Online Microbusinesses Lower Local Unemployment, Says GoDaddy and UCLA Research
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Insights
The link between microbusiness entrepreneurship and job creation is a topic of significant interest in the field of economics. The findings from the GoDaddy and UCLA Anderson Forecast study suggest a positive correlation between the presence of microbusinesses and lower unemployment rates. It is essential to understand the mechanisms through which these small entities contribute to job creation. They often operate in niche markets or provide specialized services that larger companies do not offer, which can stimulate local economies and lead to the creation of additional jobs both directly and indirectly.
However, while the reported drop in unemployment rate associated with an increase in microbusiness entrepreneurs is statistically significant, it's important to consider other economic factors that might be at play. For instance, the overall economic climate, access to capital and technological advancements can also influence job creation and unemployment rates. Additionally, the sustainability of jobs created by microbusinesses can be a concern, as these businesses may have higher volatility and lower survival rates than larger firms.
From a market research perspective, the growth of online microbusinesses reflects broader trends in the digital economy. The ease of setting up an online presence has lowered barriers to entry for aspiring entrepreneurs. This democratization of business ownership could lead to increased market competition and innovation. Furthermore, the study's emphasis on the role of microbusinesses in community spending highlights the importance of local economic ecosystems. The multiplier effect, where an increase in spending leads to additional economic activity, is particularly relevant here.
It's also important to analyze consumer behavior patterns in relation to microbusinesses. The rise of 'shop local' movements and consumer preferences for personalized, artisanal, or niche products and services could be driving the success of these small-scale entrepreneurs. Understanding these trends can help stakeholders, including investors and policymakers, to support the growth of microbusinesses and potentially replicate this success in other regions.
The financial implications of the proliferation of microbusinesses are multifaceted. On one hand, the potential for reduced unemployment can lead to a more robust consumer base, as more individuals have disposable income to spend on goods and services. This could result in a positive feedback loop for local economies, potentially increasing the valuation of businesses in the area and, by extension, the stock market. On the other hand, the financial stability and longevity of microbusinesses must be scrutinized. Their smaller scale may mean a limited ability to weather economic downturns and they may not contribute significantly to stock market gains if they are not publicly traded entities.
Investors looking at sectors or regions with a high concentration of microbusinesses should consider the potential for increased economic activity and consumer spending, but also remain cognizant of the higher risks associated with investing in smaller, less established companies. Diversification strategies could mitigate some of these risks while still capitalizing on the potential benefits of the growth in microbusinesses.
Originally published on GoDaddy Newsroom
TEMPE, AZ / ACCESSWIRE / April 4, 2024 / Entrepreneurship is booming, and online microbusinesses - those with 10 or fewer employees, a domain and an active website - create jobs and lower unemployment rates across the U.S., according to new research from GoDaddy and UCLA Anderson Forecast.
This means:
- At the county level, every microbusiness entrepreneur is correlated with seven additional jobs by hiring directly, indirectly or creating more demand and spending more in their communities.
- Adding 1,000 new microbusiness entrepreneurs in a county is associated with a drop of 0.11 percentage points in the unemployment rate. This means that studying Miami-Dade County in Florida, with almost 430,000 microbusinesses and 2.1 million people over the age of 18, adding just 1,000 entrepreneurs would reduce the region's unemployment rate by almost
7% (from1.6% to1.49% ).
"We've learned that online businesses with 10 or fewer employees are creating more jobs than before - up to seven jobs for every one entrepreneur, compared to only two just a few years ago," said Alexandra Rosen, senior director of Venture Forward. "Our findings show how even the smallest of businesses can significantly drive down unemployment rates in communities across the country."
Explore the data in full here and learn more in the blog post here. For more information on the state of microbusinesses across the country, visit www.godaddy.com/ventureforward.
About GoDaddy Venture Forward
GoDaddy's Venture Forward research initiative analyses more than 20 million online businesses with a digital presence (measured by a unique domain and an active website). Most of these businesses employ fewer than ten people, categorizing each as a microbusiness. While these microbusinesses may be small, their impact on economies is outsized even though they are often too informal or too new to show up in traditional government statistics. To find out more about GoDaddy's Venture Forward research, visit www.godaddy.com/ventureforward
About GoDaddy
GoDaddy (NYSE: GDDY) helps millions of entrepreneurs globally start, grow, and scale their businesses. People come to GoDaddy to name their idea, build a professional website, attract customers, sell their products and services, and accept payments online and in person. GoDaddy's easy-to-use tools help microbusiness owners manage everything in one place, and its expert guides are available to provide assistance 24/7. To learn more about the company, visit www.GoDaddy.com.
About UCLA Anderson Forecast
UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation and was unique in predicting both the seriousness of the early-1990s downturn in California and the strength of the state's rebound since 1993. The Forecast was credited as the first major U.S. economic forecasting group to call the recession of 2001 and, in March 2020, it was the first to declare that the recession caused by the COVID-19 pandemic had already begun. www.uclaforecast.com
About UCLA Anderson School of Management
UCLA Anderson School of Management is among the leading business schools in the world, with faculty members globally renowned for their teaching excellence and research in advancing management thinking. Located in Los Angeles, a gateway to the growing economies of Latin America and Asia and a city that personifies innovation in a diverse range of endeavors, UCLA Anderson's MBA, Fully Employed MBA, Executive MBA, UCLA-NUS Executive MBA, Master of Financial Engineering, Master of Science in Business Analytics, doctoral and executive education programs embody the school's Think in the Next ethos. Annually, some 1,800 students are trained to be global leaders seeking the business models and community solutions of tomorrow. www.anderson.ucla.edu
Source: GoDaddy Inc.
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View the original press release on accesswire.com
FAQ
How many additional jobs are correlated with every microbusiness entrepreneur at the county level?
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What is the finding regarding job creation by online businesses with 10 or fewer employees?
Who is the senior director of Venture Forward mentioned in the press release?
