Small Business Labs

U.S. Birth Rates Continue to Fall

The Axios article The American Baby Bust covers the latest fertility data from the U.S. Centers for Disease Control. Key quote:

"The U.S. fertility rate has reached a record low, and the total number of births in 2018 was the lowest it has been in more than 30 years ..."

As the article chart below shows (click to enlarge), in 2018 there were 59 births per 1,000 women ages 15-34. 

This translates to a fertility rate - the number of babies a woman of childbearing age is expected to have over her lifetime, of 1.72, which is a record low. It's also well below the replacement rate, which is 2.1.

The fall in fertility is being caused by a variety of reasons, many of them good reasons.

These are nicely covered in Time Magazine's It May Not Be a Bad Thing Fewer U.S. Babies Were Born in 2018 Than in Any Year Since 1986.

It points out births by teens are at an all-time low, mistimed/accidental pregnancies have also declined and women are choosing to have fewer babies because of greater career choices and increased levels of education.

But as we pointed out in 2014, kids get a lot of bad press due to the cost of raising them and the potential problems they can have or cause. This leads to fewer adults wanting them.

Also, the decline in birth rates is another example of the impact of economic uncertainty. Simply put, if you're uncertain about the future you're much less likely to have kids. 

Immigration has offset the declining U.S. birthrates and helped keep the U.S. relatively young.

So we're in much better shape demographically speaking than most developed countries and especially countries like Japan, Spain and Russia which are experiencing population declines.  

But obviously the U.S. is hardly welcoming immigrants these days, so we may not be able to count on them filling the gap going forward.

Declining fertility rates have enormous social and economic implications. We'll have more on this in the future. 

Deloitte on the Future of Work

Deloitte has become, in our opinion, one of the key go-to sources of information and analysis on the future of work. Their recent article Redefining work, workforces, and workplaces is a good example.

In a relatively short article, it nicely synthesizes and explains "multiple converging trends and how they are already fundamentally changing all aspects of work ...". 

As the article chart above shows (click to enlarge), they focus on three main areas: work, workforce and workplace.

The work section discusses the impact of automation and points out that technology will in some cases replace humans, but tech will also augment human workers. Key quote:

"The jobs of the future are expected to be more machine-powered and data-driven than in the past, but they will also likely require human skills in areas such as problem-solving, communication, listening, interpretation, and design."

The workforce section discusses the changing nature of talent and the growing use of contingent labor. Key quote:

"Organizations now have a broad continuum of options for finding workers, from hiring traditional full-time employees to availing themselves of managed services and outsourcing, independent contractors, gig workers, and crowdsourcing."

The workplace section covers the shift to more remote work. 

"Organizations are now able to orchestrate a range of options as they reimagine workplaces, from the more traditional colocated workplaces to those that are completely distributed and dependent on virtual interactions."

The future of work is complex. With this article Deloitte has done an excellent job simplifying it. 

Gartner says Half of All Job Postings Target Just 39 Roles

Gartner's Most Competitive Roles 2019 provides an interesting look at the jobs big companies are hiring for. 

The key finding is there is a lot of demand for a relatively small number of critical jobs. 

According to the report, "49% of all job postings by S&P 100 companies in 2018 were for just 39 roles. The remaining 51% were for 872 other roles."

The report chart below (click to enlarge) lists some of the high demand roles. 

Not surprisingly software developers, marketing managers and computer system engineers/architects are in high demand. So are sales managers and customer service reps.

And despite everyone saying accountants are being automated away, it's one of the 39 top jobs of 2018.  

This report nicely illustrates where the war for talent is being fought - functions such as IT, research and development, financial management, marketing, sales and customer service.

Because recruiting full-time talent for these jobs is so hard, corporations are increasingly turning to independent contractors to do this work. We'll have more on this in the near future.

See the report for the full list of the 39 high demand jobs.

The Rise of "Superjobs"

From Jobs to Superjobs covers the results of a Deloitte study looking at how automation and A.I are changing work and jobs.

The key finding is Deloitte sees automation changing jobs instead of simply replacing workers.

By this they mean many jobs are evolving and requiring new combinations of human skills and capabilities.

In particular, they see jobs increasingly requiring both hard and soft skills.

Deloitte see two types of jobs emerging due to increases in automation and the growing use of A.I. 

One type they call "hybrid jobs", which they describe as:

"Roles that perform work using a combination of skill sets drawing on both technical and soft skills. Historically, these types of skills have not been combined in the same job."

