Self-employed struggle in bad economy

Published: Monday, Oct. 3 2011 8:00 p.m. MDT

Jessica Bronson does Karah Mackay's hair coloring while Mackay's daughter, Addy, plays on her lap on Tuesday, September 27, 2011. Bronson is a self-employed hair stylist who works out of her West Valley home so that she can spend time with her kids. Bronson's youngest child, Blake, plays on the floor as his mother works.

Laura Seitz, Deseret News

WEST VALLEY CITY — Clip, Clip. Jessica Bronson stepped back from her client to judge her work. She grabbed her client's hair and let it fall, strand by strand. Then, it was clip, clip again.

The scene plays out in thousands of hair salons across the country every day. This salon, however, is in Bronson's home in West Valley City. And if you didn't know it was there — with its professional shampoo sink, chair, counters and waiting chairs (complete with old copies of People magazine), you wouldn't know the 33-year-old stay-at-home mom ran a licensed salon in the neighborhood.

A difficult economy has forced many people out of work. National unemployment hovers at 9.1 percent, with 7.6 percent in Utah. That's causing some of the unemployed to create their own businesses in their homes or even starting up micro-businesses with 10 or fewer employees.

Businesses on this small scale face special challenges — but they are vital to our economy. Census Bureau data from 2008 shows that 99.6 percent of all businesses in the United States have fewer than 100 employees. Nationwide there were 21.1 million self-employed businesses in 2009, the Census Bureau said in July. Those businesses generated $838 billion in sales that year. In Utah in 2009 there were 176,338 self-employers with $6.3 billion in sales, down from highs in 2007.

"The numbers speak for themselves," said Gene Fairbrother, lead small-business consultant at the National Association for the Self-Employed which is based in Washington, D.C. "However, particularly during a difficult economy, there are a lot of people attempting to be self-employed that never show up in the numbers. It could be multi-level marketing or an Internet business that may never develop enough revenue to cause them to file a business tax return. Numbers are indicators, but they don't tell the entire story."

Bronson didn't choose to open her salon because she lost her job. She said she simply wanted to work at home, "Kind of like a hobby that I get paid for."

And doing salon work at her home increases the money she can make versus renting a $400-a-month booth at a traditional strip-mall salon. "Because I work from my home, I save on rent, I save on gas because I am not driving to work, I save on day care because I can take care of my kids. And I save on eating out because food is in the house."

But the economy has made her job more important for her family. Her husband Jason works in landscape construction — and with the downturn there has been less money coming in. "Mine is the supplemental income," she said.

In West Valley City, applications for new home-based businesses this year have increased 80 percent over the same period last year to 169 licenses, said Russ Condie, assistant city treasurer. Those figures don't include how many licenses have lapsed. New applications cost $160.

"This tells me people are trying to find income wherever they can," Condie said. Non-home-based businesses have fallen during the same period

It is challenging enough to start a business in good times, said Gene Fairbrother, lead small-business consultant at the National Association for the Self-Employed. "A downturn in the economy makes it even more difficult. You have more people chasing the same dollar."

Many newly unemployed and recent graduates are starting up their own businesses, Fairbrother said. These professionals include engineers, plumbers, remodelers and accountants.

"But that doesn't mean they have that entrepreneurial sense," he said. "It doesn't mean they have the business knowledge to create strong marketing programs that will gain the attention of the public to grow their business."

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