In the last few months, businesses around the world have been put in a very difficult position.
On the one hand, a variety of restrictions have made it difficult to serve customers which has resulted in a significant decline in revenue while increasing the costs of doing business in order to adapt and comply with new policies. Meanwhile, they need employees to come to work in order to stay open but many have become used to working remotely or are considering other ways to earn an income.
Numerous articles1 have been written on the issue, however we are still far from understanding the deeper reasons why this is happening, and what can be done both for business owners and employees.
We believe the main reason is because people want to improve their quality of life, and many believe the path to that goal is to be achieved by opening their own business. Current business owners therefore need to consider that their employees may be considering leaving unless they are able to improve their work/life balance.
For many years, employees had become used to the daily grind of waking, serving, sleeping, and the pandemic came along and broke that routine.
People realized that they had dreams, passions, ideas and wanted to pursue them. They had already been seeing others doing this by becoming ‘digital nomads’ and ‘startup entrepreneurs’, living in nice environments while working on their ideas, and balancing that with travel or learning new skills that their previous job would not give them the time to do.
They also saw the way that the nature of work was changing, becoming more digitized in some cases, remote-friendly and more flexible. They saw how they could improve their quality of life by changing the way they worked.
People also discovered that they had control over their happiness, and many realized they had been in a state of depression for a long time due to being stuck in their jobs, and with little time for friends, family or interests, which was also thrown into stark comparison when forced into lockdowns by the government.
Many realized they had a purpose in life that had been suppressed for years, and it just may be something that is worth focusing on rather than going back to their old job and ways of life which to many appear to be unhealthy, such as the long commutes to work and back, the long hours sitting, the lack of food choices and so on.
What we think is even more important is that people, subconsciously, feel that the value of money is declining. They don’t want to agree to a salary that will continue to rapidly decline in value over the short term due to inflation. Instead, they want an income that could better follow the rising inflation, and for them they see owning a business and having more control over their income is the solution.
While a lot of stories in the news focus on the hardships that people have faced as a result of the economic impact of the pandemic, the fact is that there are people who have fared better as a result.
They unlocked the hidden potential of their other skills to increase their incomes by freelancing. They invested their money wisely in the stock and cryptocurrency markets. They saved a good portion of their salary in previous years. This gave them the opportunity to step back and re-evaluate their future direction.
So to improve their quality of life, improve work/life balance and have a chance to earn a better income, and to follow the changing modes of work. By being able to control their time, they realized they could maintain their output by working more effectively in a shorter period of time, and that their work could become a form of self-realization to them.
What’s clear is that the nature of work, of being an employee, is changing, and it’s changing fast. As the rich get richer and the poor get poorer, and clearly it’s the large business owners that are getting richer, people are starting to see that it’s time to make a change.
However it is not always easy for someone who has always been an employee to know what the downsides are to owning a business. It’s easy to see all the good parts of being a business owner, without seeing all of the downsides that come with being a business owner.
It may appear from the outside that business owners can have a better work/life balance than employees, and while this may be true for some business owners, others work incredibly hard for more hours than their employees. This means that how the business is designed has more to do with the ability to achieve an acceptable work/life balance.
It may also appear that business owners make more money than their employees, and again while this is true, they also have a significant burden of risk that they carry that employees don’t. Being a business owner requires a skillset that many employees will have a difficult time acquiring.
Then there’s the statistics on the survival of new businesses. Around 50% of businesses have stopped within 5 years, with the main reasons being lack of cash flow, declining market for their offering, or being outcompeted.2
If people are quitting their jobs to become entrepreneurs, to have a better work/life balance and have their revenue grow as inflation increases rather than stay the same, then they need to think outside of the box when it comes to designing their business.
While there are now hundreds of books on the subject of business design, implementation, management, there are also some strategies that are not often talked about in books, which is how businesses can work together. One of the main ways small businesses survive is by learning how to work better together. We will address how to achieve this in our next article.
1 The Great Resignation of 2021: Are 30% of workers really going to quit?
As The Pandemic Recedes, Millions Of Workers Are Saying 'I Quit'
Millions of jobs and a shortage of applicants. Welcome to the new economy
2 Why Do Businesses Fail? Visual Capitalist Infographic