DigitalOcean investigated the impact of economic downturns on innovation and how individuals are turning to side jobs and starting new businesses amid continuing turmoil in the technology industry in the May 2023 edition of its research report ‘Currents’. It found that:
- Many employees are becoming solopreneurs by creating small businesses outside of their primary employment due to layoffs and market stagnation.
- Small businesses are weathering the economy, and most continue to feel positive about their growth despite making changes due to the current economic conditions.
- Cost and security are significant considerations for businesses when choosing a cloud infrastructure provider, especially for small businesses trying to control costs during an economic downturn.
- Businesses are increasingly using artificial intelligence (AI) and ChatGPT, but many companies are still in the testing phase and lack usage policies.
Side hustles lead to a growing number of small businesses
55% of respondents said that their primary employment was full-time, while 22% reported running their own business as their primary source of income. However, over half (52%) of respondents said they also do other work on the side. Of those, 40% said they take on individual jobs, while 29% start a new company they’d like to scale.
The economic climate has influenced how respondents feel about scaling their businesses. Of those who were recently laid off, 51% said fears of a recession and layoffs have impacted their thoughts on scaling their idea, compared to only 16% of those who weren’t laid off.
Those who were laid off were also more likely to say they’re starting a company they want to scale, rather than taking on individual jobs.
31% of small business owners are navigating the current economic climate and their outlook for the future. The results showed that 31% of respondents have made changes to their business to cope with the economic situation. However, 61% feel optimistic about the outlook for their business in the coming year.
When it comes to funding, 68% of small businesses are relying on bootstrapping to finance their operations. Only 7% are using venture capital funding and 4% are using angel funding, indicating that many technology-based small businesses are being created outside of the traditional venture-backed startup model.
While only 15% have raised funds in the last six months, 27% plan to do so in the next six months, with 20% delaying fundraising due to the uncertain economic situation.
Use of AI for either personal or business use, or both increases
The popularity of generative Artificial Intelligence (AI) solutions like ChatGPT has surged in recent months, with people and businesses incorporating these tools more into their work. The report shows that 61% of respondents expect to increase their usage of AI/machine learning this year, a notable increase from 41% last year. While opinions on the rise of AI/ML tools are mixed, with 39% stating that AI makes their job easier, 30% consider these tools overhyped.
Specifically, 69% of respondents have used ChatGPT for either personal or business purposes, or both. Among them, 62% say they are testing the solution, 23% are beginning to integrate it into regular tasks, and only 13% say it is already part of their routine.
The past few years have brought about significant changes to the role and structure of small and medium-sized businesses (SMBs), largely due to advancements in technology and shifting economic conditions. Tech professionals and entrepreneurs are increasingly venturing beyond the traditional 9-to-5 and utilizing emerging technologies like AI, leading to the rise of creative entrepreneurs who are turning their ideas into side hustles, small businesses, and even scaling startups.
These digital-driven SMBs are now present in every industry and region, driven by the convenience and cost-effectiveness of cloud computing. Despite economic challenges, these entrepreneurs remain optimistic about their future.
Source: DigitalOcean
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