More than 195,000 Iowa companies are one-person enterprises

As a Realtor in 1965, Larry Sharp joined an established firm with secretaries who handled incoming calls, passed on messages from clients and helped manage paperwork.

When he formed Sharp & Co. Realtors in 2010, Sharp moved his physical office to Meadowridge Golf Driving Range, which he owns and operates at 6677 16th Ave. SW in Cedar Rapids. Sharp depends on his cellphone, rather than a secretary, as his principal means of communicating with clients, contractors, developers and city officials, among others contacts.

“I'm able to carry my office with me,” Sharp said. “My clients can reach me at any time or leave me a message that I get fairly quickly.”

Sharp, who occasionally contracts with his former secretary to handle some paperwork, is the owner of a “nonemployer business,” according to the U.S. Census Bureau. In 2009, there were more than 195,000 Iowa companies-of-one generating more than $6.9 billion in annual sales that did not employ anyone other than the owner.

Beauticians, photographers and writers, nurses, nursing practitioners, public relations and marketing consultants, real estate agents, tutors and construction contractors are some examples of businesses without paid employees.

But construction has the largest share of nonemployer companies in Iowa and the nation because a contractor only has to have sales of $1 per year to qualify under Census Bureau guidelines. Other types of business must have $1,000 or more in annual revenue.

The number of nonemployer businesses declined by more than 260,000 between 2008 and 2009 across the United States, according to the Census Bureau.

In 2009, there were 21.1 million nonemployer businesses, a decrease of about 1.2 percent from 2008. That continued a decline first observed in 2008, when the total number fell by more than 350,000 from a peak of 21.7 million companies in 2007.

“Nonemployer firms generate a small percentage of total U.S. business receipts, but they constitute the majority of U.S. businesses,” said William Bostic, associate director for economic programs at the Census Bureau. “The decline we have seen since 2008 reflects the change in economic conditions during that time.”

While Sharp is a relative newcomer as a nonemployer business, Nina Swan-Kohler recently marked the 20th anniversary of Swan-Kohler & Associates Public Relations and Marketing, primarily for the food industry.

Swan-Kohler, a published author who combines corporate team building with cooking classes, has worked in the culinary and food marketing industry for the past 25 years.

“I started Swan-Kohler & Associates when CMF&Z (a now defunct advertising and public relations agency) sort of booted me out the door,” Swan-Kohler said. “It ended up being one of the best things that ever happened to me because I've been able to build a really nice business and maintain it for 20 years.”

Technology has played a major role in many nonemployer company's success and Swan-Kohler & Associates is no exception.

“One of the smartest things that I did 20 years ago was to buy a fax machine, which was really a big deal at that time,” Swan-Kohler said.

“It helped me to have instant contact with my clients that were all over the country. I could compete with major agencies either by fax, FedEx or the phone.

“Today, with email and the social networking, I hardly use the fax machine anymore because everything is handled through email or forwarding it to an FTP site on the Internet. You can live anywhere or even be on vacation in Fairbanks, Ala., and still be working.”

Working as a freelance photojournalist, Stephen Mally must be able to travel at a moment's notice when he gets a call from the New York Times, Reuters, USA Today, the Washington Post or the Wall Street Journal. Or even Business 380.

“When the news broke that some of the prisoners from the Guantanamo Bay detention camp might be housed at a prison in western Illinois, I got a call from the New York Times,” recalled Mally, owner of Stephen Mally Photography of Cedar Rapids.

“They have photographers in Chicago, but I could be there a half-hour sooner in terms of driving time. They told me to pack a go bag because they weren't sure how many days I might be there.”

Mally makes extensive use of technology to get assignments, receive press releases “on the fly” when he's traveling with a political candidate, send digital photographs while traveling between assignments and stay in touch with clients.

While technology is important to Swan-Kohler and Mally, it's also critical for Ruth Paarmann, owner of Paarlance Creative Writing in Cedar Rapids.

“Technology makes it a very flexible way to work, either at home or at a coffee shop,” Paarman said. “I prefer to use a landline phone when I'm doing a phone interview, but I also forward my landline phone to my cellphone when I'm away.

“The laptop computer has been my weapon of choice. I haven't gotten to the smartphone phase, but it's coming very soon for me.”

Paarman said lockboxes, FTP sites on the Internet and other technology advances have made her job much easier and allowed her to work with clients regardless of their physical location.

She said companies are more inclined to hire a freelance writer than they were when she formed Paarlance Creative Writing in 2002 after being laid off by MCI WorldCom (now Verizon).

“Companies are more likely to hire a freelancer after 9/11 and the recession,” Paarman said. “They are looking for ways to cut costs, and hiring it out is often much more affordable.

“There's also more comfort with using the technology to communicate than even when I started in 2002.”

Paarman jobs out projects, particularly those involving the use of Excel software, when it's required. She said employing a secretary or administrative assistant would be cost-prohibitive, a characteristic of most nonemployer businesses.

Owning two nonemployer businesses - Nemec Marketing Group and Send Out Cards - is not enough to justify a paid employee for Rose Slaymaker of Toddville.

“We use a lot of freelancers, so we don't have the huge overhead of some of the other advertising agencies in town, and we pass that savings along to the client,” Slaymaker said. “Technology has made it possible for us to create a quality presentation and keep our costs down.

“Many of our freelancers worked previously in the advertising and public relations industry, so it's been a win for them. With the opportunities that social media offers, I think we can continue to expand both businesses.”