The American economy is undergoing a metamorphosis. A confluence of various factors is leading workers to explore entrepreneurship. Smallbiztrends.com reports that women-owned businesses have grown at a rate 2.5x faster than the national average, leading to 1.5x more women starting businesses than men. Many women are shifting to self-employment because they aspire to have better flexibility in their schedules, more compensation for their work, and better alignment with their purpose.
A similar acceleration in launching small businesses is seen among people of color. Many BIPOC individuals are pursuing self-employment to have more control over their careers, greater advancement opportunities, and more earning potential. Over the last decade, there has been a 35% increase in minority-owned businesses, which might be causing you to ask yourself, “Should I leave my full-time job and go all in on my business idea?”
The pandemic created a momentous shift in the relationship between employees and employers.
The COVID-19 pandemic fundamentally altered the economic landscape, prompting employees to reevaluate the meaning of work-life balance and redefine career aspirations.
CNBC reported that employees emboldened by a tight labor market in 2022, launched the “Great Resignation,” in which about 50 million people quit their jobs in pursuit of greater flexibility and more competitive pay.
Forbes reports that many employees who decided not to leave work began “Quiet Quitting,” where they decreased their effort to the minimum required to maintain employment.
The Economist reports that companies have reversed remote and hybrid work policies to reduce turnover, improve worker productivity, gain more control over how and when employees work.
Under pressure to cut costs, Business Insider reports a 31% increase in job cuts among middle managers in 2023. Many of these cuts resulted from productivity improvements generated by the growth of AI and organization design flattening promoted by companies like McKinsey.
The convergence of all these changes has nurtured a class of workers who are experienced, disenchanted with their current working conditions, hungry for autonomy, and willing to venture into self-employment. Many are launching side businesses with the hopes that those businesses will eventually give them the wealth and freedom necessary to step away from their government or corporate jobs and be their own boss.
Making money beyond the traditional 9 to 5.
Over the last five years, there has been significant growth in three types of entrepreneurial ventures.
Rise of the Gig Economy: CNN reports that over 1 Million Americans are working in the “gig economy.” This includes freelance workers with companies like Uber, Lyft, Doordash, Upwork, and Instacart. These opportunities provide workers with great flexibility, autonomy, and the ability to generate additional income.
Service-based Job: Forbes reports that professional and business services are two of the fastest-growing industries in America. As more companies look to outsource marketing, recruiting, employee development, and consulting, middle managers have more opportunities to leave W2 employee roles and establish 1099 and small business relationships with corporations, government entities, and non-profit organizations.
Growth in Property Rentals: After a sluggish 2023, the National Association of Realtors predicts a rise in short-term rentals. Companies like Airbnb and VRBO make it easier for homeowners to rent out their homes, providing property owners additional income.
Recent shifts in the economy and business ecosystem have provided mid-level professionals with specialized skills, wealth, a home, or a vehicle the opportunity to generate income for themselves outside of the traditional 9-5. We are seeing the emergence of portfolio careers where workers have more than one stream of income, which, over time, allows them to make career decisions based more on personal fulfillment than financial survival.
Taking the Leap: Planning for Success
Leaving the security of a salaried position demands a well-defined plan. The cornerstone of this plan should be a budget that outlines how much money you need to make to cover your personal expenses. In addition, you need to define the amount of money you need to invest to meet your business goals. The U.S. Chamber of Commerce cites inflation, lack of access to credit, rising interest rates, employee hiring and retention, and supply chain disruptions as the most significant challenges small business owners face today. These challenges should be accounted for in your budgeting and planning process.
Most small businesses fail because they do not have the capital or people resources needed to bring their company value proposition to life. A detailed business plan, with clarity on the key partners, activities, resources, customer segments, channels, and relationships, will help you clarify what is needed to thrive. The 10% of new companies that last more than ten years do so because they clarify
Who they are?
What they do best?
Secure the talent and resources needed to establish a sustainable business model.
Prelaunch Check List:
There are 7 actions you should take before quitting your current job and pursuing your business full-time.
Leverage Company Training Programs: Participate in company-sponsored training programs to cultivate skills that contribute to your professional development.
Access Free Resources: Organizations like SCORE, SBDC, and many local economic development centers offer training, workshops, and mentorship that can help you develop plans and acquire the knowledge you need to launch and scale your business successfully.
Develop a Business Canvas: This is a one-page business plan to guide your strategy.
Personal Budget: Define how much money you need personally, assuming your business generates no income for the first six months of operations.
Business Forecast: Create an 18-month financial forecast, including projected revenue and expenses. Include a best-case and worst-case scenario.
Develop a Contingency Plan: Prepare for unforeseen circumstances by outlining what you will do if the worst-case scenario occurs—for example, securing a loan, borrowing from family or friends, or taking on part-time freelance work.
Build Your Support System: Develop a network of advisors, mentors, and peers who can provide guidance, support, and motivation throughout your entrepreneurial journey.
The Entrepreneur's Journey: Rewards and Challenges
Entrepreneurship is not for the faint of heart. Many people start on the entrepreneurial journey only to later decide that they prefer being employees. If you try entrepreneurialism and it does not work out, you can always re-enter the labor market. Every new experience is an opportunity for growth, self-discovery, and self-mastery. The best way to determine if you are ready to leave your current job and go all in on your own business is to do the prep work listed above. It will help you look at things from a big-picture perspective and consider the essential factors for success.
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As an executive coach and small business consultant, I guide small business owners and business professionals in achieving their professional and business goals.
Whether you want to start, transform, or improve your business or career, I can help you magnify your strengths, minimize weaknesses, identify threats, and take advantage of opportunities.
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Email: dcunion@yourpathexecutivesolutions.com
