Small Businesses and Self-Employment


The nature of work continues to change, and many people find it necessary to work for a living for extended periods. Older workers are increasingly interested in self-employment as a way to generate income and stay connected as they age while achieving some flexibility with scheduling and perhaps pursuing new interests. Self-employment may also be the only option for older workers who cannot find a job. Self-employment takes many forms, including side gigs, freelancing, contracted services, or starting a small business or microbusiness. However, moving into self-employment at an older age can be difficult and risky. It can be more so if it involves spending savings or pension distributions to launch a new project. Older workers need assistance as well as greater access to credit if their entry into self-employment is to succeed. 

Access to capital is essential to growing a small business. Many entrepreneurs experience difficulties in accessing capital through traditional banking institutions (see also Small-Business Lending). Unregulated lenders sometimes target high-cost loans to entrepreneurs who have been excluded by traditional banking institutions. Moreover, starting a small business requires guidance to navigate both the business landscape and the support available to new entrepreneurs. 

Almost all small businesses must have a license to operate in the United States. Business licensing, when implemented appropriately, can preserve the public’s health and safety, protect consumers from fraudulent businesses, and account for and tax businesses properly. At times, however, the requirements of obtaining a license are not proportional to the safety risk of the business. This can make it unnecessarily difficult to start a small business. Occupational regulation that enhances consumer health, safety, or financial well-being can provide meaningful benefits. But in some cases, occupational regulation requirements create unnecessary barriers to launching or expanding small businesses. This can lead to increased prices without improving service quality. Universal licenses, which can be used across state lines, are one method of streamlining occupational licensing. Universal licenses, however, may not be appropriate where local standards are necessary to ensure health and safety, such as in building construction in flood zones. 




Barriers to self-employment

Federal and state policymakers should support opportunities to launch, maintain, and grow small businesses. They should ensure access to capital, technical assistance, and training (see also Small-Business Lending). This includes supporting community development financial institution programs to expand access to capital and provide technical assistance for small-business owners. 

Policymakers should streamline small business offerings across agencies. The Small Business Administration and other agencies should coordinate programs designed to assist individuals in becoming self-employed. 

Federal and state small business technical assistance programs should: 

  • address the needs of microenterprises and entrepreneurs from groups that are discriminated against, 
  • offer a wide range of services to address the needs of businesses at multiple stages of development (see also workforce development section), and 
  • include outreach and education to expand program participation. 

Programs should collect and publicly report demographic information on program participants and outcomes while protecting participant privacy and security. 

Occupational regulation

Occupational regulation should provide meaningful consumer health, safety, or financial well-being benefits. Policymakers should streamline licensing requirements where possible. They should consider universal licensing or more transferability of licenses for certain professionals, coupled with commonsense safeguards to protect consumers. 

Policymakers should reject restrictions on certain business practices that have no bearing on the quality of service. 

States and localities should conduct a thorough analysis before establishing new occupational licensing requirements. They should provide evidence of the benefits to consumer health, safety, or financial well-being of any proposed requirements. 

Regulatory and licensing boards should have adequate and diverse consumer representation. 

States and localities should require regulatory agencies to disclose any disciplinary actions against regulated individuals for abuse, neglect, exploitation, negligence, incompetence, deception, or discrimination.