Getting familiar with this bottom up economy
The American economy is currently undergoing a transformation of sorts, impacted not only by a recession but technological innovations and globalization. The days of working the same job for a lifetime to rake in that pension are dwindling, and not only are job changes increasingly common, but it has created the perfect storm for entrepreneurialism.
WePay founder Bill Clerico notes, “The new reality is that more and more Americans have to fend for themselves, economically speaking. More people are turning to forms of self-employment than ever before. More Americans are investing in their own education.”
As a result, Clerico says a new sector is taking shape, referring to it as the “Bottom Up Economy” where more people have become their own boss. “The line between ‘individual’ and ‘business’ is getting blurrier,” Clerico adds. “The Bottom Up Economy is made up of babysitters, freelancers, part-time truck drivers, and anybody else trying making money as a (very) small, informal business.”
Many new platforms and marketplaces are providing tools to enable this sector (think eBay, Etsy, and Kickstarter). WePay and Clerico specialize in underwriting this new type of business. Clerico says there are a few things everyone should know about The Bottom Up Economy and the people who compose it.
7 Things to Know About the Bottom Up Economy
1. It’s growing (by the number of people involved)
The percentage of the American workforce defined as “Proprietors” (workers who generate all or part of their income through a form of self-employment) has increased from ~10% in 1970 to ~21% in 2013.
2. It’s shrinking (as a percentage of the overall economy)
Proprietors’ share of total American income has decreased from ~11% in 1970 to ~6% in 2013.
3. The line between individual and business is shrinking
Most of the increase in Proprietors has come from people who are not fully self-employed. The number of fully self-employed people has actually decreased or remained constant over the past few decades. These are people who augment income as “Extended Proprietors” – people who classify their self-employment income as peripheral to their primary employment.
4. It’s partly driven by technological advances
More and more people are generating this income online. The IRS drastically underestimated the number or 1099K forms that would be filed in 2012 (1099K forms must be filed if a citizen accepts over $20,000 and 200 payments via credit cards or through an online payment gateway).
5. It’s partly driven by necessity
The recession in 2008 saw a surge in self-employment interest. This is noticeable via Google searches at the time, as well as relative Proprietor % increases in those years.
6. A lot of it happens off the books
The Bottom Up Economy is certainly linked to the underground economy. Several studies have placed the size of the underground American economy at several trillion dollars. These aren’t just drug dealers and pimps – they are real people running real businesses that are either too small or too informal to file paperwork for.
7. It’s important
More and more Americans find themselves working in the Bottom Up Economy. They need to be acknowledged with better infrastructure, regulation, and tools!
Times are changing and companies like WePay (which accepts online payments), are leveling the playing field for the little guy in by disrupting traditional tools, a niche that will become even more relevant in coming years as entrepreneurship becomes more common. The shift towards entrepreneurialism is not necessarily a choice for all Americans, but the shift is here, regardless, and getting familiar with the tenets of what Clerico calls the Bottom Up Economy is critical.
Amazon sets eyes on couture with launch of online Luxury Stores
(ENTREPRENEUR) As of this week, Amazon is an online luxury retailer. Is this good or bad news for smaller luxury retailers?
When I think of high-end fashion shopping, Amazon is not the first store that comes to mind. Groceries, random knick-knacks, and pet accessories for my adorable pooch are the items in my cart.
This week, Amazon confirmed the launch of its high-end online designer fashion and beauty brand shopping experience, Luxury Stores. Currently, Oscar de la Renta is the first brand to launch on the platform, but more are on the way.
Available by invitation only to eligible Prime members, the store launched on Amazon’s mobile app. Eligible customers received early access to the designer’s Pre-Fall and Fall/Winter 2020 collections. The collection included “ready-to-wear, handbags, jewelry, accessories, and a new perfume,” according to Amazon.
If you’re a Prime member and didn’t receive an invitation, you can request an invite by visiting amazon.com/LuxuryStores.
Alex Bolen, CEO of Oscar de la Renta said, “Oscar de la Renta is thrilled to partner with Amazon for the launch of Luxury Stores.” He told Vogue that “somewhere near 100% of our existing customers are on Amazon and a huge percentage of those are Prime members. For me to get more mindshare with existing customers in addition to getting new customers—that’s the name of the game.”
According to The Verge, Amazon has over 150 million Prime members. With that big of a number and potentially huge customer overlap, we can all see why Bolen is so thrilled.
But what does Amazon’s break into luxury retail mean for smaller luxury retailers? Smaller companies are still struggling to keep up with the retail giant. With small brick-and-mortar stores fighting to stay afloat during the pandemic, could Amazon’s online Luxury Stores be an all-inclusive solution?
According to Amazon’s press release, the company doesn’t plan on only partnering with established fashion brands, but also with “emerging luxury fashion and beauty brands.”
