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The underground economy: Part 2

Thomas Frey //July 11, 2011//

The underground economy: Part 2

Thomas Frey //July 11, 2011//

(Editor’s note: This is the second of two parts. Read Part 1.)

At the center of the underground economy is a set of tools that makes working from home or a local coffee shop far easier than finding a job.
Here are a few examples of unusual home-based and personal enterprise businesses:

1. Home Laundry Service: For those who don’t mind doing laundry, it only requires a washer, dryer, ironing board, a few bottles of detergent and fabric softener. A few hours spent flyering local neighborhoods and you’re in business.

2. Divorce Counseling/Mediation Business: Rather than turning every divorce into a rip-your-genitalia-out-through-your-wallet exercise, there are far better ways to create solutions without spending all the money on high-priced attorneys.

3. Pedicab Business: Every one of these pedal-powered rickshaws is a stand-alone business enterprise that can move from market to market to meet the sort-distance transportation needs of the people.

4. Online Storefront: It is now easier than ever before to create your own retail operation on Amazon, eBay, Facebook, Half, Abe, Alibris, Biblio, direct, Tomfolio, Volare, and Zvab. Many products can even be drop-shipped directly to the customer from the manufacturer so there is no need to manage any inventory.

5. Pet Counseling: People love their pets, but not all pets are a good fit for their owners. Bridging that gap creates room for a wide variety of new services that an enterprising person can leverage.

6. Professional Testimonial Writer: A growing population are searching for ways to shore up their online reputation and the solutions can be a simple as writing good testimonials or as elaborate as offering a complete set of reputation management services.

7. Donation Services: We all own too much stuff. But when it comes time to get rid of our stuff, we somehow want it to go to a good place but we don’t know the options and we don’t want to spend a lot of time handling it. Any good donation service will find themselves quickly in demand both by the donors and the recipients.

8. YouTube Video Services: Managing your online video reputation can be very time consuming. As each of the online video services adds features and becomes more sophisticated, both individuals and businesses need help.

According to the U.S. Bureau of Labor Statistics, the number of home-based businesses in the U.S. exceeds 18.3 million businesses. Although difficult to track, it is estimated that nearly 70 percent of home-based businesses succeed for at least a three-year period (compared to 29 percent outside the home business ventures). The higher success rate is due to the ability for home-businesses to be operated part-time around a day job. These types of enterprises lend themselves well to an off-the-books underground operation.

Micro Jobs

If there’s one thing you can learn from Timothy Ferriss and his book The 4-Hour Work Week, it’s the value of outsourcing. You can gain all sorts of time and freedom by getting someone else to do the work.

But what about from the worker standpoint? Will it always be a competition to see who can underbid whom? Micro jobs are short-term tasks that create an opening. They can either be the starting point for a longer work relationship or just one in a series of one-off projects to bring in a little income.

As most employers know, the quality of the work is far more important than the price paid for it. So while many will experiment with low-cost workers, a longer-term relationship with someone who is a consistent performer is far more valuable.

Micro job sites like Ffiver, Dollar3, MyntMarket, GigHour, and 7Freelance do a good job of connecting talent with the needs of business. But building a long-term relationship is highly dependent on the individual.

Youth Employment

According to the Wall Street Journal, the Department of Labor reported last week that a smaller share of 16-19 year-olds are working than at anytime since records began to be kept in 1948. Only 24 percent of teens, one in four, have jobs, compared to 42 percent as recently as the summer of 2001. “So instead of learning valuable job skills-getting out of bed before noon, showing up on time, being courteous to customers, operating a cash register or fork lift-millions of kids will spend the summer playing computer games or hanging out.”

As young people try to enter the job market at an older age, they will have already gained some awareness of the advantages afforded by the underground economy.

Long Term Trends

The U.S. government has become growingly inept in their ability to work with the emerging digital economy in the midst of the global financial problems. The number of miscues and disconnects are all but guaranteeing the size of the underground economy will grow. Is this a bad thing? It depends on which side of the fence you’re on.

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