More than half of employed adults in the U.S. have considered leaving their current jobs to work for themselves, with 44% saying they considered it within the past year. This is based on a newly-released report conducted by business tools provider HoneyBook in partnership with The Harris Poll.
The current economic and employment uncertainties were cited as the causes for this shift in the attitudes of working Americans.
The report also found that 43% of self-employed people started their business as a side hustle. One in five U.S. adults has considered quitting their job to become an independent business, according to Natalie Franke, chief evangelist at HoneyBook.
“This is just one indicator of the historic workforce shift we’re witnessing,’’ Franke said. Some 5.4 million new business applications were filed in the U.S. in 2021 — more than 20% higher than any previous year on record, she noted. And more than three million Americans voluntarily left their jobs every month in 2022, Franke added, citing data from the Bureau of Labor Statistics.
This could be cause for concern for the C suite and hiring managers. Even with a record number of layoffs in the tech sector in recent months, organizations and recruiters still need to retain workers.
“With more people than ever opting out of traditional jobs in favor of pursuing their passion, it’s clear that attitudes toward independent work have changed,’’ Franke said. “In fact, more than half (59%) of U.S. adults say the current economic uncertainty makes them more interested to work for themselves.”
In unstable economic times, it is not surprising that people want autonomy over their careers and incomes. Of individuals who were employed by another organization prior to becoming independent, nearly all (89%) are more satisfied since becoming their own boss, according to Franke.
Effects of the pandemic continue to impact businesses
Being an independent business owner today is a viable and respected career path that offers clear benefits like autonomy, flexibility and the ability to make more money, according to Franke.
“The pandemic played a role in this change in perception,” she said. “Record layoffs left many without traditional employment options, and the Great Resignation revealed widespread dissatisfaction with working conditions.”
This global crisis eroded trust in the stability of larger organizations, which has also increased an appetite for entrepreneurship, according to Franke.
Independent business owners are able to make a living doing what they love on their own terms. This leads to greater pride and satisfaction in their work compared to when they were employed by an organization, she said.
“Add to that the rapid advancement of technology, and it’s never been easier to start an independent business,’’ thanks to tools that empower independent business growth at all stages, from website design to client flow management, Franke said.
Younger generations are also attracted to independent work
There are several reasons why younger generations are choosing self-employment at higher rates than their parents, according to Franke. Here are three of those reasons.
Gen Z has been exposed to “non-traditional” forms of employment throughout their adolescence thanks to examples seen on social media. This makes the idea of building an independent business less intimidating and more attainable.
It has also never been easier to turn your passion into a profitable business, and digitally-native generations are primed to seize this opportunity. Advancements in technology mean that any committed person who wants to start their own business can access the tools they need to do so.
While Americans have always celebrated entrepreneurship, attitudes have changed toward making it a career path.
“Younger generations highly value being engaged in work they are passionate about,’’ she said. “They are less inclined to settle for uninspiring employment options and working conditions that may compromise their mental health. This, when coupled with changing attitudes toward independent work, technological advancements, and social media culture, makes working for oneself a viable and attractive option for many young people.”
Pros and cons of self-employment
Franke said she was struck by how positive attitudes toward independent work are these days, citing the fact that the research revealed 66% of U.S. adults said their overall quality of life would improve if they worked for themselves.
The study found that the benefits of being an independent business owner outweigh the challenges according to independent business owners (87%) and most expect a prosperous future. Two-thirds of respondents said they anticipate their business’s net revenue to grow in the next year (65%) and many are actively planning to grow their business (82%) in ways such as investing in social media marketing or advertising (39%) or securing external financing (23%). Around a quarter plan to hire additional staff or support (26%), or outsource more tasks (25%).
“This is a clear indication that this workforce will continue to grow and have a substantial impact on the economy,’’ she said. “We were also encouraged to learn that the majority of independent business owners are making more money and working on average fewer hours than they did working for a larger organization.”
This indicates that the perceived benefits of flexibility and increased income are true in practice, though that’s not to say being an independent business owner is without its challenges.
But the same proportion of IBOs that said they are anticipating growth also said they are worried about satisfying customer demand as their business grows (65%) and they know having smooth communication and being able to respond quickly to clients is key to a successful business (93%).
Franke said HoneyBook was “surprised to learn that one in five [independent businesses has] lost business because of a lack of organization or an administrative error.”
Another surprise was how many of those independent business owners surveyed (72%) did not set out to become independent business owners from the beginning of their career, she said.
“It appears they were planning to take the traditional employment path but were lured to independent work by the clear benefits,’’ Franke said. “For about two in five, it started as a side hustle.”
What it takes to become an IBO
To help run an independent business and manage their client flow, slightly more than half of IBOs surveyed (58%) said they currently use software services or applications to perform functions such as generating online contracts and invoices as well as payment processing for the end-to-end process of selling and delivering their services.
Beyond finding the right software tools, The Small Business Administration recommends a number of steps that include advice on how to write a business plan and find funding.
IBOs in the HoneyBook study said they would like to see more government resources and financial assistance dedicated to supporting independent businesses (84%). The majority said the government does not do enough to make business owners aware of the programs that could benefit their business (e.g., with loans, tax rules and tax breaks, and federal assistance programs) (81%).
Tips for retaining employees
Read these TechRepublic articles to learn tips for retaining employees, which include improving the company culture and upskilling:
The Harris Poll said that this report contains data from two online surveys it conducted on behalf of HoneyBook: a custom survey of U.S. independent business owners and an omnibus survey among U.S. employed adults conducted via its Harris On Demand platform. The custom research was conducted between Jan. 24-Feb. 9, 2023, among 509 U.S. adults aged 18 and older, who are employed and are independent business owners. The Harris on Demand survey was conducted between Jan. 24-26, 2023, among 2,052 adults, of which 932 were employed but not currently independent business owners.