“We are always listening to and learning from our customers, and we are inspired by feedback from Prime members who want the ability to shop their favorite luxury brands in Amazon’s store,” said Christine Beauchamp, President of Amazon Fashion.
Engadget reported that Amazon is taking a hands-off approach with Luxury Stores. The company will offer backend and merchandising tools support. Brands will have control over their pricing, inventory, and selection. With brands being able to have more control over their experience, maybe smaller luxury retailers will feel inclined to use this new sales outlet.
“It’s still Day One, and we look forward to growing Luxury Stores, innovating on behalf of our customers, and opening a new door for designers all over the world to access existing and new luxury customers,” Beauchamp said.
Amazon has yet to reveal which new luxury stores will arrive on the platform. Hopefully, we will also see our local luxury stores on Amazon in the future, too.
Small businesses must go digital to survive (and thrive)
(BUSINESS ENTREPRENEUR) A study at Cisco reveals how digitizing small businesses is no longer optional, but critical to success, thanks to the pandemic.
As digital transformation efforts ramp up due to the COVID-19 pandemic, a new study released by Cisco has highlighted some key insights into how small businesses will need to adapt in order to survive in the “new normal.”
The study, conducted by International Data Corporation (IDC), analyzed more than 2,000 small businesses across eight different markets, including the United States, Canada, Germany, Mexico, United Kingdom, Brazil, Chile, and France. Using a four-section index to assess a small business’s digitalization efforts, the research found that 16% of companies said they were “thriving and feel their businesses are agile and resilient.” While 36% stated they were in “survival mode.” Regardless of where they were ranked in the index, the study concluded that 70% of firms were in the process of ramping up digital transformation within their company due to the coronavirus pandemic.
“The COVID-19 pandemic has exacerbated the digital divide that was already present in the small business market, and it is forcing companies to accelerate their digitalization,” said Daniel-Zoe Jimenez, AVP, head digital transformation & SMB research at IDC. “Small businesses are realizing that digitalization is no longer an option, but a matter of survival.”
The study also highlighted several challenges associated with digital transformation. The three biggest obstacles that businesses seem to face during the process were digital skills and talent, budgetary issues (lack of funds or previous commitment of funds), and cultural resistance to change. Despite these roadblocks, 45% of companies surveyed stated that they expect over 30% of their business to be digital by 2021. And 32% responded that they are planning on developing a digital strategy. This included investing in talent with the right set of digital skills moving forward.
Those decisions fall in line with Cisco and IDC’s recommendations. These include creating a three-year technology road map and building a workforce with the right skills to succeed in a digital world. Other suggestions include finding the right technology partner, and keeping up with industry trends. Leveraging financing and remanufactured equipment can aid with cash flow and budget requirements.
As small businesses continue to adapt to consumer behavior and the whirlwind of ever-changing rules that have come with the coronavirus, digital transformation will continue to play a major role in the post-COVID world. According to the report, if half of the small businesses surveyed can reach the second-highest tier of the index by 2024, those companies could end up adding an additional $2.3 trillion to the eight markets’ gross domestic product (GDP), contributing to the global economic recovery.
As we approach the six-month mark of the pandemic, just when and how the “new normal” will emerge is still uncertain. But there seems to be a light at the end of the tunnel for small businesses — even if it’s faint green and contains zeroes and ones.
Choose your startup business partner wisely
(BUSINESS ENTREPRENEUR) Creating a startup business with a friend sounds amazing, but consider carefully if you may be better off as friends.
So, you want to be your own boss? Maybe get out and into a new career to crawl out from under the corporate drone motif? What better way to do it than to go into a startup business for yourself?
Hundreds of Americans have ideas that could turn into a new career. But not as many have the support structure, either financial or social, to make these dreams become a reality. A few of these people might look for someone to go into business with to help with the financial burden.
Can you think of a better way to start off a new business than with your best friend by your side? I sure as hell can.
My best friend and I get along great in our personal time. We’re both zombie horror nerds. He’s straight, I’m gay. He’s a cop, I’m an out of work geophysicist/bartender/writer – the jokes don’t quit with us. Our typical nights together include drinking at bars and smacking the other one upside the head as deemed necessary. We’re both slightly better than Neanderthals some days. And most importantly, neither of us should be trusted to work together.
Now of course that’s probably more specific to my situation, but let’s just realize that finding two people who can be the closest of friends and business partners is pretty rare.
There are a few people who have figured it out though and you can find a number of pointers online for new/established startup companies. A few of these tips include: Lots of structure to try and keep the fun at home and the business in the office, clearly defining roles, honest open communication, and strictly defining fiscal expectations.
So basically, it’s like committing to another marriage, which is what another set of people do for their startup business as well. Numerous married couples have put together careers and their relationships, and a great many of them are very successful.
So, if you have someone who you can commit to another potentially lifelong relationship with, and you trust to follow all of these rules, then go for it.
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