The myth of the SoHo entrepreneurial boom

There’s a popular perception that one of the trends of the ‘noughties’ was a growth in the proportion of ‘SoHo’ businesses.

As Wikipedia defines it: “The modern concept of small office/home office, or SoHo, refers to the category of business, which involves from 1 to 10 workers. SOHO can also stand for small or home office or single office/home office. A larger business enterprise, one notch up the size scale, is often categorized as a small business. When a company reaches 100 or more employees, it is often referred to as a Small and Medium-sized Enterprise (SME).”

It seems to me that there have been four groups who have most vociferously propagated this perception:

1 Convertors of home offices – the firms who specialise in turning a spare bedroom, or other space, into a designer place to work from home. This began as a trend in the 80s, for companies to allow executives who were travelling increasingly long-distances to spend a little time each week recuperating (though they would never describe it in those terms) by ‘working from home’. As pressure mounted further, and trust began to decline, so these busy types were expected to demonstrate that they could work from home and one way of doing this was to have a mini-office at home. As technology boomed, and broadband became a reality, so the SoHo was born.

2 Governments, keen to spread wealth across the country rather than have it polarised in Cities, with all the infrastructure problems that this causes, recognised and promoted the value of working from home. This message reached its first peak in the late 1980s when dramatic reforms in the financial services sector meant that many large companies, seeking to reduce their own liabilities due to mis-selling, began to shift the onus for sales from their own staff to ‘independent financial advisors’. It persists today, because Governments realise that people resent being packed like sardines into commuter trains and instead prefer to leave two hours earlier and drive in their own tin protector. The environmental consequences are horrendous and smart politicians realise that they need to promote SoHo enterprise for sound environmental reasons.

3 The self-employed, professional. With the initial wave of independents in the financial sector discovering the comfort of working more locally, and especially from home, so other professionals began to consider the possibility for themselves. They did so tentatively, and they found that it was often not as easy as they had, at first, thought. While they might be a very good, indeed exceptional, designer, computer programmer, telecoms engineeer, project manager, or whatever, working from home was isolated and called on both strong resilience to being alone, and good interpersonal skills to be able to ‘sell’ what one did. Bear in mind too, that the choice was often sold quite hard to them by their former employers, keen to reduce overhead without seeming to ‘lay people off’. Many found this transition very hard, and their self-esteem began to suffer. So, imagine their relief, when they discovered that they were not alone? And to reassure themselves that they were not alone, they were happy to propagate the perception that they were not the only ones making this lifestyle ‘choice’.

4 And so, the ‘trend’ was born. And, to nurture it, a wholly new industry emerged – the industry of ‘social networking’ – amusingly named, since it has little to do with ‘social’ and is all to do with ‘business’, whether online (through ‘social networks’, such as Ecademy and LinkedIn) or offline (through BRE, BNI, or one of thousands of semi-formalised networks meeting for a ‘power breakfast’ at golf clubs and hotels around the world). And to sustain their business model, this industry has to propagate the perception that the SoHo is a growing trend.

Just how accurate, then, is the perception that there’s a growth in the proportion of self-employed people working from home? Government statistics are readily available these days ( and extensive time-lines can be traced.

This data shows us that changes have certainly not been ‘steady’ – the trend is not exactly constantly upwards! There was a 25% increase in self-employment overall between 1986 and 1989. The level remained relatively stable then, if hovering between 3.3M and 3.6M (ie a 10% shift) can be called ‘stable’. There was then a substantial decline from 1995 to 2000 from 3.6M to 3.3M, and then a rise back again from 2000 to 2003. A Government enquiry, at the time, demonstrated that the single largest contributor to this was the change in working practices in the banking, finance and insurance sector which forced/encouraged many people formerly employed in those areas to become self-employed.

Since 2003, the overall number of self-employed has continued to grow however the rate of growth in employment has been faster than that of self-employment (ie the proportion of self-employed in the workforce is reducing, albeit only slightly).

Yes, there’s been a growth in the absolute number of SoHo businesses, but as a trend in the overall employment picture? No, it’s a myth.

Why do we believe so passionately that this myth is a reality? Above everything else, there’s a psychological component – a kind of ‘reticular activation’ which is the scientific reason why we see more cars of the same make, model, and colour as our own soon after we have bought it. Suddenly, that unique rusty-red designer hatchback, that we thought was so unique, is everywhere – oh, what trendsetters we are in our family!

The same is true of our lifestyle choice to be a SoHo worker – as we meet more such people, then we extrapolate that to the rest of the population. Among the self-employed, there’s a desire to feel ‘normal’ and so we see more people who are ‘enjoying’ the same lifestyle, and we delude ourselves that this is the norm, while we play down in our minds the people we meet who are, and have always been, ‘commuter drones’ (as one blog described them only this morning)!

There’s also a white collar issue – self-employment has been more common for longer among manual jobs than ‘professional’ ones – farm labourers, milk-roundsmen, shop-keepers, and so on, were generally self-employed. As many modern-day ‘professionals’, tend to disassociate themselves from manual workers, they tend to ‘forget’ that these folk have always been ‘entrepreneurs’.

You would rarely hear a dairy roundsman (one of the early franchise opportunities – forced to start selling bread, eggs and all kinds of other produce to make a living competing against the spread of the supermarket) describe themselves as an ‘entrepreneur’.

However, with the arrogance that comes from ‘knowledge’ work, those who try one way of processing information, and then another, struggling to find one that actually generates an income, don’t stop there but describe themselves as ‘serial entrepreneurs’.

Next time someone tells you that the next best thing since sliced bread is to become a SoHo social networker, check out their agenda, consider selling milk at the same time, or step back and decide whether you are really cut-out for this choice or prefer to stay among the undiminished ranks of the employed.

I am happy to comment, or deliver keynote sessions, on any of the topics that I post about.
For media and speaking enquiries, please call me, Graham Wilson, on 07785 222380.

Best wishes

Behind the scenes, helping those of power see themselves, other people and situations differently

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