Solopreneurs in the Spotlight: How Sole-Proprietors May be the Key to Jumpstarting the Economy

One of the drawbacks of being a solo-entrepreneur is that you know there are more of you out there – they are your colleagues, business partners, and friends – but that there isn’t much hard data on you. Who are the solo-entrepreneurs? What do they do? Do they thrive or die off? The Small Business Association Office of Advocacy recently released a paper “The Non-Employer Start-up Puzzle” that strove to solve some of these mysteries. And what they found was that we sole-proprietors are more important to the health of the economy than anyone had guessed.

The paper came up with one statistic that we here at the Outright blog already knew – sole-proprietorship rises during times of economic recession and job cuts by employers. According to the report, “In contrast to employer firms, which often start as a response to an economic opportunity in the marketplace, microbusinesses are often started as an occupational decision.” In other words, unintentional entrepreneurship is a very real phenomenon and thrives in a down economy.

Other research showed that there are over three times more non-employing businesses – about 21 million – than those with payrolls – only about 6 million. They also start up at about 3 times the rate of traditional, employee-based businesses. But perhaps this segment of the business population is so underrated because they only represent only about 3 percent of U.S. business receipts. Still, the report concluded that solo-entrepreneurs are ones to watch because of their potential for growth and thus job creation.

Perhaps this study, by identifying microbusiness’ place in the U.S. economy will encourage more programs and funding to help nonemployee businesses transform into employer businesses. Until then, know that sole-proprietors are out there at 21 million strong and growing.

The report can be read in its entirety, here.