Small Business Labs

Book Review: Tiny Business Big Money

In Tiny Business Book Money, small business expert Elaine Pofeldt offers solid advice on starting and operating a microbusiness, which she defines as a business with fewer than 20 employees.

This is a follow-up to Elaine's first book on solopreneur businesses - Million-Dollar, One-Person Businesses. 

While researching that book, she discovered that many solopreneur businesses turned into highly successful employer small businesses. 

So she decided to chronicle how these firms scaled and reached high levels of sales and profitability.

In this book, Pofeldt profiles nearly 60 microbusinesses that have reached $1 million in annual revenue and describes the tools, techniques, and methods they used to succeed.

Our favorite section of the book is chapter two, Mindset Makeover.

It's our favorite because our research shows that an entrepreneur's mindset is crucial to success. And Pofeldt does a great job describing the kinds of mindsets successful entrepreneurs have.

We also liked chapter 6 - Set Yourself Up for Success - and its description of the lean way most very small businesses run.  

In particular, Pofeldt describes five basic models tiny businesses use to run their businesses. These are:

1. The automated approach
2. The freelancer/contractor model
3. The outsourced model
4. The traditional employee model
5. The partner model

A key goal of all these models is to run lean and stay flexible. 

The book points out that most microbusinesses use several of these models, and our microbusiness is no exception.

We decided early on not to have traditional employees and instead rely on contractors, business partners and outsourcing. We chose this for lifestyle reasons and to help us achieve our work/life balance goals. And in our case, it worked.

See the book for more details on each of the models and "real-life" examples of their use.

Certainly, anyone thinking of starting a solopreneur business or microbusiness will find the advice and information in Tiny Business Big Money of great value.  

Existing solopreneurs and microbusiness owners will also find useful advice.

For example, our firm plans to implement some of the automation ideas we found in this book.  

As the book points out, the pandemic has led to a surge of interest in starting microbusinesses.  And Tiny Business Big Money provides a guidebook for successfully doing so.  

Book Review: Building the Business of You

Building the Business of You aims to help people "navigate the uncertain, post-pandemic world of work, while aligning personal purpose and professional advancement." 

And it hits the target with practical, actionable advice on taking charge of and building a career in the new world of work.

The central concept of the book is what the author calls the "career mashup". 

This is a career where workers merge their skills, interests, passions, and experiences in a way that fits a person's whole self.

While this sounds a bit new agey, there's a growing body of research showing that work that is is consistent with a person's values, interests and passions leads to greater career success and overall happiness.

To help develop a mashup career, the book explains to readers how to:

• Push past the fear that holds them back and build limitless confidence to move forward.
• Align their interests, strengths, and skills to get them where they want to be.
• Spot the common threads between skills and experiences and leverage them like a pro.
• Expand their sustainable skillsets.
• Identify the full value they bring to every new network so they can socialize with confidence.
• Leverage themselves as their own best assets.

Think of Building the Business of You as a guidebook for the new world of work.

You can learn more about the book and get additional tips and career resources at the book's website.                  

Book Review: Gigged - The End of the Job and the Future of Work

We're behind on our reading, but did manage to get to Gigged - The End of the Job and The Future of Work.

It's written by journalist Sarah Kessler, who's been covering the gig economy since 2011. 

The book profiles a mix of gig workers, including an Uber driver, a computer programmer, someone working via Mechanical Turk and a few others.

The theme that unites them is they all get work via an online marketplace or platform.

The book's bottom line on the gig economy is for those with the right skills (like the computer programmer), the gig economy provides a flexible, interesting and lucrative alternative to a traditional job.

But for those without the right skills, Kessler describes gig work as "the best of bad options".

That the gig economy has good and bad sides is something our research has clearly shown since we started digging into this topic a decade or so ago.

So we agree with the book's point that for many the gig economy is "the best of bad options".  We also agree with the book's suggestion that need new laws and a new social contract to make gig work safer, fairer and more secure.

