Small Business Labs

The Motivations and Challenges of Diverse Small Business Owners

Gallup's Diverse Small Business Owners Share Their Experiences covers a series of surveys of different segments of small business owners.

The surveys asked about the motivations and challenges among Asian, African-American, Hispanic, Women, LGBT and Veteran small business owners.

Their key finding is small business owners have pretty much the same motivations and challenges regardless of their ethnic, racial and social backgrounds. Key quote:

There are more similarities than differences across diverse small-business owner segments. Racially and ethnically diverse small-business owners share similar broad challenges with the general population of owners. 

This echos our finding on this topic over the years.

Below are two charts from their reports showing the motivations for being a small business owner by different demographic cohorts.

I have to add I was much amused when I read the methodology section in these reports.

Methodology sections are normally not a source of mirth, but I laughed out loud when I read:

Owners with less than $10,000 in revenue were asked to confirm if they considered their work a business in order to be included in the survey.

This means some small businesses with less than $10,000 in revenue were included in these surveys. It also means many more small businesses with less than $100,000 were included.

Why is this funny?

The reason is the vast majority of small businesses with less than $100,000 in revenue are solo businesses and Gallup is on the record as saying solo business aren't real small businesses. They describe them as "inactive companies that have no sales, profits, customers or workers".

I find it funny that they don't consider these firms real, but still include them in their surveys.

Coworking Booming in Chicago (Dallas Too)

Crain's Plenty of Rivals are Following WeWork into Coworking Competition covers the rapidly growing coworking industry in Chicago. 

As the article chart below shows not only have a lot more spaces opened over the past couple of years, they are also much bigger.

And there's no signs of a slow down. The article points out there are literally dozens of companies planning to open new coworking spaces in Chicago in the near future.

      

 It's not just Chicago. Silicon Angle's Why Dallas is having a Coworking Boom says the city:

"has recently become a hotbed of new coworking spaces, with around two dozen or more popping up around the metroplex."

I could go on listing recent articles talking about coworking expanding across globe, but I think you get the point. Coworking is booming.

Researching Society's Edges

We're often asked about how we go about our work of identifying, tracking and forecasting the future of small business. 

One of the key tools is identifying and studying edge communities.

These are groups that exist outside of the mainstream in one way or another.

We spend a lot of time finding and interacting with edge communities. We do this because mainstream shifts and changes generally start in these communities.

A good example of an edge community we've been focusing on for several years is digital nomads.

These are folks with location-independent work and lifestyles that allows them to roam the earth working anywhere that has a good Internet connection. 

Digital nomads are extreme remote workers who are also looking for an alternative to the traditional 9-5 life.

This makes them a double edge community. They are exploring alternative lifestyles and developing new and better ways to work remotely.  

A great quote describing the digital nomad lifestyle comes from the Huff Po article How to survive as a digital nomad:

What unites most of them is the fact that they refuse to settle for a lifestyle dictated by the society's perception of "normal" ... This lifestyle is not only about escaping, it's about creating exciting things in new ways ... it gives you an invaluable opportunity to see the world and experience more than living the 9-to-5 life.

William Gibson's famous quote about the future - the future is already here, it’s just not evenly distributed - is about edge communities. Some of these communities are living in the future in the sense they have behaviors and/or use technologies that will become mainstream at some point in the future.

But most edge communities don't fit this description. They're simply fringe groups that will always be fringe.

Our job is to find the communities living in the future.

One of the best things about this work is we constantly get to interact with people who "refuse to settle for a lifestyle dictated by society's perception of "normal"."

These folks are both fun and interesting. 

Many High Earners Living Paycheck to Paycheck

We' written a fair amount about economic uncertainty and the impact it's having on everything from marriage and birth rates to the rise of the on-demand economy and the rapidly growing number of people with side gigs. 

One of the main drivers of economic uncertainty is living paycheck to paycheck. This, obviously, means an unexpected bill or job loss can quickly result in substantial financial damage.

Most think it's only those with low incomes who live paycheck to paycheck. But a recent survey by Sun Trust Bank shows that a sizable number of people earning more than $75,000 per year live paycheck to paycheck.

