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Those of us who came of age during the 2008 financial crisis — which saw companies large and small shed nearly 9 million jobs — want control over our financial fate.
Today’s opportunities have created a new lifestyle around employment. The emotional link that tethered workers to brand-name employers is dissipating as a new generation of entrepreneurs look to make their own brands — from a one-person band to a startup looking to disrupt entire industries.
One thing is clear: Whether it’s a startup like Uber or a new dry cleaner down the street, small to midsize businesses drive the nation’s economy.
Here are a few reasons why now is the best time to start your own business:
Tech levels the playing field.
Cheaper, better technology has enabled the rise of small-business owners by dropping barriers to entry, speeding distribution channels and lowering overhead. This is the case no matter where you set up shop –from Silicon Valley to Main Street America. The rise of the sharing economy, the growth of smartphone use and the accompanying app explosion have combined to drop the cost of budgeting, tracking sales, human resources and about any other business service you can name.
Despite an employment rebound — last year, the U.S. economy regained the 8.7 million jobs lost in the financial crisis — the number of “solopreneurs” rose 12.5 percent from 2011, according to a study by MBO Partners, a business services company. By 2019, the number of people who derive all or part of their income from independent work will grow “from 30 million today to nearly 40 million,” MBO Partners projects.
Tide is turning on credit.
One challenge that has dogged small businesses since the downturn is access to credit. Small-business loans are still down 20 percent compared with pre-crisis levels, a Harvard University study shows. Failures of community banks, a traditional source of small-business loans, have exacerbated the recovery in lending. But there are signs of change.
“Things are getting better for businesses to get loans,” Craig W. Smalley, a financial advisor for small businesses, recently told NerdWallet. “After 2008, it was hard to get loans and hard to do anything, but in the last six months, I’ve seen things loosening up. I think one reason is lenders now have more competition with crowdfunding.”
Crowdfunding, through sites like Kickstarter and Indiegogo, came of age in 2014, growing into a $5.1 billion business in the U.S. Peer-to-peer financing giant Lending Club, fresh from a $1 billion IPO, is aggressively moving into small-business loans.
Another factor is the rise of online alternative lenders that are making it easier for small businesses to borrow money. Square — the payments startup that is putting credit card readers at mom-and-pop stores and farmers markets around the country — now is lending cash to businesses that use their system. OnDeck and Fundation are just two of the nontraditional lenders that focus on small-business loans.
“From a small-business owner’s perspective, that there are alternative financing companies focusing on this space is very good news,” Mark Palmer, an analyst at financial services firm BTIG, told NerdWallet. “New business models like the Lending Club are trying to find those gaps in the finance ecosystem (that are) underserved, and this is certainly one of them.”
Meanwhile, the federal government is stepping up efforts to ease small-business credit woes by expanding access to U.S.-backed loan guarantees. All of these signs point toward a parting of the clouds that enveloped small-business finance.
The economy is back.
Unemployment is at pre-2008 levels, inflation is low, stocks have hit record highs and the U.S. economy is growing. The result? The number of new business starts is declining, according to the Kauffman Index of Entrepreneurial Activity. In 2013, an average of 0.28 percent of adults created a new business compared with 0.32 percent of adults who did so in 2011. (Note: These figures don’t include casual or part-time self-employment.)
What a thriving economy means for new business owners is less competition and a better financial climate. This environment allows entrepreneurs to start a business for the right reasons: Because they want to fulfill a dream, not because they’ve been laid off and are scrambling for an income.
The economy is back. Naysayers warn that the U.S. may be overdue for a recession, but there are few storm clouds in sight. The economic winds are blowing favorably, with calm seas and clear lines toward the horizon. There’s never been finer weather to launch your new venture.
The rebounding economy, low interest rates, less expensive technology and the state of regulation are all fair winds blowing in favor of new small-business owners. In short, there’s never been a better time in America to go out on your own.
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