The pandemic sparked a rush in new single-person businesses. Are they here to stay?
If you have decided it’s time to launch a new business, there’s plenty of inspiration to be found in the post-pandemic economy. An emerging optimism nudged record numbers of entrepreneurs into the single-owner businesses sector in 2021. Their persistent success shows no signs of abating.
We’ve seen them coming for a while.
According to a recent Kaufman Foundation study, each month during 2020, an average 380 out of every 100,000 people left company jobs to become self-driven entrepreneurs. That’s the highest rate in 25 years, the Foundation found.
Opportunity is still ambition’s best friend
It wasn’t fear of job loss that made 2020 an attractive year for these enterprising souls. Almost nine out 10 of the entrepreneurs surveyed said they were motivated by the opportunity to pursue a passion or to become their own boss.
So, that hot business idea that’s been making a ruckus in your head all these years? This year, a lot more people paid heed to that noise. And when the COVID-inspired slowdown forced them to work or quarantine at home, they used that time to make that business happen. In fact, 96 percent of the new entrepreneurs surveyed by Azlo in 2020 said the pandemic actually motivated them to take the plunge. If you are one of those new single-person business owners - or you plan to be - here are some tips that could launch your dream.
Success still favors a great side hustle
Using your skills or talents to start a business on the side is a strong strategy, says Patricia Hunt Sinacole, CEO of First Beacon Group, a human capital consulting firm. Sinacole often works with clients whose skills in business, technology, and manufacturing have the potential to earn them extra cash in their off-work hours – the very definition of the side hustle. In January 2020, she met with one such prospect – an IT expert who was tossing around the idea of quitting his job at a tech giant to start his own IT consulting firm. His experience was telling:
“He had worked there for 20 years, so he had some great skills. But he wasn’t sure he was ready to give up the paycheck, so he waited,” says Sinacole.
“Two months later, with the pandemic in full swing, he started getting literally hundreds of emails at home from friends, family, and acquaintances – all begging him to come set up their home offices, get them connected, figure out video conferencing. Well, that showed him there was a very strong market for his skill. He quit his day job and started out on his own. Now, he has eight employees.”
That’s hardly an outlier. Some 40 percent of the entrepreneurs who started up during the pandemic said they plan to hire additional employees this year, according to Azlo’s COVID Economy report.
If you are thinking of hanging your shingle, a side hustle is certainly a popular way to launch. A recent Harris Poll found that one in four Americans is planning to launch a side-hustle in 2021. That’s down from 31 percent during the height of the pandemic, in 2020.
Before you make the transition, make sure you set reasonable expectations from the onset. According to the 2019 Hiscox Side Hustle to Small Business™ Study, entrepreneurs should anticipate working at least 20 hours a week on their side hustle for a period of about 18 months before making it their main job. And, once they take that leap, they should expect to work for about 3 years to attain their previous rate of pay.
Sound too demanding? The perks of pursuing your dream are hard to beat. Notes Sinacole, “A lot of sole proprietors love the fact that they can choose what projects they take on and whom they work with. And if your daughter’s soccer game is a priority, you have the freedom to schedule it in. It's your business and your time.”
Related: Read the 2019 Hiscox Side Hustle to Small Business Study
Success still depends on versatility
2020 was the year of the business pivot. Some 92 percent of established businesses owners surveyed by Small Business Trends said that they survived a turbulent business climate by reinventing their service model, tailoring their hours, upping their online presence, or automating their business processes. If you are planning to launch a business this year, let their flexibility teach you a lesson. It paid off.
Restaurants who offered online ordering and curbside pick-up; doctors who adopted telemedicine practices; consultants who replaced in-person with video visits – all of these fared better because their pivots also increased efficiency and cut costs.
What can your business plan do to accommodate the current climate?
Consider remote work - a business tweak that was road-tested extensively in 2020. Can your start-up reduce the size or cost of operations by allowing workers to work from home? Maybe you can offer remote options for one, two or more days each week. If you are working on your own, can you see clients via video-conferencing rather than travelling to their site for every meeting?
If your start-up doesn’t require a rigid 9-to-5 schedule, try borrowing another lesson learned from 2020: flexible work hours. This can benefit the bottom line in a number of ways, according to a study published in Forbes Magazine. Flex-hour workers were found to suffer less burnout, take fewer sick days, and achieve more.
If you plan to hire even one employee, this is a critical thing to consider. If you are flying solo, it can’t be overlooked. Still looking for ideas? The folks at Small Business Trends put together 6 Tips On How Businesses Can Weather Unpredictable Futures With Limited Resources.
Success will always demand hard work
Almost all of the new entrepreneurs surveyed by Azlo said they plan to continue growing their businesses as the economy improves. Keeping that commitment will require the same hard work that has consistently positioned small business as a pillar of the U.S. economy.
Here are some tips for making your hard work smart work:
- Plan smart. A business plan will help you launch. A strategic plan will help you soar. Don’t overlook the importance of putting it all down on paper. Related: Strategic planning for your small business: What it is and how to do it
- Fund smart. Making sure you’ve supported your dream with the right combination of passion, loans, equity, and cash is as crucial as the brilliance of your idea. Related: How to get a start-up business loan
- Partner smart. Hiscox is committed to protecting the dream you alone can launch. Call us and we can can help you find right general liability and professional liability insurance packages. And our trusted business partners can help you lay down a solid framework for everything from bookkeeping to incorporation.