Their survey found:

• nearly one third of households earning $75,000 or more live paycheck to paycheck at least some of the time.
• nearly one quarter of household earning $100,000 or more live paycheck to paycheck at least some of the time.

This data is somewhat confirmed by a report from Deutsche Bank showing that almost half of all Americans don't save anything from their current income.

The chart below, from a Business Insider story on the study, nicely illustrates this. It also shows that this is not a new phenomenon. Even back in 1992 43% of Americans weren't saving anything.   

But back in 1992 jobs were much more stable and easier to find if unemployed. Medical, education and housing costs were also much lower. This means living paycheck to paycheck is much riskier today than back then. 

We think economic uncertainty is one of the key economic issues of our time - which is why we are spending so much time trying to understand its impacts.

Coworking Members Learning New Skills, Becoming More Successful

One of the more interesting findings from our recent survey of coworking members is how many reported they had learned new skills - or improved their existing skills - due to their coworking space membership:

• 69% of the respondents reported they learned new skills
• 68% of the respondents reported they improved their existing skill set

The learning generally comes two ways. First, most coworking members reported learning new skills and improving existing skills from events and educational programs hosted at their coworking space.

67% of the respondents reported attending events and/or educational programs often (21%) or occasionally (45%). Only 4% said they did not attend events or educational programs hosted by their space.

The other way learning happens in coworking spaces is interaction among members. Over three quarters of the respondents said they had learned something new through interactions with other members.

The ability to learn new skills is becoming increasingly important. With the pace of change increasing, today’s professionals must prepare themselves to work in multiple fields. This means continuously learning new skills and new ways to work.   

We think the learning aspects of coworking are under appreciated, particularly since so many corporations are complaining about a skills shortage. 

We also think it's one reason why 64% of coworking members - and 72% of coworking members who are independent workers - report being a coworking member has improved their professional success.  

McKinsey's Four Global Disruptions

McKinsey's new book No Ordinary Disruptions covers 4 global forces they believe are rewriting the world economy's operating system.

The 4 are:

1. The Age of Urbanization
2. Accelerating Technological Change
3. Responding to the Challenges of an Aging World
4. Greater Global Connections

What's interesting about this list is these trends have been apparent and discussed for many years.

For example, all of these in one form or another are in the Intuit 2020 report, which was released in early 2010. They weren't new then.

Even the authors themselves point out these are not new trends. In their book excerpt The Four Global Forces Breaking All the Trends they say:

These four disruptions gathered pace, grew in scale, and started collectively to have a material impact on the world economy around the turn of the 21st century. Today, they are disrupting long-established patterns in virtually every market and every sector of the world economy—indeed, in every aspect of our lives. 

So why bother writing a book about old news?

The reason is despite all of these forces being well known, most organizations, institutions and people still haven't adjusted to this new world. Key quote from the book excerpt:

There is an urgent imperative to adjust to these new realities. Yet, for all the ingenuity, inventiveness, and imagination of the human race, we tend to be slow to adapt to change. There is a powerful human tendency to want the future to look much like the recent past. On these shoals, huge corporate vessels have repeatedly foundered. Revisiting our assumptions about the world we live in—and doing nothing—will leave many of us highly vulnerable. Gaining a clear-eyed perspective on how to negotiate the changing landscape will help us prepare to succeed.

This is the way it is with shifts, forces and trends - they take a long time to reach the mainstream and even a longer time before most organizations adapt to them.  

Which why a book explaining these shifts and how to navigate the world's new operating system is useful. I look forward to reading it.

Coworking Spaces are Human Spaces

Last week the results from the spring coworking space member survey were released at the Global Coworking Conference Unconference (GCUC). Emergent Research (that's us) partnered with GCUC and Jacob Sayles of Office Nomads on this study.

The key finding is while coworking spaces are definitely workspaces, they are also much more. They are places where members work, network, learn and socialize together. 

In other words, coworking spaces are human spaces.

The key results from the survey illustrate this.

