The State of Small

State of Small

Now in our third year, we felt that it was time for Small is Beautiful to present a "State of the Union address" on the current status of microbusiness and enterprising. We're calling it the State of Small.

Since the run-up to our inaugural conference in 2014 we've been examining the microbusiness landscape in Scotland and beyond, navigating the dichotomies between big business and microbusiness, and watched small enterprises create huge impact – often through creative collaboration.

We've also been lucky enough to be provided with excellent research. The research and findings of the RSA and Ben Dellot's work on The Power of Small have been instrumental in how we at Small is Beautiful think about the microbusiness landscape and the benefits and drawbacks of being one's own boss.

The interest in "small" has been rising exponentially since we started out. New reports from the RSA, Skills Development Scotland and Creative Scotland have focused on the number and impact of small businesses, particularly of course in the creative sector.

At a macro level, last year Hilary Clinton made small and microenterprises a major part of her economic planning in her campaign for US Presidency. Even Nicola Sturgeon announced major commitments to small businesses as part of her SNP Manifesto bid for re-election in May 2016 in Scotland.

So today we are asking: Where have we been? Where are we now? Where do we want to go from here?


The Self-Employment/Micro Figures

The RSA and Populus conducted a survey in which 27% of people who recently moved into self-employment (within the last 5 years) said they did so to escape unemployment. Likewise, the Resolution Foundation estimate that 24% of the recent growth in self-employment is accounted for by people moving out of unemployment. In other words, more than 73% of self-employment is a more positive choice than one enforced by redundancy and/or unemployment.

At our conference in 2014, Patricia van den Akker, Director at The Design Trust and business coach, spoke about how what made her a textbook stereotype microenterprise. The Design Trust has a reach to over 25,000 people, but Patricia's is a one-woman company that works with other independents to offer business advice centres for designers. At Small is Beautiful 2014, she said, in response to the RSA research, "I am a bit of a poster child, I think, of the new south entrepreneur in the UK… I'm an older, okay 42, female immigrant professional living in London... I realised, having worked for quite a long time myself in the funded business support sector in London that there wasn't going to be any funding. So I needed to run indeed my own business. But I am that older female, immigrant professional."

1 in 7 people in the UK are self-employed. Meanwhile in the US, where these trends are even more accelerated, a software company called Intuit estimates that 40% of the population – some 60 million people – will be in non-traditional employment by 2020.

The creative industries are also characterised by high levels of self-employment and freelance working. Research suggests that, at the UK level, approximately 30% of the creative media workforce is 'freelance', and 44% of those in the Creative and Cultural Skills footprint class themselves as freelance or self-employed.

Skills Development Scotland's Creative Industry review noted that the creative sector is dominated by sole traders, micro and small businesses, with around 13,500 businesses employing 0 to 49 employees and accounting for nearly 98% of the total number of businesses in 2014. This is an increase of 35% in the number of small and micro businesses since 2009.

Self-employment is more concentrated in some parts of the sector than in others. In particular, freelance working and self-employment is high in Design, Film, Performing Arts, Visual Arts, Music, Television and Fashion.

Just over one fifth of Scottish SMEs are majority owned by women, and of those, the overwhelming majority are microbusinesses. In fact, microbusinesses make up a vast majority – nearly 94% – of all businesses in Scotland. This means that women make up a significant portion of our Small is Beautiful community. Our microenterprise support needs are different and our motivations and contributions, significantly different from 'business as usual', and employing ourselves in a microbusiness context allows us to work in a way that's practical and meaningful for us. [Women's Enterprise Scotland Survey of Women Owned Businesses in Scotland 2014.]

Despite these huge figures, microenterprises barely feature on the business pages of our media, typically receive less bespoke attention than they need from business support agencies, and of course, research on the real support needs are few and far between.


The Myths

This of course is a scenario ripe for misinterpretation and misunderstanding. When the RSA began it's three-part research project The Power of Small in 2014, they started by tacking the three big myths about self-employment and micro-entreprises:

1. That most of the newly self-employed have been forced into that position,
2. That the boom in self-employment is largely accounted for by 'odd jobbers', and
3. That the growth we had seen since the economic crash in 2008 was a cyclical blip that would die down once the economy returns to full health.

The report also pointed to structural changes in our economy and society as well as economic fluctuations that might suggest a cycle. Dellot and his research partners said that changing mindsets, shifting demographics and the emergence of new technologies contributed to the microbusiness economy.

Each of these three myths has been fully debunked by this careful research. Not only is increase in self-employment a positive choice for the majority (over 73%), and that this growth has been steadily building since the 1970's, but the very disparaging idea of 'lifestyle' business (what business isn't?) is anomalous to the hard working, value driven approaches of most micro's keen to make a wider contribution to society – on their own terms.

Of course, none of this means that everything is rosy in the land of micros.


Freelancers and Micros: Are we The New Precariat?

This is a big question. At Small is Beautiful we don't believe that creative microbusinesses are precarious by definition. People's reasons for starting microbusinesses and factors like approaches to new models, impact on family, wellbeing, environment, and income generation outweigh the likelihood of leading a precarious existence. But there are difficulties in working alone, and we must be aware of these risks.

Again, there is some mythologizing going on in the media around microbusiness owners – who we are, and what our lives look like. Microbusiness owners are often presented either as rags to riches entrepreneurs or as the new precariat. As Ben Dellot reminded us in a July 2015 blog post, entrepreneurship is often still the preserve of the privileged. While rags to riches tales do exist, he reminds us that, "the reality is that affluence is as much the fuel for entrepreneurship as entrepreneurship is the fuel for affluence" and that "affluence is both a springboard and a safety cushion".

