September 18, 2014

One Third of Microbusiness Owners Rely on Second Jobs

micro business owners

If you own a microbusiness, defined as a business employing five or fewer people, you occupy a very important part of the economy. Yet chances are, at least early on, you aren’t able to make a full time living at it. If not, you’re not alone.

Nearly one third (33 percent), of microbusiness owners depend upon another job as their main source of income, a recent Gallup Survey says. This is especially the case early on, the survey suggests.

The reason for dependence on outside employment obviously has to do with the levels of revenue many of these businesses bring in, especially during the early years of their operation.

For example, the majority of microbusinesses (62 percent) bring in $100,000 or less, the survey indicates. In the first year of operation, almost half (48 percent) brought in $10,000 or less. No wonder owners need a second job in the early days to keep the electricity on and pay the rent.

But while these microbusinesses may be quite small and their revenues quite modest, the survey also suggests their owners make up a majority of U.S. entrepreneurs, making them an important force in the economy.

In fact, as a group, they make up approximately 81 percent of all U.S. business owners. Over time, the percentage of these businesses with revenues adequate to become the main source of their owners’ incomes increases.

For example, only 26 percent of microsbusiness owners depend on outside jobs for their main income after operating their business for more than 11 years. Only 19 percent depend on outside employment after operating their businesses more than 20 years.

The survey also does not separately track the number of microbusinesses that grew to larger small businesses over time, so these are likely being left out of the equation.

Finally, the poll numbers suggest microbusiness owners who rely on their businesses for the majority of their income worry more about the cost of taxes, complying with regulations and even hiring the right employees.

The survey was conducted by interviewing 868 U.S. microbusiness owners over 18 years of age between Feb. 18 and March 2, 2014.

Rushed Photo via Shutterstock

2 Comments ▼

Shawn Hessinger - Editor


Shawn Hessinger Shawn Hessinger is the Editor for Small Business Trends. He is a journalist and social media networker with more than a decade of experience in the traditional newspaper business before moving to the digital world. He was the former community manager of BizSugar and the former community editor at AllAnalytics, a site dedicated to professionals in the business intelligence and analytics community.

2 Reactions

  1. I perfectly understand why someone running a microbiz would need to facilitate their income with a second job. It’s hard enough managing when it’s a business of one, but when you’re employing a few other people, well a second job is likely to be on the cards.

    Although a third have to do this, it’s encouraging to see that two-thirds are able to avoid a second job altogether.

  2. More important to note might be how many more job seekers would be competing in the market if not for the amazing population of microbusiness owners. Micros create the most net jobs – non-employers included as they create their own. http://justthefactsjack.us/Assets/NetJobCreationDecadeReview.pdf

    StartUP!

Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>



Compare your business to the industry - Try our new tool