NCPA - National Center for Policy Analysis

Supplemental Entrepreneurship Benefits Low and Moderate Income Households

May 18, 2015

One reason entrepreneurs found companies is because they desire the autonomy and flexibility that self-employment provides. While a majority of entrepreneurs consider their ventures their sole career, other entrepreneurs consider their business as supplemental income.

Supplemental entrepreneurs can often secure some of the same advantages of full-time entrepreneurship, like the ability to use one's creativity or set one's own hours, without the economic risk of full-time entrepreneurship.

Supplemental entrepreneurship comes with many advantages, including autonomy, lower stakes and the flexibility to scale depending on customer response.

Supplemental entrepreneurs fluctuate in their reliance on the income:

  • Some 21 percent said their business supplements income from their primary job.
  • More than 15 percent said they work on their business sparingly and the income is insignificant.
  • Another 13 percent said they split time evenly between their business and their job.

Generating supplemental income can prove especially beneficial to low- and moderate-income entrepreneurs and act as a primary motivation to engage in entrepreneurship.

One study indicates that 38 percent of nascent entrepreneurs, defined as "those who are actively involved in the creation of new business ventures," live in low-and moderate-income (LMI) households.

Entrepreneurship is an attractive option for many people because of the autonomy and flexibility it can provide. For others, entrepreneurship can provide a supplemental income that can prove life-changing by providing greater financial security, especially for low-and middle-income entrepreneurs. In addition, supplemental entrepreneurs can experiment with their companies to decide whether their companies have the ability to scale.

Source: Emily Fetsch, "Experiments in Entrepreneurship: Supplemental Entrepreneurs and the Etsy Economy," May 14, 2015. 

 

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