There's also the issue of long-term contracting that has replaced employment in many industries. As Aditya Chakrabortty pointed out in his recent article for The Guardian, about half of the 2.8 million self-employed people in Britain are low paid. The article, which is provocatively titled "Being self-employed means freedom. Freedom to be abused and underpaid" outlines how, although employee roles at many firms have been converted into positions for independent contractors, the basic relationship between boss and worker has remained unchanged.

The RSA refers to this phenomenon as "bogus self-employment". Ben Dellot summarises it thus:

"The problem with the bogus kind is that most of those affected suffer all the downsides of working for themselves but few, if any, of the benefits. They are still an employee in the sense of having to follow someone else's orders and agree to a predetermined hourly rate. Yet they forgo all the benefits typical employees take for granted, including redundancy pay, holiday pay, sick pay and maternity/paternity pay – to name but a few."

Yes, class and context affect the ability of choosing the micro route, in the UK but across the world the micro approach is paying some dividends. Just take a look at the microbusiness loan company Kiva to see how positive both Kiva's approach is supporting micro's in developing countries and how the micros themselves are working to thrive.

We know that one of the biggest issues for long-term self-employed people is the lack of benefits. This affects all of us in the day-to-day: sick leave, maternity, hardship; and our long-term, like pensions. One day of flooding, an unforeseen chronic family illness, a bust laptop, or a late invoice can leave us with little to fall back on. These are the sorts of things we need to tackle and are being passionately advocated for by the likes of Tony Robinson OBE and Tina Boden at MicroBizMatters.

We at Small is Beautiful believe that a key aspect of moving from precariat to thriving is the right kind of advice, information, collaboration, digital support and human systems that are appropriate to the size of the operation and small needs a different kind of support, often small, human, bespoke. We believe that being as creative and hardworking ON your business, as much as IN your business makes the difference between precarity and thriving in this new economy.

We believe this is possible because the so-called dividends in microbusiness are huge. In 2015, microbusinesses accounted for 33% of private sector employment and 19% of total output. Although microbusiness employees tend to earn less, receive less training, and have fewer benefits, the Workplace Employment Relations Study found that they were also the most satisfied group of workers in the labour market. Factors like job control, influence in decision-making, business loyalty and – paradoxically – satisfaction with pay.

Microbusinesses were also shown to be more likely to employ economically marginalised people including immigrants, disabled people and recently unemployed people. Unemployment therefore, once again, has been a factor driving microbusiness employment." Read 9 key takeaways from the research here.


What Can Self-Employment Do For Us?

The major predictions for the future of self-employment require us to address the darker side of self-employment as above, but we at Small is Beautiful aim to shine a light on the positive answers we bring to some of the questions around meaningful work in the fast changing, complex times we live in, and how we can improve approaches for this increasing segment of the country's workers who choose to live and work in this new way.

Over the past 3 years talk to our delegates, our speakers and people in our own networks about why they started their own microbusinesses. There is a mix and as more of our delegates are artists or people in the Creative Industries, the nature of the work often dictates the need for smallness.

Those who we've spoken to who have been new to the freelance life say they run their own business partly out of necessity, and partly out of choice. While many found themselves unemployed or graduating into a poor market, the element of choice is almost always what they choose to focus on:

• Making their own hours
• Choosing the work that matters most to them
• The freedom of time and energy that come along with these decisions
• Connecting in a deeper, richer way with other people they collaborate and work with
• Being happier at work
• Being able to spend more time on the work they love
• Constantly learning and refreshing their practice
• Making a difference
• Developing clients and relationships with people they want to work with and for
• Impact can still be significant even at a small scale
• Being able to respond quickly to opportunities and ideas

While many have described their work as varied, our audience is not one of "odd-jobbers" or gig economy freelancers. These are dedicated, committed practitioners with immense passion (and often experience) to their work. They come to us as a way to work on their business, as well as in it. They seek opportunities for growth, improvement, collaboration – and often new definitions for those factors, too.

This year at Small is Beautiful, we want to continue the conversation about whether and for whom self-employment is a viable option. Our 2016 World Café will be more of a hack. We want to develop ideas to support our individual micro's more collectively and how can work better together to make a bigger social impact.


Where Are We Going?

What does it all mean? We're a diverse, enterprising bunch. We're satisfied with lower pay as long as it translates into greater satisfaction and freedom in what we do. And we all got here from different routes. Some of us want to earn lots of money, some of us would be happy with 'enough' income as long as we can work with integrity.

We need to learn to work better with bigger institutions and we need to help them work better with us. We want to learn what things we can do to be less precarious and live with the uncertainty that faces everyone in every work place. We will continue to keep pulling together the research that we find that is helpful for micros and work on making change happen together.

Over the coming weeks we'll be sharing a range of stories from the gamut of self-employment, with people who own and operate creative businesses out of necessity, out of love, from an early age or as a second or third career. We will also share a new manifesto that outlines missions and values for Small is Beautiful.

Stay posted on the blog for more and follow us on Twitter and Facebook for updates.

What does being "small" mean for you? How has that changed, if at all, over the past 3 years?

We'd love to hear your input. Feel free to share your thoughts in the comments, chat to us by email on, or get in touch on Twitter and Facebook.