During the Great Recession, it was clear that small businesses were hit the hardest, but take a look around America and it’s obvious smaller firms are finally getting their groove back.
Small business owners are growing increasingly more optimistic. According to the 2016 State of Small Business Report by Wasp Barcode Technologies, 71 percent of small business owners say they expect to increase revenue this year.
Not only do small businesses drive economic growth, they also keep people employed, creating two out of every three jobs in the U.S. According to the State of Small Business Report, half of all small businesses plan to hire new employees this year–up from 38 percent in 2015. Combine these factors with the fact that more and more people want to work for themselves rather than any other kind of traditional employment, there’s something really exciting happening with small business growth in America.
Three indicators suggest the small business landscape is about to be transformed:
1. One person and $1 million in sales
At the prime age of 28, Joey Healy has brought in more than $1 million in sales for his business all by himself. In 2009, Healy started his brow styling business by traveling to apartments in wealthy Manhattan neighborhoods for appointments. He quickly found demand for his skills was so high (also thanks to recent fashion eyebrow trends) that he was able to start charging $115 per session. A profit-sharing arrangement with a spa, Completely Bare, and brow products followed that all together would make up the extremely successful business that is now Joey Healy Eyebrow Studio.
Recently, Healy teamed up with hair-removal specialist Spruce & Bond to train eight of its employees and to launch brow services at Spruce & Bond studios. The new partnership makes up 10 percent of Healy’s revenue.
Healy’s impressive story is not the only one. There’s 27-year-old Allen Walton who brings in seven figures for his online store, SpyGuySecurity.com, which he runs from his home in Dallas. And there’s Robert Smith, who brought in $1.4 million in 2014 from the Illinois public relations firm that bears his name. Finally, there’s Harry Ein who projects $4 million in revenue this year for his one-person business, Perfection Promo, which provides promotional swag to corporations—all done from his three-car garage at his house in Walnut Creek, California.
Examples of solopreneurs hitting and exceeding $1 million in sales without any employees by their side have been on an upward trend in recent years. In the most recent data provided by the U.S. Census Bureau, there were 30,174 “nonemployer” firms that brought in $1 million to $2,499,999 in 2013, up from 29,494 in 2012 and 26,744 in 2011. The top categories for these businesses were professional, scientific and technical services, followed by retail businesses.
What’s enabled this rise of the one-person million dollar business? It could be the fact that small business owners’ optimism jumped this year, so people are feeling good about starting new businesses and investing.
But the core reason these businesses exist is most likely because of technology, which has enabled business owners to start new ventures with little overhead. Additionally, business owners can outsource the “busywork” of their businesses to allow themselves more time and space to focus on growth factors.
2. Let’s talk about millennials turning 30
It makes sense that those who truly understand technology are those who can take the most advantage of it. And who understands technology better than the generation that grew up with it?
Corporations have been trying to understand millennials ever since they set foot in the workplace. They’ve been called “lazy,” “entitled,” “the smartest generation,” “the most educated generation,” you name it. Whatever you think of millennials—loosely defined as those born between 1980 and 2000—they’re a major economic powerhouse and the largest demographic in the workforce.
As older millennials enter their thirties and settle into their careers, the generation’s spending power is expected to reach more than $200 billion annually starting in 2017 and $10 trillion in their lifetimes.
How does this affect the small business landscape? Millennials are said to be more entrepreneurial and socially conscious than any generation before. They’ve also had access to entrepreneurship college courses like no generation before, says a study from the Kauffman Foundation.
A study from Bentley University revealed 66 percent of millennials said they aspire to start their own businesses and be their own boss one day. However, reality paints a different picture: only 3.6 percent of businesses today are started by entrepreneurs under the age of 30.
What’s stopping or delaying them? Some blame massive student loan debt and entering the labor force in the middle of the recession, which definitely affected some career choices. But as millennials enter their thirties and their economic power increases—not to mention their tech-savviness and ability to network effectively—it’s exciting to see how they’ll transform the small business landscape in the years to come.
3. Let’s talk about how banks are giving more loans than ever to small business owners
During the economic recession, access to credit was severely constrained and many small businesses found they didn’t have the necessary resources needed to survive. Fortunately, as the economy improves, bank credit seems to be free flowing again.
In fact, Flickr’s Stewart Butterfield is quoted as saying
This is the best time to raise money ever. It might be the best time for any kind of business in any industry to raise money for all of history, like since the time of the ancient Egyptians.”
At major banks with more than $10 billion in assets and at institutional lenders, approvals for small-business loans climbed to its highest rate in June 2015, according to a report from Biz2Credit, an online marketplace for small-business loans.
Additionally, dozens of online companies from LendIt, Fundbox, Square, Lending Club, and Funding Circle, currently make up the growing online lending industry that didn’t exist a few years ago. This makes access to credit much more accessible to small businesses.
Lastly, crowdfunding platforms like Kickstarter and Indiegogo provide the funding needed to get a project or small venture off the ground (not to mention provide public awareness of your services and products).
Small businesses have always been a critical part of the American economy. The Great Recession slowed down their growth for some time—and delayed the most entrepreneurial generation of all to start their dreams of owning a business. But, as the economy improves, indicators—like the above references—point to a financially healthy and exciting future for small businesses.