It would also be nice to make traditional jobs safer, more secure and more lucrative. Then people could choose between good options instead of bad.

Overall we very much like Gigged. It provides insights on the struggles many gig workers face while also showing there are people who are thriving as gig workers. 

But we do have one major quibble: it only profiles people who are working, or trying to work, full-time or close to full-time in the gig economy.

This ignores a very important attribute of the gig economy. It provides millions of people a low friction, highly flexible, part-time way to supplement their income. 

And since the majority of people working in the gig economy do so part-time, this, in our opinion, is a big miss.

But we still highly recommend Gigged to anyone interested in the gig economy and/or the future of work. 

It's well written, easy to read and covers both the good and bad of the gig economy from the point of view of those working in it.

Book Review: The Million-Dollar One-Person Business

We really like the tagline for the book The Million-Dollar One-Person Business. It's "Make great money; work the way you want; have the life you want."

This pretty much sums up the advantages of being successfully self-employed. 

But this book is not just about being self-employed.

It’s about creating a successful solopreneur business, which is one that doesn’t have traditional employees.

There are many advantages of being a solopreneur.

There is less risk because there’s no regular payroll to meet and less stress because there aren’t employees to manage.

There’s also more freedom and flexibility without employees.

The challenge is scaling a business without hiring employees. And that’s what The Million-Dollar One-Person Business focuses on.

The book is written by the well-known and highly respected small business expert Elaine Pofeldt.  She explains how to identify, launch and grow a single person business that can generate $1 million or more in revenue.

The book is based on hundreds of interviews Elaine has conducted with successful solopreneurs. Because of this, it's filled with practical advice from those who have accomplished the challenging task of reaching $1 million in revenue.

We liked the entire book, but our favorite part is Chapter 4 - Making It Happen. This chapter has the nuts and bolts advice about building a successful solopreneur business.

We particularly liked the section Experiment and Revise (page 113). Being able and willing to adapt, adjust and pivot is almost always a prerequisite to business success. This section nicely and usefully lays out how several successful solopreneurs did this. 

We also found the section on Useful Resources to be very helpful. It's a one stop shop of the tools and hacks that can be used to automate work and business processes.

The value of automation is stressed throughout the book (you simply can’t build a large solopreneur business without using automation tools) and this section provides a list of the tools to make this happen.

The Million-Dollar One-Person Business is clearly aspirational. As the book points out, there were only about 36,000 single person businesses in the U.S. with a million or more in revenue in 2015. 

But this book is not just for those who want to reach $1 million in revenues.

Anyone who wants to build a high income solo business will find the information in this book extremely valuable. And a growing number of Americans are building high income solo businesses.

As the chart below shows, over 3 million American solopreneurs reported earning more than $100k in 2017. This is up from just a bit over 2 million in 2011. 

So if you plan on building a $1 million solo business, this is the book for you.

But it's also the book for you if your goal is simply to build a successful solopreneur business of any size. Especially if you want a business that "lets you work the way you want and have the life you want."

Book Review: Thriving in the Gig Economy

"How to capitalize and compete in the new world of work" is the tagline for the book Thriving in the Gig Economy. This nicely summarizes this useful guide to the shift to independent work. 

The book starts with an excellent overview of the gig economy.

This includes a discussion of the various terms used to describe the gig economy, such as the sharing economy, the on-demand economy, etc., and how they differ.

There's also an in-depth review of many of the key gig economy studies.

After the overview, the book turns to the nuts and bolts of becoming and building an independent worker business.

This includes chapters on:

• building an independent worker brand
• setting prices
• marketing and selling services
• the role of online marketplaces
• legal aspects of independent work (taxes, business structure, etc.)

The advice in each of these chapters is both practical and explained in a way that makes it easy to apply. 

The author of Thriving in the Gig Economy is an independent work pioneer and founder of a consulting firm - M Squared Consulting - that relies heavily on independent consultants to staff their projects. 

