How to leapfrog from gig worker to prosperous business owner

By Elaine Pofeldt, CNBC

  • Today 57 million Americans currently work as freelancers, up by 4 million since 2014, according to Upwork's Freelancing in America survey.
  • Gig jobs are a low-risk way to raise money and hone the business skills entrepreneurs need to launch a business.
  • With freelancing more popular with each generation, there are more people picking up entry-level business skills than ever before.

A stretch of stores along the base of Munjoy Hill had open signs out and were ready for business as part of small business Saturday, November 28, 2015.

When Miguel Sanchez, 29, started driving for Uber in 2012 after dropping out of Glendale Community College in Arizona, he dreamed of starting a taco stand.

Driving around the Phoenix metropolitan area, he noticed that the upscale neighborhoods where people took a lot of Uber rides were also the ones where restaurants did well. That taught him an important lesson: He needed to open up shop in an upscale area. "That's where there's high disposable income," he says.

Sanchez, known locally as Wadaa Mike, soon found a location in Scottsdale and, using his income from Uber, leased his stand next to a bar that fed him a steady stream of customers. Driving when cash flow was tight helped him get through tough times. He eventually found an investor.

When the bar closed, he opened another stand, and a catering service, under his brand Wadaa Street Tacos and sold the company in 2016. He says sales were just under $1 million annually.

Now interested in commercial real estate, he's working as a realtor in his uncle's real estate brokerage, Pulse Realty & Associates.

"Whatever dream you're chasing, I believe Uber is a stepping-stone to your next destination," Sanchez said.

Miguel Sanchez, a former Uber driver, launched Street Tacos, a taco stand business in Scottsdale, Arizona.

Many people try gig work for a simple reason: "They just want to make some extra money," says Angela Heath, principal of the consultancy TKC and organizer of The GIGCon, on online summit for gig workers that is part of Global Entrepreneurship Week. Today, 57 million Americans work as freelancers, an increase of four million since 2014, according to Upwork's Freelancing in America survey.

As free agents like Sanchez are discovering, finding work through an app or a freelance platform can be an unexpected gateway to running a more traditional type of business. Many are learning skills like how to attract customers and market themselves, and finding opportunities to expand their professional skills without the risk of losing their day jobs, says Donna Kelley, a professor of entrepreneurship at Babson College. "It is a low-risk way to enter entrepreneurship," she said.

And for those with the entrepreneurial spark, one of the most powerful lessons is the importance of turning a healthy profit. Once they learn the basics of business and begin getting word-of-mouth referrals, these gig workers often branch out beyond the platforms, where they don't have to pay middlemen to send them work. Some supplement platform-based work with projects they find through other efforts. "They go wherever the opportunities are," Heath said.

The Freelancing in America survey, produced by Upwork and the Freelancers Union, found that the largest group of freelancers in the country (45%) provide skilled services, such as computer programming, writing, design, IT, marketing and business consulting. Another 30% provide unskilled services such as dog walking, cleaning or driving for ride-sharing services. Many of these services lend themselves well to businesses that the founders can just as easily run outside of a freelance platform, once they build a good reputation in their field.

Stepping-stone to business ownership

Many seem to be taking the first step. One striking trend in the survey was that the share of freelancers who are working on their own full time, as opposed to freelancing on the side, increased from 17% in 2014 to 28% in 2019.

And with freelancing more popular with each generation, there are more people picking up entry-level business skills than ever before. Among Gen Z (those 18–22) 53% freelance, compared to 40% of millennials (ages 23–38), 31% of Gen X (ages 39–54) and 29% of baby boomers (ages 55+), the survey found.

That's been the case for app developer Carissa Lintao, 23. Needing to find a way to make money while at Thomas Edison State University, she Googled "online work" and came across Upwork, which matches freelance professionals with clients who need projects done. Lintao, based in Bayonne, New Jersey, put up a profile and soon won her first project, writing a story for a client's book, back in 2015.

Carissa Lintao starting a side gig to help pay for college which led her to launch her app development firm Apptuitive.

Although that project was low paying, Lintao says, "it was fun." And it was closer to her area of interest than getting a retail job at a local mall. "I would have been working at Forever 21," she added.

Lintao was confident she was on the right track when, four months later, she won a second $50 project, developing a trivia app for a client in the tech industry who made gaming apps. "That was the equivalent of a million dollars to me at the moment," Lintao said. The client was so happy with her work that she ended up developing a portfolio of projects for him, earning what she estimates to be at least $1,000 in total.

"He introduced me to the world that is now mobile app development," she said. "I got into it at just the right time."

That was about four years ago. With her business growing, Lintao took a leap of faith after graduating from college in 2018 and went full-time with her business. Now, in addition to finding work through Upwork, her agency Apptuitive finds projects through organic search and marketing directories.

"By the time I graduated, I was figuring out the difference between freelancing and entrepreneurship and trying to connect those dots," Lintao said.

She now has built a team of three freelancers and contractors so she can grow her business. "That's my focus for this year, trying to scale what I am doing," she said. So far she has four to 15 clients a month and forecasts year-end revenue between $80,000 and $100,000.

Building a business

When Kimberly Spencer, 32, launched her business-coaching practice, Crown Yourself Enterprises, she says, "I literally didn't know where to start."

The Burbank, California, resident, who ran a successful Pilates business for 10 years and then underwent training and certification in a formal coaching program, put up a profile on the platform Thumbtack, which offered qualified leads.

When Spencer won her first few clients, her confidence began building. "It gave me practice in having a sales conversation," she said.

However, she ultimately found that many of the potential customers who approached her were not a good fit, because they were "price shoppers," prioritizing rock-bottom rates above the value delivered.

When Spencer analyzed what she was spending to get leads, she realized it would be more profitable to focus on attracting customers through word-of-mouth referrals. Once she got referrals from satisfied customers, she arranged to do a short consulting session for a minimal fee and make recommendations for the best package for a potential client, an approach she previously used when running her Pilates studio.

Today, she has 73 clients. With her business growing, Spencer also developed six online self-study courses on topics such as leadership, productivity and mindset, and expanded into live workshops and events in San Diego and Los Angeles, where she encourages attendees to network and partner with each other — something she didn't see as much in her platform-based work.

"In gigs it felt very competitive," Spencer said. "Now it feels much more based in collaboration and connection."

As Spencer and other gig workers turned entrepreneurs often realize, it's a lot easier to build a small business with growth potential if you've got the right people behind you.

See more at CNBC


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Unplugged Magazine: How to leapfrog from gig worker to prosperous business owner
How to leapfrog from gig worker to prosperous business owner
Unplugged Magazine
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