Item number one:

The Shift to Contingent Workers Turns Employees into Entrepreneurs: Employers large and small are shifting from full-time employees to part-timers, freelancers, outsourced services, partnership arrangements and other forms of contingent workers. They are doing this to save money and increase business flexibility. Despite the economic recovery, 2010 will see the contingent workforce grow as companies continue to limit hiring of full time staff. Many of these contingent workers will create or work for small businesses.

Item number two:

Personal Businesses on the Rise: Enabled by the Internet and low-cost information technology, the number of personal businesses (one employee businesses) has grown twice as fast as the overall economy over the last decade and exceeds 22 million. With the unemployment rate remaining high and traditional employment options limited, 2010 will be another year of strong growth in the number of personal businesses. The growth in personal businesses will also result in an increase in overall small business formation and numbers in 2010.

Clearly I’ve written about this issue before, and it’s something that always stirs up a lot of controversy because it hits a lot of hot buttons for many people. Personally, I love these trends. Even more than that, I think these trends are ultimately beneficial in ways that most of us currently don’t recognized.

In the 17th century, to whatever extent workers were organized, it was on a guild model that was discipline centric. Whether a person was a blacksmith or a cobbler, their “peers” were other professionals within the same trade. In the most literal sense, they were competitors who had comperable skills and offered similar services. They were mostly what we would now call ‘freelancers’ who were responsible for their own independent businesses, from stem to stern.

With the rise of the Industrial Age, the shift moved away from individual contributors with specialized skills, to collection of skills brought together to work collaboratively as part of a larger enterprise. Because of the financial investment involved with building these enterprises (factories being the most obvious and common example), the rules for workers changed.

A paternalistic model emerged, where large businesses had to lure people to them. Companies would make long-term committments to their people — pensions, healthcare, education for the kids, mortages, and more — and the people would develop long-term (and sometimes even multi-generational) relationships with the company.

Now that was are in (or even past, as some claim) an Information Age, the employee model needs to be re-examined. And while plenty of people don’t like the idea of a contingent workforce (and I understand why), the fact is that is an employment model that makes far more sense for the rules that come with an information economy.

Geography is no longer the end-all-be-all of meaningful and well-paid work; large companies no longer have to stockpile human talent like cord wood in the event that the right spark of creative genius will occur for them if they just have enough people thinking big thoughts; and small motivated teams in garages are just as capable of creating lucrative, innovative ideas as multi-billion dollar corporations.

The reason I think that these trends are particularly valuable for entrepreneurs and small businesses is for one simple reason: this change is much harder for large businesses, with large investments, and large real estate holdings and enormous legacy systems (both techical and policy-based) to evolve to match. Small businesses simply have less baggage. This gives entrepreneurs, startups and small businesses an edge that the Fords and Proctor and Gamble’s of the world do not have.

Yes, there are always going to be employees who are simply looking to punch a clock in exchange for a paycheck: not everyone is cut out for the entrepreneurial life (and the fact that our education system is designed to funnel people into an employee role doesn’t help). The number and types of those jobs are going to continue to change and dwindle over time as ideas like Results Only Work Environments continue to gain momentum. But for entrepreneurs the value is in the flexibility.

Knowledge workers are not unlike tradesmen: we think nothing of assembling a plumber, an electrican, a carpenter, a roofer and a painter to build a garage. This is valuable work, and the individuals involved are often ‘freelancers’ who are each specialists in their fields. They have partners they like to work with, but they are individual contributors who must work together to accomplish large projects because it is unrealistic to assume that any of them would have all the skills required to do the whole thing themselves.

Knowledge workers are much the same: if you combine a project manager, a developer, a designer and a systems engineer to build a website, that is a valuable association of individual contributors who come together to deliver a project bigger than what each of them could do alone. Even better, unlike a construction crew, a web team is not hindered by geography, weather or super expensive equipment investment to get started.

Naturally, there are downsides to that model: once one job ends, you need to have another one lined up or money saved to wait out the time in-between work. This model requires developing different skills and exercising fiscal discipline in ways that may not always be necessary when working for someone else. This model also requires a dash of realism that many people who cling to the fantasy of “job security” are reluctant to give up: after all, your company could lay you off as soon as your current project is over with, too. The days of ‘guarentees’ are long gone.

Learning to be flexible and take advantage of what the information economy can offer will make the difference betwee those who succeed in the new era, and those who flounder. That is, of course, why even USA Today has called this The Era of Small Business.