Given this background, it's not surprising the book is targeted at skilled professionals considering or already working independently. 

We think baby boomers looking for their next gig will in particular find this book useful, especially the sections on online talent marketplaces and building an independent brand in a digital world. 

Our research shows aging boomers are very interested in independent work.

It also shows they often aren't up to speed in terms of the digital skills and knowledge that are helpful in succeeding in an independent "encore" career. 

But anyone interested in the gig economy will learn much from this book.

The Ideas Industry

The Ideas Industry is an interesting look at how the marketplace for ideas is shifting due to the emergence of for-profit think tanks and ideas entrepreneurs.

Written by Tufts University professor and political scientist Daniel Drezner, the book covers how traditional non-profit think tanks and academic institutions contribute ideas. But Drezner sees their influence declining, mostly because of the money available to for-profit intellectuals.

Drezner lumps the for-profit group into two broad categories - for profit think tanks and thought leaders. 

Examples of for-profit think tanks include the McKinsey Global Institute and the JP Morgan Chase Institute.

These organizations research a variety of topics with the goal of positioning their firms as field experts.

This, they hope, will lead to some combination of more business for their firms, an enhanced brand or more influence with policy makers.

Based on the large investments these firms are making - according the book McKinsey spends over $400 million per year on their think tank activities - they are likely accomplishing these goals.

Thought leaders, according to Drezner, are "intellectual evangelists".

These are people who come up with an interesting idea or concept and successfully market it via mainstream books, speeches and TV appearances. Thomas Friedman and Niall Ferguson are examples of thought leaders. 

The book points out the key to being a successful thought leader is the ability to create ideas with "heuristic punch" - clear enough to comprehend yet potent enough to persuade. A great example is Friedman's idea that The World is Flat. 

If you can do this, you can become a "superstar intellectual" and make a lot of money. Historian Niall Ferguson, for example, gets $50,000 to $75,000 per speech and he makes several per month. 

A major concern about for-profit think tanks and thought leaders is that their work is biased because of their marketing and/or money making priorities. This concern is legitimate.

But as Drezner points out, the for-profits also have advantages. They can explore new areas more quickly than academics and think tank scholars can and they often have access to data that is not available to the non-profits.

Also, as the amount of money McKinsey is spending illustrates, the for-profits are generally much better funded.

The book reaches no firm conclusions whether or not the evolution of the ideas industry and the rise of for-profits is good or bad.

But Justin Fox's review of the book point out something I think most readers would agree with:

"... the rise of the thought leader could be making all of us less thoughtful."

Missing from the book is coverage of the role thought leadership is playing in the rapidly growing content marketing industry. This is understandable given the background of the author and the book's focus. 

But the ideas industry is much bigger and much more diverse than presented in this book. 

The Ideas Industry is well worth reading for anyone active in the marketplace for ideas.

Those working in content and thought leadership marketing will also find it useful. They will gain from better understanding how academic intellectuals, "superstar intellectuals" and think tanks create and spread their ideas.

Book Review: The Gig Economy

The holidays were quite hectic this year. But we were able to carve out some time and read The Gig Economy: The Complete Guide to Getting Better Work, Taking More Time Off, and Financing the Life You Want.  

And we're glad we did. The book provides a wealth of excellent "how to" advice on succeeding at independent work.

The author, Diane Mulcahy, is a Senior Fellow at the Kauffman Foundation and an Adjunct Lecturer at Babson College where she teaches an MBA course on the gig economy.

Mulcahy packages up the information from her MBA course in this book, and at only $16 ($11 if you buy the Kindle version), it's a a whole lot cheaper than taking her class at Babson. 

