal change in the basic arrangement of workforce in our economy, giving rise to several thriving marketplaces for small slices of people’s time and equally small work items. This should also improve the business productivity of our workforce because inherently one’s productivity for one’s own business is much higher, and the marketplace for small projects and work items reduces the overall dead time.