Work related:

• 84% said they were more engaged and motivated when coworking
• 67% said coworking improved their professional success
• 69% said they feel more successful since joining a coworking space

Networking related:

• 82% said coworking has expanded their professional networks
• 80% said they turn to other coworking members for help or guidance 
• 64% of the respondents said their coworking networking was a very important (26%) or important source of work (38%)

Learning related:

• 69% reported they learned new skills
• 68% reported they improved their existing skill set
• 67% reported they attend events at their coworking space occasionally (45%) or often (21%); only 4% said they never attend events

Social related:

• 87% report they meet other members for social reasons, with 54% saying they socialize with other members after work and/or on weekends
• 79% said coworking has expanded their social networks

But even more interesting is coworking makes people happier. We asked how being a coworking space member had changed their lives. According to the respondents:

• 89% reported they are happier 
• 83% reported they are less lonely
• 78% reported that coworking helps keep them sane

Our research objective for this project was to better understand the role work-related networking played in coworking spaces. And the results show that work-related networking is strongly enhanced by membership in a coworking space.

But despite our research being focused on the work aspects of coworking, the social and learning sides of coworking came out loud and clear. To be honest, this surprised us a bit.  

We'll have more on our results in the coming weeks and we'll also be posting the full presentation on the GCUC website in the near future.

64% of Americans Own Smartphones

Pew Internet's U.S. Smartphone Use in 2015 profiles American smartphone usage and the growing role that "smartphones play in helping Americans access, share, and create information and communicate with others."

And while the growth of smartphones and smartphone usage is not new news, it's nice having detailed data illustrating it.

The key quote from the report is:

64% of American adults now own a smartphone of some kind, up from 35% in the spring of 2011. Smartphone ownership is especially high among younger Americans, as well as those with relatively high income and education levels.

The report chart below shows what I think is the most interesting report finding - the huge smartphone usage gulf between older and younger Americans. 

       

I guess it's fair that my kids consider me a smartphone Luddite.

For those who don't want to read the full report, Pew's 6 Facts About Americans and Their Smartphones covers the highlights. 

HBR - The 3-D Printing Revolution Has Arrived

Regular readers know that while we're very excited about 3-D printing, we continually warn not to get caught up in the surrounding hype.

Harvard Business Review's The 3-D Printing Revolution (subscription may be required) not only is one of the best articles I've seen on this topic, it also explains the advantages and uses of 3D printing without over hyping the technology.

Key quote:

Industrial 3-D printing is at a tipping point, about to go mainstream in a big way. Most executives and many engineers don’t realize it, but this technology has moved well beyond prototyping, rapid tooling, trinkets, and toys. “Additive manufacturing” is creating durable and safe products for sale to real customers in moderate to large quantities.

The article covers the pluses of 3D printing - flexibility and production simplicity - as well as its current main limitation, which is a lack of economies of scale.

The article also nicely positions where 3D Printing is today, and the impact it will likely have in the future. Key quote:

Here’s what we can confidently expect: Within the next five years we will have fully automated, high-speed, large-quantity additive manufacturing systems that are economical even for standardized parts. Owing to the flexibility of those systems, customization or fragmentation in many product categories will then take off, further reducing conventional mass production’s market share.

The report chart below, which shows the growth of 3D printing patents, nicely illustrates the rapid growth of this industry.

There's been little doubt for years that 3D printing is a game changing technology. The question has been when will it finally enter mainstream use for industrial applications.

The answer is soon.

We cover 3D printing extensively in our small manufacturing section.

How Large Corporations See Contingent Workers

Holistic Talent Supply Chain Management is an HBR study sponsored by Kelly OCG, which is the outsourcing division of the large staffing firm Kelly Services.

The study surveyed around 300 global business leaders to understand the talent challenges large organizations are facing and identify the best practices among leading companies working with external talent.

For me the most interesting section of the study covers how large corporations view contingent talent.

The study chart below shows that corporations see contingent talent as increasing business flexibility and agility as well as allowing them to access hard to find talent.  

This fits with our research, which shows that while cost and saving money continues to be a reason corporations use contingent workers, it's no longer the main reason.