Forecasting the Future of Small Business by looking at social, demographic, business and technology trends that will impact small business formation and operation over the next decade. Focus on future trends.
Occasional independents are are workers who report working independently occasionally or sporadically, but at least once a month on average.
Most occasionals have other jobs, but many have activities such as care giving, homemaking, school, etc that keep them from having a traditional full or part-time job.
And, of course, most occasional independents are working side gigs to supplement their income. Other reasons for side gigs are to pursue a passion, build skills and to start or test out a new business opportunity.
Another reason side gigs are growing is that online platforms and marketplaces are making them easier to do. These platforms provide a low friction (meaning it's easy and quick to get started), highly flexible (work when you want or can) work options.
With wage stagnation, the hollowing out of middle skill jobs and the rising costs of housing, healthcare and education showing no signs of abating, we believe the number of Americans with side gigs will continue to grow.
Predicting the Next Tech Disruption from Big 3 Strategy Consulting firm Bain and Company discusses 4 forecasting tools (shown below) Bain uses to predict when disruptive technologies will be widely adopted.
Two of the tools - experience curves and adoption curves - have been around a long time and widely used.
For example, we use both - and especially adoption curves - in our forecasts. And much like McKinsey also suggests, Bain suggests using similar technologies to help you develop your adoption curves.
This is something we've done for many years and have found very useful.
Bain's Elements of Value tool is focused on consumer technologies. But we think it could be modified to also work with B2B tech. You'd just need to create the equivalent of Maslow's hierarchy for business users.
The tool we found most interesting is what they call barriers and accelerators.
We spend a lot of time examining potential barriers and countervailing trends that could impact our forecasts. This is because we've observed that most technology forecasts are overly optimistic because they don't include these.
Other examples include autonomous car forecasts, Internet of Things forecasts back in the early 2000's and again in 2010 through 2015 and pretty much all the forecasts that A.I. and automation would eliminate huge numbers of jobs by 2020 that were put out 6-8 years ago.
In all these cases barriers and countervailing forces were either missed or ignored. So we certainly agree with Bain's inclusion of this tool.
Forecasting is obviously not easy and no one can actually predict the future. But using tools like the ones Bain suggests will help your forecasts miss by less.
The article covers the growth of the pet economy. Key quote:
The surge in spending on pets – and explosion of new products, services and unique “experiences” to help quadrupeds and their owners bond more closely – is at an apex, tracking to break U.S. records this year.
According to the article, "the U.S. pet economy is projected to exceed $75 billion this year, up from $72.5 billion in 2018 and a doubling of 2005’s $36 billion ...".
“What we see happening is a transition from pets being ‘man’s best friend’ to ‘family’s favorite child,’” Petco chief merchandising officer Nick Konat, told CO—. “ People want to take the best care of their pets, like they are a member of the family.” He does not view this mindset as a trend so much as a movement that’s been building over time as people integrate pets more fully into daily life — the workplace, dining, shopping and celebratory occasions."
The pet industry's growth is attracting a wide range of products and services. Our favorite from the article is Nashville's BarkPark (pictured below).
One of the clear findings from the MBO Partners State of Independence study series is that, on average, independent workers (freelancers, independent contractors, the self-employed, etc.) and those with traditional jobs have different risk profiles.
Simply put, independent workers are more comfortable with the risks associated with being independent than traditional job holder are. They're also are more willing to accept these risks in return for greater work autonomy, control and flexibility.
As the chart below shows (click to enlarge), 65% of those with traditional jobs think it's risky being an independent worker or running your own business versus only 18% of independent workers.
This different view on risk is reflected by what people value in terms of their work.
Independent workers tend to value the flexibility, autonomy and control independent work provides. Traditional job holders tend to value stability and a predictable income.
Interestingly enough, as the chart above shows both groups tend to be satisfied with their income.
That independent workers are more comfortable with risk than traditional job holders may seem obvious.
But it's rarely discussed in the debates around independent work and the gig economy.
Nor is the willingness of most independent workers to trade security and a predictable income for greater levels of work autonomy, control and flexibility.