The other type are "superjobs", which are:

"Roles that combine work and responsibilities from multiple traditional jobs, using technology to both augment and broaden the scope of the work performed and involve a more complex set of domain, technical, and human skills."

The emergence of superjobs is going to require new types of thinking by both organizations and workers.

In particular training people for jobs that require strong hard and soft skills will not be easy. It will also require major shifts in thinking. 

It's not just traditional employees who will become super. According to Fast Company's A Growing Crop of Supertemps is Changing Work, independent workers are also becoming super.

So whether you want to be a traditional employee or an independent worker, you're gonna need a mix of skills - and a cape. 

TV Sitcom Explores the Blending of Work and Life and the Barriers Between the Professional and Amateur

Salon's Mike Schur's new sitcom "Abby's" is "Cheers" for the gig economy is an interview with the producers of a new NBC sitcom that takes places in a backyard bar. 

The interview covers what a show set in an illegal backyard bar says about modern culture. 

The interview explores multiple themes. But the most relevant to us here at Small Business Labs are the blending of work and life and break down between professional and amateur.

These shifts are happening across our society. A good example is when friends reach out to sell you something, which is increasing common thanks to the growth of side gigs.

Abby, the bar owner in the show, faces this on a regular basis because her customers are also her friends and neighbors. Key quote from the article on this:

There's one part of your question that I found interesting, and it is something that we talk about in the writer's room a lot. That is, where does the relationship between our patrons and Abby, when does it become personal and when is it professional? We dealt with that in a really explicit way in one episode with Beth [Abby’s next door neighbor] grappling with, "I thought this was a friendship and the way you're behaving, you're making me feel like you don't see me that way."

The blending of work and life is making answering this question both increasingly challenging and important.

We also find the show's view on the blurring distinctions between professionals and amateurs interesting. Again from the article:

There's also this weird thing in our culture now, where if you want go out somewhere, but you don’t want to drive, you use your phone and you get into some guy's Toyota Camry. It’s his car. It's like the barriers between what you would think of as a professional and amateur are completely broken down now, right?

These are both cultural and work shifts that are happening at least in part to the growth of the gig economy. It's interesting to see TV shows picking up on and exploring these trends.

Somewhat related, the popular online game The Sims is adding "freelancer" as a career choice. Sims will be able to be a writer, artist or programmer.

Just like in the real world, freelancing Sims can choose not to take gigs and instead take more time off.  Or, if they need more simoleons (money), they can take on extra gigs.

Having both TV shows and online games adding freelancing and alternative work arrangements illustrates the growing role independent work is playing.

Podcasting Entering the Mainstream

In case you hadn't heard, podcasting is booming. 

According to The Infinite Dial 2019, an annual survey conducted by Edison Research and Triton Digital, more than half of all adult Americans have listened to one.

And as the report chart below shows (click to enlarge), 32% of all Americans aged 12 and older listened to a podcast in the last month. This equals about 90 million people.

There are a number of drivers of podcasting's growth. These include:

• There's now a diverse array of interesting podcast content.
• Large audio/music firms like Spotify, Pandora and Apple have embraced podcasting.
• So have big media companies like the New York Times, the Wall Street Journal and the Washington Post.
• Smart speakers have made it easier to find and listen to podcasts.
• The use of internet audio in cars has become easier and more widespread.
• Successful business models are emerging.

Most revenue estimates for the podcast industry continue to be small - ranging from $500 - $700 million in 2018. But as the TechCrunch article Y Combinator Bets on the Booming Podcast Industry points out, revenues are expected to rapidly increase. 

Podcasting is interesting to us here at Small Business Labs because it's yet another example of small businesses and even individuals successfully competing with large corporations. 

In fact, many successful podcasts come from solopreneurs and micro-businesses. This is due in part to podcasting's low production and distribution costs.

The other part is creating compelling content, which a lot of solopreneurs and micro-businesses are capable of. This is especially true for podcasts designed to build community or used for content and/or influencer marketing. 

Medium's 10 Big Takeaways from 2019's Infinite Dial Research covers the study in more detail.

McKinsey's Bias Busters Collection

McKinsey's Bias Busters Collection covers how are decisions are often affected by cognitive and/or organizational biases. 

These include being unwilling to cut back on an under performing asset or activity, getting too distracted by shiny new initiatives, sticking with numbers or projections that are out of date or likely incorrect.

But our favorite was what they call taking an "outside view" of a project or forecast. They describe this as:

"... building a statistical view of your project based on a reference class of similar projects."

They say this is important because if you do the analysis based only on in-house data, you're likely going to miss important information that can be learned from other, similar projects.

