Posted on: Wednesday, August 18, 2004

More working alone at start-ups

By Jim Hopkins
USA Today

SAN FRANCISCO — More entrepreneurs are taking a Greta Garbo approach to managing start-ups: They want to be left alone.

The share of self-employed Americans who don't have employees is rising, to 83.1 percent last year from 79.3 percent in 1995, says a new Bureau of Labor Statistics study. Part of the shift among the United States' 10.3 million self-employed workers reflects overall weak hiring, says economist Steven Hipple, the study's author.

Most of the increase is among men. The 2001 recession may have forced some into self-employment. Without strong start-up skills, their ventures are less likely to prosper and hire, says economist Brian Headd of the Small Business Administration.

Still, the rise in solo entrepreneurs began before the recession, suggesting a possible long-term shift driven by:

• Technology. Computers, cellphones and the Internet let people start home-based companies they can run more productively by themselves.

In San Diego, marketing consultant Robert Weinberg says he can do the work four people did 20 years ago. After client meetings, Weinberg, 46, can quickly call a Web site developer to ask for changes on a customer's site. The developer works on contract. Back at his office 30 minutes later, Weinberg gets an e-mail with a draft of the changes.

In Phoenix, Helen Goldman's Web site eliminates the need to hire employees to sell her company's pens, calendars and other promotional items. To create the impression her business is bigger, Goldman, 59, lists three employees on her voice-mail greeting, though she's the only worker.

• Temporary help. Contracting with other self-employed workers or hiring through a temp agency lets entrepreneurs staff up only when they need extra help, holding down costs.

In Milwaukee, Gail Sideman, 40, has a temp agency assistant 50 miles away. She and the temp, who also works from home, swap files by e-mail to create mailing lists for Sideman's sports publicity company.

• Benefits. Health costs jumped more for the smallest employers. Costs for firms with three to nine workers rose 16.6 percent vs. 13.9 percent overall last year from 2002, the Kaiser Family Foundation says.

Near Rockford, Ill., those costs are a reason Mike Gallagher works alone at his healthcare consulting firm. He estimates that benefits for just one employee would cost him as much as $600 a month.

Gallagher pays $12,000 in annual premiums to cover himself and his wife. Both are 63. "Health insurance costs are incredible," he says.