At the time the new association launched, there were a small handful of businesses involved: BatchBook, FreshBooks, MailChimp, Outright and Shoeboxed. The companies involved were starting the affiliation and announcing that, though a series of API-based integrations, they were offering a new capability to their customers: integration between their services. Since each solution provides a single slice of back-office functionality for small businesses, by integrating with each other, they are able to support a much more robust lifecycle of back-office activity.

The requirements for joining were simple but essential:

First, a public, demonstrated commitment to customer service.

Second, a technology solution that includes an API.

What I love about this is that, though most business people may not know what an API is, they know what it does: it makes their lives easier. It makes a huge difference in a socially-interconnected eco-system. The fact that these applications are all capable of communicating with each other, sharing vital data, eliminating duplicate entry and providing a much broader view of small business activity, by re-using the same data across multiple areas of their business.

What I love even more, though, is seeing how many additional businesses have joined the original handful since launch earlier this year. If you look at the list today, twenty-seven (27) additional companies are on the list. Not all of them have integrations (not all of them need it), but they are all companies serving the small B2B market. It is one of the first resources I send small business owners to, because it’s a great place for them to see what is available at price points they can afford.

My only lament, of course, is that unless or until we all become part of The Matrix, consultants can’t have APIs, so we can’t join.

An exciting initiative that launched earlier this year, The Small Business Web is a partnership of businesses dedicated to upholding a central tenet: “A passion for customer service, an excellent product or service, a solid business model and an API.”

The Small Business Web Manifesto: We think small businesses are the lifeblood of the economy and that it’s from small business that true innovation will arise. We believe small businesses should have access to the same tools and technology that big companies have without paying a huge amount. We know simplifying access and increasing integration to our products and services will benefit all of our customers. We want small businesses to succeed and we want to help.

The benefits of this partnership for freelancers and small business are expansive thanks to the out-of-the-box integration between these great small business-focused businesses: whether you’re sending your receipts from ShoeBoxed to Outright, or your BatchBook (made by BatchBlue) contacts to MailChimp, or your accounting information from Outright to FreshBooks for invoicing, these small business understand the challenges of small business and have done their best to make life just a bit easier for freelancers and small organizations.

• FreshBooks – Small business invoicing services.

• Outright – Free small business accounting services.
• Shoeboxed – Business card and receipt scanning services.
• BatchBook – CRM for small businesses.
• MailChimp – Email marketing services.

FreshBooks and Outright Integration

To see more details, see either FreshBooks or Outright‘s website.

From a customer: I have been meaning to write and thank you guys for making three of my favorite applications FreshBooks, Outright and Shoeboxed work together. I am an online business manager and marketing virtual assistant — the numbers part of running a small business has never been my strong suit. Before your terrific troika, I would dread dealing with the numbers at all — saving up most of my accounting tasks until the end of each quarter – where I would hand enter all of my transactions into my accounting software (OK – I admit it – a spreadsheet) — it took my hours — and I left out many expenses that I just didn’t track.

FreshBooks and Shoeboxed Integration

From a customer: I am just getting started with the combination of FreshBooks, Outright and Shoeboxed – and already in my first month I have saved an amazing amount of time! As a freelancer with a thriving design business I love how much time I save with these great tools… not to mention the peace of mind I have knowing that I am up to date on my invoicing, expenses and I know where I stand with my taxes! I HIGHLY recommend this “system” for any freelancing looking to run an efficient, streamlined and professional small business! – Mona Pennypacker

Outright and Shoeboxed Integration

BatchBook and Shoeboxed Integration

For more details, see BatchBlue‘s website.

From a customer: I use all three services, and absolutely love all of them! In fact, the companies I start today have as a requirement that all three be used when talking with my partners. I do all my invoicing in FreshBooks; I keep a shoebox for receipts that I dump every one into; and I download to Outright automatically and then go back in and delete the non-work related ones out of my file. – Andrew Simmons

BatchBook and MailChimp Integration

BatchBook and FreshBooks Integration

From a customer: The integration is awesome. I started first using FreshBooks for my invoicing- it does a fine job tracking my hours, generating invoices and keeping track of payments. Then I added Shoeboxed, which is simply amazing – it worked so much better than I expected. Then I found I could use Outright to pull it all together – my invoices flow into my Outright income line, my expenses flow from Shoeboxed into my expenses – any it’s all accessible at home and on the road at a client site – I don’t even have to pull out my own laptop.

If you own or run a small business, you owe it to yourself to take a look at the wide array of solutions these products have to offer – both in combination and as stand-alone applications. And what’s even more exciting, is that each of these products has integration capabilities with other companies as well – everything ranging from Gmail (BatchBook) to BaseCamp (FreshBooks). Never before have small businesses had so many affordable resources at their disposal. And the best news of all is that this web only promises to grow.