The 1099 Gig Economy Poses a Threat to Ill-Informed Entrepeneurs
By James Lang
Entrepreneurship is a powerful economic engine for the United States and the global economy. And it’s popular. According to the 2016 census, nearly 90% of employers in the United States were small firms with fewer than 20 employees. These startups and small businesses find ways to stay afloat in volatile markets by providing the services that consumers and other businesses need.
I have nothing but admiration and respect for someone that is willing to plant their flag and go into business. But, there’s an alarming trend in the United States and abroad – the 1099 underclass. Many of these contract workers are being convinced to invest their entrepreneurial passions into a turn-key platform. Examples include rideshare companies and online freelancing sites. We need to better define what entrepreneurship means, and create a reasonable boundary between a side-hustle and a real startup.
Contract workers are kidding themselves if they think they’re entrepreneurs.
If you get fired up after an episode of Shark Tank, resist the urge to dive head-first into the contract workforce economy. Need fast cash? Sure, pick-up a few strangers and take them where they need to go. But entrepreneurship means something more than becoming a contractor on an app.
You need to understand that your time spent with a gig-economy platform will:
- Build the platform’s brand, not yours.
- Force you to comply with their vision for how you operate within their ecosystem.
- Limit your earning potential because they control how much you can charge, what percentage you get to keep, and when you get paid.
- Require you to shoulder the costs and potential risks associated with using your personal property to service their customers.
Companies like Uber leverage entrepreneurial desire to fill their labor pool.
The gig economy platforms know that Americans want to be entrepreneurs. Two-thirds of millennials are captivated by the idea of launching their own startup and firing their boss. That’s one reason platforms like Uber use the catchphrase – Be your own boss! – in their advertising. A google image search for Uber ads for drivers will return countless results that imply you are chasing your entrepreneurial dreams by joining their platform and deciding for yourself how much you want to earn.
Joining a contract workforce is wantrepreneurship. It’s right for some people, but it’s a horrible long-term solution for those that strive to become successful entrepreneurs.
Great entrepreneurs run the numbers before diving in.
I wholeheartedly believe that Americans should be free to pursue their dreams on their terms. For some people, the gig economy is a godsend. To know if it’s right for you, you need to step back and run the numbers – constantly!
I’ve said it before and I’ll say it til you die, if you don’t know your numbers, your idea is as good as dead! pic.twitter.com/qIin0MsmOO
— Kevin O’Leary (@kevinolearytv) July 10, 2018
Kevin O’Leary (a.k.a. Mr. Wonderful) grills the entrepreneurs that step onto the carpet in Shark Tank. He wants to know their numbers so that he can make an informed decision. Here …read more
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