Instead the assumption by many is that most independent workers - like most traditional job holders - would prefer having a traditional job.
Despite trade wars, tariffs, and the erection of other barriers to cross-border commerce, independent workers, freelancers and solopreneurs are increasingly finding customers outside U.S. borders.
As the MBO Partners State of Independence study chart below shows (click to enlarge), in 2019 22% of Independent workers who work full-time as independent workers said they provided goods or services to customers outside the U.S.
This us up from 19% in 2018 and just 12% in 2012.
The increase in exports is being driven by several factors:
Online marketplaces have made it much easier to find and service customers outside of the U.S. They also simplify and facilitate transactions and payments.
Collaboration software has reached the level where communicating with remote customers is easy and efficient. This has greatly increased the ability of service providers to serve customers outside of the U.S.
Improvements in outsourced logistics services have reduced the costs and greatly simplified the process of delivering physical products to pretty much any global destination.
We expect the trends driving the growth of exports by full-tine independent workers to continue to strengthen. Because of this, we expect the export activity by independent workers to continue to grow.
Nonemployer data gets less attention than other government data on self-employment.
This is because the dataset is messy and includes a hodge podge of business entities - passive businesses, firms no longer in business, LLCs owned by major corporations, etc. - that aren't active solopreneur businesses.
But we find this data a useful general indicator of U.S. self-employment.
Their big finding is it's a myth that most independent workers aren't doing independent work because they can't find a job. They also found - and it apparently shocked them - that independent workers like the flexibility and autonomy they have.
These findings have, of course, been known for many years. But it's nice to see the HR world catching up.
2. Platform Work in the UK 2016-2019: This study is a collaboration between the University of Hertfordshire and the U.K.'s Trades Union Congress (TUC). It found the number of people in the U.K. doing gig economy work has doubled over the last three years.
And as the study chart below shows (click to enlarge), about 10% of UK residents report using a gig platform for work on a weekly basis and almost 30% are seeking work using these platforms.
The study also found the majority of people using online platforms to find work are working part-time to supplement their income. The study report has lots of interesting data on UK gig workers.
As the study chart below shows (click to enlarge), in 2012 only 3 percent of full-time independent workers reported having used an online marketplace to find work in the prior 12 months.
In 2019, 24% said they had.
Relatively few (8%) report using online talent marketplaces as their primary source of work.
But online talent marketplaces have become important secondary and tertiary sources of work. Independent workers use them to fill in gaps in their work schedules, explore new markets, find new clients and learn new skills.
Going forward, the use of online marketplaces by independent workers will no doubt increase.
The 2019 data show 29 percent of full-time independent workers reported they intended to use an online marketplace over the next 12 months.
And as the chart above also shows, there's a strong correlation between between one year’s reported intentions and the next year’s reported usage.
So we're very confident forecasting that next year we'll see close to 30% of full-time independent workers using online platforms to find work.
So far 27 organizations including Mastercard, Visa and Stripe and Paypal, Uber, Lyft, Spotify, several venture capital firms and 4 nonprofits have joined as founding members of the Libra Foundation.
It is expected there will be more than 100 members by the time Libra launches.
Facebook also announced a new digital wallet called Calibra, which will provide users a way to store and spend Libra. Expect to see many others offering Libra digital wallets.
According to Facebook the main near term market for Libra is the 1.7 billion people around the world who lack access to the banking system.
Other early likely users include people who live in countries with unstable currencies, people who want to move money across borders and people who want to buy digital goods and services (in-game purchases, for example).
But the longer term goal is for Libra to be used for everyday purchases by everyone. This is a goal Bitcoin and other cryptocurrencies have failed at, primarily because their value fluctuates so much.
It will be years before we know if Libra will succeed as common medium of exchange, but the broad organizational support Libra has attracted certainly makes success possible.
In the past we’ve suggested small businesses stay away from cryptocurrencies. We think Libra easily could be different.
Although unlikely to be an important payments option for most small businesses in the developed world anytime soon, it should be easy to add it as a payments option post launch.
So Libra will be worth looking at when it launches.