The book covers a range of topics, including:

• How to stop looking for a job and start looking for work.
• Why income security is the new job security and how to develop the skills it requires.
• Why diversification is the new climb up the corporate ladder and how to build the right, diversified work portfolio.
• How to create a Gig Economy financial plan that is flexible, low-­‐leverage, aligned with personal values and addresses retirement.
• How to create a financial life built on accessing rather than owning things.
• How to manage time effectively and make the most of the variable work hours associated with Gig Economy work.
• How to take advantage of the variable work schedule in the Gig Economy to take more time off.
• How to create an exit strategy to quit your job.
• How to create a personal vision of success by shedding the employee mindset and reducing feelings of fear and risk that are associated with the Gig Economy.

We particularly liked the section on risk reduction. Our research consistently shows most Americans fear the risks associated with becoming self-employed.

We also liked the sections discussing creating a portfolio of gigs and using gigs to experiment with new business ideas and models.  

The book also does a nice job describing the trends driving the gig economy and why more people are turning to independent work. See the book for details. 

The Gig Economy is well worth reading for anyone considering becoming an independent worker.

We also think experienced and successful independent workers will find useful, new information in this book. 

We were somewhat surprised that someone from the Kauffman Foundation would write such a book.

Kauffman has historically shown little interest in the gig economy and independent work. This appears to be changing, which is yet another signal that the gig economy is entering the mainstream.

Book Review: The Sharing Economy by Arun Sundararajan

The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism is written by NYU professor Arun Sundararajan.

We follow Sundararajan's work closely and consider him one the top experts in this field, so were excited to get a copy of his new book.

We weren't disappointed.

The Sharing Economy provides a clear and concise description of crowd-based capitalism, the term the author prefers to call this growing segment of the economy.

The book defines this sector as having the following characteristics:

• Largely market-based: The sharing economy creates markets that enable the exchange of goods and the emergence of new services, resulting in potentially higher levels of economic activity.
• High-impact capital: The sharing economy opens new opportunities for everything, from assets and skills to time and money, to be used at levels closer to their full capacity.
• Crowd-based “networks” rather than centralized institutions or “hierarchies”: The supply of capital and labor comes from decentralized crowds of individuals rather than corporate or state aggregates; future exchange may be mediated by distributed crowd-based marketplaces rather than by centralized third parties.
• Blurring lines between the personal and the professional: The supply of labor and services often commercializes and scales peer-to-peer activities like giving someone a ride or lending someone money, activities which used to be considered “personal.”
• Blurring lines between fully employed and casual labor, between independent and dependent employment, and between work and leisure: Many traditionally full-time jobs are supplanted by contract work that features a continuum of levels of time commitment, granularity, economic dependence and entrepreneurship.

We like this definition and especially its focus on crowd-based networks and the various ways things are blurring.

The book nicely covers the topics of trust and regulation as they relate to the sharing economy. The chapter on blockchain is especially well done. It's a difficult technology to explain, but this book does a great job of covering why this technology is potentially useful in creating peer-to-peer trust networks.

Being a history buff, I also like the discussion of how the 11th century Maghribi traders managed to build multi-country commerce enabling trust networks. Fun stuff. 

But Sundararajan's views on trust and regulation are controversial. He is often criticized for his view that self-regulation is one option for regulating the sharing economy. Key quote from what is overall a very positive review of the book on the International Monetary Fund's site:

Sundararajan advocates giving regulatory responsibility to the peer-to-peer marketplace and allowing new self-regulatory organizations to fill the gap. But he may be overestimating the private sector’s ability to provide sufficient consumer protection. Although keeping government regulators at bay may seem necessary to incubate the sharing economy, consumers may have to suffer through lots of dangerous rides, filthy apartments, and ruined gardens before the “collaborative” market sorts things out.­

We strongly recommend this book for anyone interested in the sharing economy or economics in general.

Peppered with interesting examples and anecdotes, The Sharing Economy provides an easy to read yet highly detailed look at this increasingly important economic sector.

The Rise of Internet Middlemen

One of the most persistent myths about the Internet is that it's eliminating the need for middlemen. 

