Gallup Wrong About Solopreneurs

I'm a big fan of the Gallup organization and often reference their work. Which is why I'm so disappointed by their article American Entrepreneurship: Dead or Alive?.

Gallup is simply completely wrong about solopreneur businesses. Key quote from the article:

Let's run some numbers. You will often hear from otherwise credible sources that there are 26 million businesses in America. This is misleading; 20 million of these reported "businesses" are inactive companies that have no sales, profits, customers or workers. The only number that is useful and instructive is the number of current operating businesses with one or more employees.

The 20 million "inactive" businesses Gallup refers to are "non-employer" businesses (also called solopreneur businesses). This is the term the government uses to describe small businesses that have an owner, but don't have traditional employees.  

Many non-employer businesses are very small part-time or hobby businesses. Some are inactive.

But millions of non-employer businesses are not only active, they are the major source of income for their owners.  

My business - Emergent Research - is an example of an active non-employer business. Emergent Research doesn't have traditional employees, so it's counted as a non-employer business by the U.S. government and considered inactive by Gallup.

But Emergent Research has customers and sales and generates most of my family's household income. 

So please don't tell me my business and the 18 million other American solopreneur businesses that collectively generate over $1 trillion in revenue are inactive and/or don't matter. 

I suspect Gallup doesn't understand how the government defines non-employer businesses. Nor does it seem to know that millions of successful solopreneur small businesses are included in this category. This is the only explanation I have for their position that firms like mine don't really exist.

The large and positive economic impacts that independent workers (solopreneurs, self-employed, freelancers, etc.) have on the U.S. economy are covered in the 2014 MBO Partners State of Independence report. 

Key economic impact points from this report include:

1. Solopreneurs are a major source of employer small businesses: 15%, or about 2.7 million, solopreneurs reported they plan to grow their businesses in the next 2 years and add traditional employees. This is not a surprise; over half of all U.S. businesses with employees started as non-employer businesses.

2. Solopreneurs hire others via contract hiring: In 2014 38% of independent workers collectively reported spending about $92 billion in the past year hiring other independent workers on a contract basis. This is roughly the equivalent of hiring 2.2 million full-time workers via contract hiring.

3. Solopreneurs are major sources of household income: Over 10 million U.S. households - roughly 1 in 12 -  get more than half their household income from a solopreneur business. 

Comments

[Chrimack]

Yes. Non-employer businesses are growing - quickly - in number. A lot of that is the growing freelance/outsourcing model which means that businesses that might have needed one or two employees in the past - now work with several OTHER non-employer businesses to get specialized skills and help.

I'm with you - normally a Gallup fan, but what you quoted is clearly incorrect.