Stephen and Nicki Hinch own TeamLogicIT in Santa Rosa, Wednesday Sept. 26, 2012. (Kent Porter / Press Democrat) 2012

Sonoma County haven for self-employed workers

ROBERT DIGITALE
THE PRESS DEMOCRAT

Jayme Powers admits she doesn't "work well at desks."

Powers, 31, this month opened her own business, Sigh, a champagne and sparkling wine tasting bar off the Sonoma Plaza.

A native Sonoman, Powers was working at a winery and a restaurant until she left to launch her own business. She is the company's sole staffer, opening the shop six days a week, greeting customers, paying the bills and stocking the bubbly from both local wineries and producers around the world.

The best parts of her new endeavor, she said, are engaging with customers and "just the independence, knowing that it's mine, that it's my baby."

Powers has joined the ranks of the self-employed, a sizable part of the Sonoma County workforce. Economists and other experts expect more people to join her as the economy improves.

Self-employed workers in Sonoma County accounted for nearly $2 billion of the county's $22 billion in gross output in 2010, according to data published recently by the U.S. Census Bureau.

"What it generates to the economy is serious money and job opportunity," said Gene Fairbrother, a spokesman for the National Association of the Self-Employed in Washington, D.C.

Sonoma County has a slightly higher proportion of self-employed workers than most places. Roughly 35,000 people, or 15 percent of the county's workers, are self-employed, compared with 12 percent statewide and 10 percent across the United States, according to Census estimates.

Precise numbers are difficult to measure. The size of the self-employed workforce would be considerably larger if you include people who work in full- and part-time payroll jobs but also run their own side businesses to bring in extra income. And the Census Bureau cautions that its estimate of self-employed workers in the county could be off by 5,400 people, higher or lower.

The self-employed belong to the larger group of "microbusinesses" that make up the majority of the nation's enterprises. Roughly 55 percent of U.S. businesses employ fewer than five workers and nearly three-fourths have fewer than 10, according to Census data.

Among such small companies is TeamLogic IT, a Santa Rosa franchise that offers computer network support to small and medium businesses.

Its owners, Steve and Nicki Hinch, started looking to start a business after Steve Hinch decided to retire in 2009 as a longtime manager from Agilent Technologies rather than accept a job transfer to Colorado.

"Nicki told me that I needed to get a job," said Steve Hinch, 61. But he concluded his opportunities for employment in the county "were pretty much nonexistent."

The couple opened their business more than two years ago and since have expanded to employ three technicians and one part-time telemarketer.

Running their own company has given them the chance to meet many local business people, Nicki Hinch said. It also has driven home how different it is to be the people who control a company rather than its employees.

"The success of this business in 100 percent dependent on how well we do as owners," Steve Hinch said.

The largest number of the self-employed in the county work in the professional, scientific and technical sector, followed by real estate and leasing, construction and health care/social assistance.

Real estate and leasing produced the most revenue, $415 million in 2010, or about one fifth of the total generated by all the self-employed.

The sector that suffered the biggest declines between 2007 and 2010 was construction, where revenues fell 24 percent to $241 million. Experts said it was part of the larger collapse of the real estate and home building markets.

"We're missing this big chunk of the economy," said Eduardo Martinez, a senior economist for Moody's Analytics in West Chester, Pa., who analyzed the Census data.

Since the recession, the ranks of the self-employed have declined nationwide, according to data from both the Census and the Bureau of Labor Statistics. Census data suggests the numbers of self-employed fell 9 percent nationally between 2007 and 2011 to 13.5 million.

Sonoma County experienced a smaller decline for the same period of 4 percent.

Even so, the dip may surprise those who thought that the thousands of laid-off workers in the county would have been forced to start their own businesses in order to create themselves a job.

However, experts said the opportunities to go into business were often limited.

First, it became more difficult to get capital, especially for those who saw their home equity plunge with the drop in housing prices.

"Microenterprise lending has been really tight," said Ann Johnson-Stromberg, communications manager for the NorCal Small Business Development Center Network, a government-funded effort to assist small businesses. "Those small loans have been harder to get than the big loans."

Second, the outlook often seemed bleak for finding potential customers. Many laid-off employees couldn't get work as independent contractors "because the major corporations were pulling back," said Fairbrother.

Still, the ranks of the self-employed are expected to grow in the years ahead. Among the reasons are the opportunities made possible by technology to set up new businesses and more easily connect with faraway customers.

Many will be started by Baby Boomers seeking an alternative to full-time work, said Ben Stone, executive director of the Sonoma County Economic Development Board.

"The next group coming up will be retirees," Stone said. "If they have a niche or a specialty, they can put it to use."

Robert Eyler, chairman at the Economics Department at Sonoma State University, said the numbers of both regular workers and the self-employed will increase once the economy improves. Some may first seek a paid position but will need to accept work as independent contractors.

"The more the companies are unwilling to hire permanent positions, the more you're going to see people hanging their own shingle," Eyler said.

Charles Bell of Healdsburg joined the self-employed after overcoming throat cancer.

"When I got better, I couldn't get a job anymore," said Bell, 58, who has worked as a professional musician, a chef and more recently, a life insurance representative.

To help support his wife Julie, and 8-year-old daughter Sophia, Bell last year opened The Wurst, a sausage grill located near the Healdsburg Plaza. He couldn't get a bank loan, so he used his own capital.

"It was a Hail Mary pass because of my daughter," Bell said. "I have to make a living."

The business has grown and now employs 10 workers.

Both the experts and the business owners say those who succeed in starting small companies typically will be the ones who learned some business basics and who really study their niche.

"The biggest cause of small business failure is because people don't have the knowledge to do it," said Fairbrother.

One path followed by both Bell and Powers is to take classes and speak with a business adviser from the Santa Rosa Small Business Development Center. The center, previously at Santa Rosa Junior College, continues to offer services even as its NorCal network is seeking interested parties to oversee it, said Johnson-Stromberg, the interim coordinator.

In starting a small business, she said, "a lot of times the most important thing to know is what you don't know."

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