Survey Says Many U.S. Microbusiness Owners Depend on Second Job

Nearly one in three microbusiness owners in the U.S. depend on a second job as their main source of personal income, according to the new Sam’s Club/Gallup Microbusiness Tracker.

Many microbusiness owners depend on 2nd jobs.

More than half (54%) of first-year microbusiness owners say they depend more on a second job for their personal income. Meanwhile, business owners who have been running their business longer are less likely to rely on a second source of income, presumably because those businesses that have survived are more likely to succeed.

The percentage relying on a second job drops to 44% among microbusiness owners in business two to five years, with 51% getting most of their personal income from their business.

Among microbusiness owners who have been in business for 20 years or more, 19% depend on outside work as their main source of their personal income, and 71% rely primarily on their business as their chief source.

Virtually all businesses begin as microbusinesses, though for various reasons, only some will grow into the small, medium, or large enterprises that employ most American workers. Most microbusiness owners (54%) interviewed by Gallup are “non-employers” — that is, business owners with no employees other than themselves — and they constitute almost half (44%) of all business owners overall. Understanding their unique challenges and concerns can provide important insight into the factors shaping the future of the American economy.

Low Revenues in First Years Have Impact on Need for Second Job

Low revenues in the first years of operations are a big reason so many new microbusiness owners get most of their personal income from a second job.

The majority of microbusinesses (62%) have annual revenues of $100,000 or less. Almost half (48%) of first-year microbusiness owners brought in $10,000 or less in their first year of operations. Of those in business five years or less, a majority (56%) report annual revenues of less than $50,000.

The likelihood that microbusiness owners depend on a second job to support themselves decreases as their business revenues increase. Slightly more than half (53%) of those with business revenues of less than $50,000 in 2013 say they depend on another job for most of their income, compared with 15% of those whose businesses earned $50,000 or more.

Lower Revenues Bring Different Top Concerns and Priorities

Perhaps reflecting their smaller fiscal footprint, microbusiness owners who get most of their income from a second job are less concerned about taxes, complying with regulations, or finding qualified employees than are other microbusiness owners. When revenues are so small, challenges such as taxes, regulations, and hiring may take a back seat to more immediate problems like maintaining cash flow.

Splitting Efforts Between a Job and a Business Affects Preparedness

Microbusiness owners who depend on another job for most of their income are less confident in their ability to attract new customers and in their understanding of what their customers want both now and in the future. Understandably, in light of their heightened concern over attracting customers, they are more concerned about having the right kind of marketing than are business owners who primarily sustain themselves on the revenues of their business. They are also less likely to feel confident in their cash reserves of their business.

Source: Gallup Economy