Will 2022 be the year of the entrepreneur? The Wall Street Journal recently noted:
- The number of self-employed workers has risen by 500,000 since spring 2020, to about 9.44 million. That’s a 6 percent increase.
- 4.54 million new businesses received federal tax ID numbers in the first 10 months of 2021, up 56 percent from the previous year.
As a long-time advocate of entrepreneurship, I applaud these developments. All work is not traditional; meaningful work does not need to fit into office-centric parameters. The internet is delivering information, commerce and electronic business tools that make independent work more practical — and lucrative — than ever.
Some banks will be able to affirm the rise of entrepreneurship by delivering products and services specifically tailored to this unique customer group. Many entrepreneurs with a great product or service idea may not be very good at administration, cash flow management or payments processing. The banker who figures out how to meet these needs will own a special niche. These are the areas where upstart entrepreneurs need help:
Payroll — The record-keeping can be overwhelming, yet no business owner wants to get this wrong, because no one wants to anger employees or upset the IRS.
Benefits — It’s not just about the paycheck. Health insurance, flex savings accounts, tuition reimbursement, and some form of retirement savings. Most business owners want to offer these things. They have to in order to attract the brightest people. But this is complicated, especially in today’s world where workers may be spread all over the country working out of their homes at all hours of the day and night.
Billing and collections — Delivering a great product or service is one thing, getting paid for it is quite another. There are a lot of good software programs for billing and accounting, but staying on top of receivables is about more than just software. Sometimes some of the biggest buyers require ridiculously long repayment windows. This can create a need for short term financing.
Line of credit — This is a safety net that most entrepreneurs need in order to fill in the valleys when uneven business activity or unexpected trouble comes up.
All of these are things that a business-oriented banking organization, including its holding company, could offer the right kind of entrepreneurial business customer. Entrepreneurs need to be encouraged and nothing may be more enabling than an encouraging word from a banker.