As the recession squeezes the entire economy, it's getting harder and harder for independent contractors to take a vacation.
"Solo entrepreneurs, freelancers and other self-employed professionals have always struggled to take vacations, and the recession is making it even harder," writes Sarah Needlemen, in an article in The Wall Street Journal last week, "For the Self-Employed, It's an Endless Workweek."
"Being out of pocket can mean missing one of a diminishing number of business leads, and the rising tide of unemployed professionals has heightened competition for freelance work," she notes.
"If you don't get to the inquiries right away, they disappear," the article quotes Frank Natoli, a partner in LanternLegal.com, a legal-services provider in New York. "They'll call somebody else in a second."
"We're tied to the desk," Natoli says. "When the phone rings, we have to be here to answer it."
Competition among freelancers is getting even more competitive than ever. Guru.com, a freelance job site, reported membership of 907,000 in July, up 15% from a year ago. Rival Elance.com says it received 131,000 new applications from freelance professionals in this year's first half, up 40% from the same period last year.
Some freelancers may be able to stay in touch with the business and their clients by using cell phones, email, texting and voicemail, during a vacation, but many say that defeats the purpose of a taking a vacation.
To preserve some degree of sanity and avoid total burnout, some freelancers are resorting to one- or two-day respites.
At least some time off is a must, because people tend to underperform when they're overworked, says Gene Fairbrother, lead business consultant for the National Association for the Self-Employed.
So, if you're an independent contractor, despite what seems a necessity to stay plugged into their business at all times in the current economy, it is imperative that you take some time off, or else suffer the consequences of declining performance and burnout.
Monday, August 10, 2009
Friday, August 7, 2009
Kauffman Study: Credit Card Debt Reduces Startups' Chances of Survival
Although conventional advice for startups is that they finance partially through bootstrapping, including the use of credit cards, a new study from the Ewing Marion Kauffman Foundation suggests that startups with credit card debt have a lower chance of survival. The study's results are reported on the Wall Street Journal's website today.
The study, "The Use of Credit Card Debt by New Firms," was conducted by Robert H. Scott III, an assistant professor of economics and finance at the Leon Hess School of Business.
A statistical analysis in the report shows that for every $1,000 in additional credit card debt taken on by the firms studied, the chances of survival were reduced by 2.2%.
"More than half of all new firms rely on debt financing when starting operations," the report states. "A vast majority of these businesses rely on credit card debt to fill any equity gap. This debt financing can be very expensive. While credit card debt provides needed short-term funding, reliance on this type of financing may lead many businesses into a long-term liquidity drain that affects their financial stability -- and thus survival."
"Many factors explain why new businesses succeed or not," the study concludes. "The growth in credit card use among small businesses has raised the question of whether firms with credit card debt were less likely to survive during their beginning stages of development. This study shows that credit card debt does play a role in business closure in the first few years of operations. And, while it is not the only determinant of a business's stability, it appears to be an important factor in a firm's likelihood to survive."
The study, "The Use of Credit Card Debt by New Firms," was conducted by Robert H. Scott III, an assistant professor of economics and finance at the Leon Hess School of Business.
A statistical analysis in the report shows that for every $1,000 in additional credit card debt taken on by the firms studied, the chances of survival were reduced by 2.2%.
"More than half of all new firms rely on debt financing when starting operations," the report states. "A vast majority of these businesses rely on credit card debt to fill any equity gap. This debt financing can be very expensive. While credit card debt provides needed short-term funding, reliance on this type of financing may lead many businesses into a long-term liquidity drain that affects their financial stability -- and thus survival."
"Many factors explain why new businesses succeed or not," the study concludes. "The growth in credit card use among small businesses has raised the question of whether firms with credit card debt were less likely to survive during their beginning stages of development. This study shows that credit card debt does play a role in business closure in the first few years of operations. And, while it is not the only determinant of a business's stability, it appears to be an important factor in a firm's likelihood to survive."
Tuesday, August 4, 2009
Angel Investing Groups Have Become More Selective During the Recession
During the current recession, angel investing groups have exhibited the following pattern: a decline in the amount of money sought by entrepreneurs, a reduction in the number of companies receiving financing, and a decrease in the expected value of companies, but a small increase in average deal size.
These conclusions are included in an article by Scott Shane, a professor of entrepreneurial studies at Case Western University, on the New York Times website today.
Citing data from a survey by the Angel Capital Association, Shane noted these figures for 2008: a 9% decrease in angel capital dollar investment, a 16% decline in the number of angel deals, and a 4% increase in average deal size.
Data from Angelsoft, which provides investment tracking software for angel investment groups, shows "an increase in investment selectivity" among angel groups in 2008. That selectivity was evident in a drop in the share of companies who sought financing who actually received an investment from 3.9% in 2007 to 1.8% in 2008.
Angelsoft data also showed that the amount of financing sought by the typical entrepreneur declined from about $1 million in the fourth quarter of 2006 to $750,000 in the first quarter of 2009. And the average company valuation fell from $3 million in the pre-recession period to $2.5 million in the 2009 first quarter.
It is clear that angel investor groups have become very cautious in the current environment, and, and in my judgment, that caution is likely to continue for at least the next 6-12 months.
These conclusions are included in an article by Scott Shane, a professor of entrepreneurial studies at Case Western University, on the New York Times website today.
Citing data from a survey by the Angel Capital Association, Shane noted these figures for 2008: a 9% decrease in angel capital dollar investment, a 16% decline in the number of angel deals, and a 4% increase in average deal size.
Data from Angelsoft, which provides investment tracking software for angel investment groups, shows "an increase in investment selectivity" among angel groups in 2008. That selectivity was evident in a drop in the share of companies who sought financing who actually received an investment from 3.9% in 2007 to 1.8% in 2008.
Angelsoft data also showed that the amount of financing sought by the typical entrepreneur declined from about $1 million in the fourth quarter of 2006 to $750,000 in the first quarter of 2009. And the average company valuation fell from $3 million in the pre-recession period to $2.5 million in the 2009 first quarter.
It is clear that angel investor groups have become very cautious in the current environment, and, and in my judgment, that caution is likely to continue for at least the next 6-12 months.
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