It is often said that what is measured is managed.
A new report from Dare to move forward Measurement of micro businesses shows that they are a powerful “hidden” economy in America that deserves attention. One that has helped families and communities survive – and even thrive – during the pandemic. Venture Forward director Alex Rosen says understanding these micro-enterprises is key to enabling government and industry to better serve their unique needs in the future.
The Small Business Administration (SBA) defines a micro-enterprise than with one to nine employees. They vary in nature and location, with Venture Forward finding that roughly half are owned by an individual or solo preneur, roughly 50% work both in the physical world and online, and more than half are currently serving as a source of income – either primary or primary complementary – for their owners.
But don’t let the “mic” fool you. Microenterprises, while small, are powerful and have a huge impact on the economy as a whole. Each of them helps create jobs, raise the median household income, lower unemployment and support economic resilience. The SBA notes that America’s micro business is made up of 74.8 of all private employers and 10.3 percent of all private sector jobs in 2016.
However, according to Rosen, this impact is likely to be under-captured as up to one in four micro-entrepreneurs may not be covered in traditional government statistics because they are staying at home, staying at home, retired, a student, or otherwise unemployed.
This edition of the study by Venture Forward, GoDaddy’s multi-year research initiative that analyzes the economic impact of the country’s micro-businesses on local communities, has produced a number of compelling results:
- Every everyday entrepreneur creates two new jobs in a community;
- Adding one micro business per 100 people reduces the unemployment rate in a county by 0.05 percentage points and can increase the median household income by nearly $ 500 in three years;
- During the pandemic, communities with more micro-businesses and more broadband adoption saw lower unemployment and fewer job losses with low incomes.
Rosen says it’s critical that we better identify, track, and measure the impact of these millions of companies. With this ongoing study, Venture Forward hopes to provide government leaders and policy makers a deeper understanding of micro-business so that they can develop policies that better support one of the hidden pillars of the economy.
At the top level, Venture Forward noted that micro-businesses are demanding four key areas of support: better access to capital, improved broadband adoption, flexible services, and qualification through local government resources. Interestingly, the majority will need less than $ 10,000 to get started, with assistance in obtaining health benefits and learning marketing skills as other major needs.
A number of mayors and city teams have told Rosen that they were shocked to learn how many micro-businesses exist within their zip codes. She said most were pleasantly surprised to learn about this collective economic engine and eager to learn how to help. A local politician said, “You can’t make politics for what you can’t see.”
By understanding micro-businesses and their needs, officials are better able to adjust policies – even how to make their cities more attractive to owners to live and work in. Rather than focusing solely on how funds are used to attract large businesses or top-down economic programs, micro-businesses could provide more opportunities for executives to make policy decisions. In some cases, this could even mean serving this segment to offset industry or macroeconomic downturns in the future.
Women make up a large proportion of these micro-businesses, with the study found to have unique needs and experiences. Rather, female owners viewed technology as a way to support and grow their business. Almost 2/3 of the women surveyed said a website had helped them communicate online, expand or relocate business – a much larger percentage than the male respondents.
Rosen believes that female-owned micro-businesses will continue to grow as the future of work evolves. At a time when remote working and the ability to move easily or frequently are evolving, organizations will still need dynamic professionals and partners. Micro-businesses run by women bring a wide range of sought-after perspectives and products to market while giving women room for maneuver and flexibility in terms of income and time schedule.
She also believes this is a self-fulfilling cycle. The more women see women running micro-businesses; the more micro-businesses run by women are created.
While Rosen obviously sees GoDaddy as a great partner for these women – set up a website and go to work – she also points out that there are a number of other support programs on site and online. Unfortunately, many of the women surveyed were unaware of the many free local government resources available to business owners, including training.
She understands that it can seem overwhelming at first, but Rosen suggests that potential founders start by focusing on small businesses in their area.