National Small Business Week has come and gone, but challenges of operating a small business are evergreen. And as the size of the company gets smaller, problems like cash flow management often get bigger.
Nearly all of the micro-business owners surveyed by Invoice2go, which provides eInvoicing solutions for micro-firms and freelancers, said the control of being able to work for themselves is a definite benefit to owning and operating a micro-business.
That doesn’t mean freelancers are always sitting pretty, however.
Invoice2go’s report, released this month, found that more than two-thirds (67 percent) of those surveyed said cash flow and consistent income are challenges.
Cash flow is a headache, whether these professionals label themselves a micro-business, a freelancer, a side-gigger or a contractor, researchers found. As it turns out, the majority of U.S. businesses are some form of these labels. The Association for Enterprise Opportunity found that 92 percent of companies in the country operate with five or fewer people.
“Despite their prominence, institutional support doesn’t match up with the unique needs of this substantial segment,” Invoice2go concluded.
Nearly one-third of those surveyed said their toughest challenge to overcome is competing against large companies in establishing trust with clients and customers. Nearly the same said their biggest concern is a lack of employee-sponsored benefits, like retirement plans and health care.
Nearly two-thirds said competition in the micro-business arena is on the rise, compounding the challenge for this independent workforce to survive and thrive, Invoice2go said.
The debate over how to categorize these businesses is perhaps the biggest deterrent to providing them with the resources they desire. According to researchers, the debate over whether to label gig workers as full-time employees or as independent contractors has led to a gap between these professionals and resources like protection against loss of income or access to health care.
Invoice2go proposes a resolution.
According to the results of its survey, the firm said that this breed of small business owner may now create an entirely new paradigm — and a new category — of micro-business or independent worker.
The challenge now is to bring legislation up to speed with this evolution.
“The punch line here is that work and income opportunities have evolved, but current programs designed for small businesses aren’t serving the needs of the micro-businesses, a rapidly growing category,” stated Invoice2go CEO Greg Waldorf.
Researchers pointed to the Small Business Jobs Act of 2010 and the ScaleUp America Initiative as two government efforts that, while beneficial to small businesses, have been unable to extend their services to micro-businesses.
Government programs can link small business owners to health care plans, tax incentives, retirement programs, cash flow management and financing solutions, legal help and other resources, like business training. Yet, these features were all cited by micro-business owners as areas of support they feel they should have access to more easily.
“Nearly 40 percent of our respondents left traditional work to strike out on their own, and we estimate more than 80 percent of all Invoice2go users have less than five workers, with plans to remain that way,” Waldorf continued. ”It is our hope that the government will begin to take note and to support the specific needs of the smallest of businesses.”