The number of small office/home office (SOHO) entrepreneurs is on the rise, and the pace of growth will accelerate into 2002, says a bizSmart study.
During slower periods in the economy, the number of SOHOs rises faster than any other segment of the labour market, according to the study.
"We can expect to see an upward trend in SOHO growth in the coming months, given what has occurred in previous economic slow periods such as in 1991 and 1995," says Benjamin Tal, CIBC's senior economist.
In 1991, the number of paid employees fell by 1.7 per cent and the number of SOHOs rose by three per cent. In 1995, the number of paid employees rose by only 0.1 per cent while the number of SOHOs increased by close to four per cent.
Over the past decade, the SOHO segment has increased by 33 per cent. There are more than two million SOHOs in Canada. This number includes almost 1.5 million companies that are one-person operations, as well as another 600,000 companies that employ up to four people, in addition to the owner.
This growing SOHO force of small, flexible enterprises is reshaping the face of the working world and is making a significant contribution to the economy, according to the bizSmart study.
"As larger firms cut back, we will see a rise in the number of people starting their own businesses," says Tal. "But during a downturn, large companies also increase their outsourcing activities. SOHO entrepreneurs . . . will benefit by assuming a significant portion of this work."
The bizSmart study also singles out a number of major trends contributing to the growth of SOHOs:
* The aging labour force: The tendency to select self-employment increases with age so the growing number of baby boomers reaching their 50s is boosting this segment.
* An increasing demand for personalized products: By their nature, small-scale operations are flexible enough to support the increased demand for personalized services by designing products and services for niche markets.
* Immigration: More than one in five of the self-employed are immigrants, almost double the rate in the 1980s. One of three new immigrants since 1991 had a university degree, a group that historically has a higher propensity for self-employment.
* An increased interest in self-employment among young Canadians. Many no longer wish to be embraced into the bosom of large corporations.
* The increased availability and lower cost of technology, which makes it easier to start businesses with less investment.
* Government and corporate outsourcing are encouraging the growth of self-employment to provide services formerly undertaken in-house.
BizSmart is the no-fee daily business banking service developed by the CIBC banking institution along with STAPLES Business Depot.
