If you’ve been thinking about leaving your job to become an independent worker, you’ll be in very good company. And, in a bit, I’ll offer some advice for you.
According to the recently released 4th annual State of Independence Report by MBO Partners, a firm that provides back-office services to independent workers, the number of U.S. independent workers is projected to grow from about 30 million today to nearly 40 million in 2019. Many will be over 50; boomers and people 68+ already comprise 44 percent of independent workers, the study said.
For its State of Independence Report, MBO Partners surveyed more than 11,000 independent workers (which they define as consultants, contractors, self-employed, freelancers, temps, on-call workers and small business owners with fewer than four employees). And for the first time, it included “side-giggers” — people who work on an independent basis, but fewer than 15 hours a week.
What’s driving this declaration of independence? The report highlights a few key factors:
- Businesses are increasingly hiring talent on an as-needed basis to lower overhead costs. As the report states: “Small businesses, large businesses and even government agencies are increasingly choosing to hire talent on a project basis only when and where it’s needed.”
- The allure of traditional employment is fading. At a time when more employers are cutting back on benefits and promises of long-term employment, growing numbers of people see independent work as offering greater career and life flexibility, autonomy and control than traditional jobs. Interestingly, the survey found that men and women value the autonomy for different reasons. “Women tend to see independence as a path leading to fulfilling work that fits into their lifestyle. Men, on the other hand, tend to focus on being their own boss and maximizing their income,” said the report.
- There’s a growing infrastructure of entrepreneurial support products, programs and services. They include plug-and-play website builders, online shopping cart systems and cloud-based collaboration tools. Such assistance is making it easier, cheaper and less risky to strike out on your own.
I think there are five important takeaways if you’re considering working as an independent:
1. Your age, experience and connections can help you achieve greater profitability. About 15 percent of solopreneur independent workers (as opposed to side-giggers) generate $100,000 or more in annual revenue. But contrary to the popular image of Millennial tech tycoons, more than half (56 percent) of people in this $100k+ club are 50+. And 65 percent of them have been independent for more than 11 years.
One reason older independents tend to be successful is they have well-established networks to tap into for referrals — an advantage that can’t be overstated. The survey confirms that the most important source of work for independents is network-generated, word-of-mouth referrals; nearly 75 percent said word-of-mouth was their top method of snagging work.
2. More independents are actively choosing independent work rather than being forced into it due to a job loss. While working as a temp or freelancer used to be considered little more than a stop-gap between “real” jobs, the MBO Partners' research shows that most solopreneurs are now full-time independents who deliberately chose this path. More than half (54 percent) said it was their choice completely; another 32 percent said that choice and other factors played a role in their decision. Only 1 in 7 noted that the decision to work independently was due to factors beyond their control, such as a layoff or illness.
3. Independents are overwhelmingly satisfied with this choice. Free agents want control over their lives, including the ability to determine when and where they work and what type of work they do. They’re getting it: 82 percent are satisfied and 63 percent rate their satisfaction as very high.
That’s not to say the independent life doesn’t come with challenges. Among the key worries of independent workers: uncertain income streams, retirement concerns and lack of job security. But most said the key advantages of independent work (control, autonomy and flexibility) far outweigh the challenges of working solo.
There is one important, and sizeable, exception to this feel-good sentiment. Independent workers who lack sufficient control over their career, work assignments, workplace, and/or work schedules are much less satisfied than others — the roughly 30 percent of independent workers known as “reluctant entrepreneurs.”
The “reluctant independents” tend to rely on assignments from contingent employers and agencies, essentially employees without the security and benefits of full-time employment. Reluctant independents are more likely than others to have gone out on their own because of job loss or inability to find a traditional job. Understandably, most (54 percent) said they’d prefer to return to traditional employment when the job market improves.
4. The majority of independent workers depend on multiple streams of income. Independence often means that you’ll be doing more than one job at a time. In fact, most solopreneurs (60 percent) pursue more than one revenue-generating activity; 19 percent mix their independent work with a full or part-time traditional job.
Of course, all that juggling can take a toll. You no sooner start a job than you need to begin looking for the next one. It takes hustle, fortitude and grit to succeed. Nonetheless, those with multiple revenue streams say that by having a variety of clients and/or revenue sources, they feel more secure and have more control over their career.
5. Side gigs can help you broaden your skillsets, supplement your income or prepare to launch a full-time business. On average, “side-giggers” work 11 hours per week and 60 percent of them do so while holding down a traditional full-time or part-time job. While most do this to supplement income, 1 in 8 (12 percent) said it’s to “have a back-up in case something happens to my regular job.” Another 14 percent said having a side gig helps them develop new skills and improve their marketability.
People approaching retirement find side gigs a useful way to test out ideas for semi-retirement before leaving their full-time jobs. Having one is a smart and low-risk way to prepare for your future.
As Kim Palmer, author of The Economy of You noted in the Next Avenue post, Starting a Side Gig After 50: A How-To Guide, “It’s important to have an extra stream of income when you retire. But people find it even more valuable to continue their professional identity in retirement by using the experience and skills they’ve built up over so many years to help others.”
I side with her on that.