Since the early days of the Internet when Bill Gates wrote in his book The Road Ahead that the "information superhighway" would become the "ultimate go-between" and that "only the humans involved in a transaction will be the actual buyer and seller" there's been a constant theme that middlemen are finished.

Things haven't exactly turned out that way.

In fact, some of the most successful and most highly valued tech startups are middlemen.

Examples include Uber, Airbnb, eBay and Etsy - all of which provide classic middlemen functions.

And, of course, the many online work intermediation platforms such as Upwork, Fiverr, Task Rabbit, Work Market, etc. are middlemen.

Even more interesting is these work intermediation platforms are spawning a second layer of middlemen. 

Research by the London School of Economics finds that a new type of market intermediary, which they call agencies, are responsible for a stunning 27% of all workers hired at least once on Upwork. 

Key quote on these agencies:

Agencies are typically groups of around three to ten workers with similar skills and backgrounds. They are independent of Upwork, but the website accommodates their presence by allowing common agency members to reveal their affiliation on their profile page and to display the pooled feedback scores of all current and past agency members. Employers can observe these agency-level feedback scores, even for new agency members who have yet to be employed on the website and have not earned any individual feedback scores.

In other words, the agencies allow their members to show strong profile scores, even if an individual member is new and hasn't built up a solid score. This increases the likelihood that an employer will hire members of the agency.

The main reason most of the Internet middlemen are thriving is because of the need for trust. Because most buyers and sellers have few interactions, it's hard to develop trust. intermediary platforms provide a variety of methods for increasing the trust levels between buyers and sellers.

A good example is Airbnb. The Forbes article How Airbnb Used Design To Break Through Its Biggest Challenge describes the efforts Airbnb has gone through in this area. You can also watch Airbnb founder Joe Gebbia's TedTalk on this topic.

But middlemen will continue to flourish for a variety of other reasons. 

I recently read the book The Middleman Economy and it dives deep on how middlemen add value in today's economy. It lays out six value added roles middlemen play. Most of these are at least somewhat related to adding trust to transactions.

The book is quite good and well worth reading.

But for those who prefer the Spark Notes version (or, if you're around my age, the Cliff Notes version), see the author's summary Fast Company article.

BTW, the latest in a long line of technologies touted to eliminate middlemen is blockchain. The widely tweeted article Blockchain technology spells the end of middlemen explains why.  

Maybe it will. But I doubt it.

The Rise of the Single Ladies

The New Yorker's The Single American Women is an extended extract from the book All the Single Ladies, written by Rebecca Traister. 

According to its website, the book is:

A nuanced investigation into the sexual, economic, and emotional lives of women in America. In a provocative, groundbreaking work, National Magazine Award finalist Rebecca Traister, “the most brilliant voice on feminism in the country” (Anne Lamott), traces the history of unmarried and late-married women in Amerca who, through social, political, and economic means, have radically shaped our nation.

The key statistic on this trend, at least in our opinion, is:

Today, only around 20 percent of Americans ages 18–29 are wed, compared to nearly 60 percent in 1960.

The article and book also point out "that In 2009, the proportion of American women who were married dropped below 50 percent. In other words, for the first time in American history, single women (including those who were never married, widowed, divorced, or separated) outnumbered married women."

This is not new news for regular readers.

We've long covered the important demographic trends around the decline of marriage and the increasing number of single Americans.

I'd also like to point out an important fact missing from the article.  

The proportion of American men who are married has also fallen. And it's fallen at about the same rate as for women.

But I digress.

The article and book provide an interesting view on why this shift is happening with a strong focus on what it means for women.

I have to say I don't always agree with the author's point of view. 

For example, although I agree today's school schedules are not family or women friendly, they were not originally designed to subjugate women as the article states. Most school schedules were originally designed so kids could help out on the farm and with other family work. 

But this is just a quibble. 

Overall an interesting article and book and well worth reading.