This is what we do in our forecasting projects here at Small Business Labs.

Because we're forecasting things that usually have little or no historical data, we can't use traditional forecasting models. Instead, we use diffusion of innovation models that incorporate growth rate data from similar industries or products that are more mature. 

For example, we built our coworking forecasts in part by using the growth and expansion rates experienced by premium coffee shops and boutique hotel chains in their early years. 

This approach helped us in creating forecasts that have been fairly accurate. It also helped us forecast how coworking's industry structure would likely evolve, and in particular, the emergence and coexistence of big and niche coworking spaces. 

We learned about this approach long ago while working at a consulting firm (not McKinsey). We were unaware of McKinsey's "outside view" method, which was developed by Nobel laureate Daniel Kahneman and his colleagues in the 1990s until we read the article. 

But it's nice to know that we are using an approach similar to one designed by Kahneman and used at McKinsey. 

While McKinsey focuses on the impact of biases on corporate decision making, the same biases impact small businesses and independent workers. 

The one we see most often with smaller businesses and independent workers is an unwillingness to cut back on a activity that clearly is not adding value. 

Regular readers know we often write about biases and our efforts to avoid them.

These are some of our least read articles. But we'll continue to write about biases. 

It's too important a topic not to.

Kauffman Foundation Indicators Show U.S. Entrepreneurship Near 20 Year High

The Kauffman Foundation recently introduced the Kauffman Indicators of Early Stage Entrepreneurship. 

The indicators cover:

• Rate of new entrepreneurs: The broadest measure possible for business creation by population.
• Opportunity share of new entrepreneurs: The percentage of new entrepreneurs who created a business out of choice instead of necessity.
• Startup early job creation: The number of jobs created in the first year of business.
• Startup early survival rate: The rate of survival in the first year of business.

The indicators cover the time frame from 1996 to 2017 and will be updated annually. They replace the Kauffman Index, which was also on entrepreneurial activity but not as data intense.

We first reported on the old Kauffman Index back in 2007 and have followed it every since. We will, of course, continue to follow the new indicators.

The most interesting finding from the new indicators is that early stage entrepreneurship was near a 20 year high in 2017. 

As the study chart below (click to enlarge) shows, the rate of new entrepreneurs is fairly stable.

But after peaking in 2010, it declined until 2013 and then started to increase again. 

The Kauffman Indicators use a somewhat unusual entrepreneurship measure - the percent of the adult U.S. population who create a new business each month. 

In 2017 this worked out to be .33% of the adult population, or 330 out of 100,000 adults. This is just shy of the .34 in the peak years of 2009 and 2010.

There have been a number of reports on the decline of entrepreneurship in the U.S. over the past few years. See this Brookings Study or the Washington Post's The decline of American entrepreneurship — in five charts for examples.

The Kauffman data shows otherwise.

We agree with Kauffman that entrepreneurship is alive and well in America. We'll explain why in a future article. 

Most CFO's Use Non-Employee Labor for Major Initiatives

New research from Robert Half Management Resources found nearly seven in 10 CFOs (69 percent) use non-employee labor for major one-time business initiatives, such as an acquisition or system implementation.

As the study infographic below (click to enlarge) shows, the most common approach is using a combination of internal and external teams.

The top reason for using external talent is access to specialized skills.

This study illustrates the growing use of highly skilled independent workers by corporations.

We'll have more on this topic in the near future.

Insect Farming Company Ynsect Raises $150 Million

Ynsect, a Paris-based producer of insect protein used in fish farming and pet food, recently raised $125 million. 

The company is using the money to expand in the U.S. and build the world's largest insect farm in Northern France. They plan to grow mealworms, which are larvae of the beetle species Tenebrio molitor (not that you care) at the plant.

       

Key quote from CEO of Ynsect from the TechCrunch article Tech investors see bugs as a big business as Ÿnsect raises $125 million on why insects are a good protein choice:

“By offering an insect protein alternative to traditional animal and fish-based feed sources, Ÿnsect can help offset the growing competition for ocean fish stock required to feed two billion more people by 2050, while alleviating fish, water and soil depletion, as well as agriculture’s staggering 25 percent share of global greenhouse gas emissions,” says Hubert. “Our goal is simply to give insects back their natural place in the food chain.”

We've covered the use of insects as a food source in the past.

And while insects are popular snack foods in parts of the world, most people continue to be hesitant to embrace eating bugs. So using bugs to feed fish, pets and livestock makes a lot of sense.

Insect farming is another example of the many changes happening in the food industry. See our Small Farms section for more on this.