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The Sad, Sad State of Small Business

Posted on 3.28.2017
FU_FreelancinginAmerica2016_InfographicIt would be a short leap to assume that small business owners are the ones hiring a large portion of the 35 percent of the U.S. workforce that is freelancing (click image), because they could use these individuals to make up for inexperience in areas like design or marketing and get more clients, make more money and take less stress off themselves.

A new survey from FreshBooks, however, indicates that few self-employed professionals or small business owners outsource for business support services, despite a lack of in-house expertise. In fact, 30-60 of them are taking a do-it-yourself approach for services which they have no internal expertise, such as digital marketing, information technology or social media. To some degree that makes sense, as many are strapped for cash particularly as they have a difficult time being seen as a worthy credit applicant. According to the survey:
  • 25 percent have been rejected as borrowers because of their occupational status
  • 52 percent said big banks aren't designed to serve the needs of small business
  • 54 percent said when it comes to financing, they wish there were more alternatives to big banks

With a little more capital, self-employed professionals and small business owners may feel more confident to expand, bringing in talent to improve their bottom lines.

With just over half of survey respondents agreeing they "sometimes get out of paying for professional services by finding 'other' solutions" it might be time to consider what true experts in the realm of marketing, social media, SEO, etc., could do for a business struggling like the 85 percent of respondents who say business development is a challenge or the 51 percent who say they are too busy getting work done to sell.

It doesn't seem to be the government that these small business owners are pointing the finger at though with some mixed results of 40 percent wanting somewhat higher taxes and getting similar public supports that employees have, and 60 percent wanting minimal taxes with minimal support from public programs for their business or self-employment.

Overall, it appears that small businesses and self-employed individuals are facing some winless scenarios, and we've yet to mention that 51 percent indicated they are unprepared should a large invoice not get paid and 42 percent are doing nothing about their retirement despite a median age close to 50 years old. 

"In the next five years, self-employed professionals will make up nearly half of the U.S. workforce, yet everything from health care to America’s tax code cater to larger businesses,” said Mike McDerment, CEO at FreshBooks. “To better serve this market, it’s important to understand it. The study is the first of its kind, and sheds light on the motivations, mindsets and challenges of self-employed Americans. In sharing it, we hope it will inspire change that benefits this fragmented, but enormous group.”
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