Small business owners are self-starters
Whether they possessed entrepreneurial drive early on or had a business idea later in life, one trait shared by all small business owners is that they are a group of self-starters. Of those surveyed, 88% started a business on their own compared to just 6% who took over or purchased a business from a previous owner. Unsurprisingly, their chief motivation was to “be my own boss” and put their own ideas to work (66%).
“Being able to embrace and use my own ideas, (the) freedom to be creative with my work and provide the very best customer service … compared to being an employee where you have no say on policies.”
For many, those ideas were seeded in their youth. An impressive 42% had a business idea or started a business when young.
Fear of failure remains a challenge
As was the case last year, fear of failure tops the list of challenges — 45% compared to 39% in our first annual survey. Concern for doing something wrong came in second (31%), followed by how to price services (29%), and “no one to advise me” (26%). One respondent said: “The fear of failure has been an interesting one to overcome. I’m much more comfortable hearing ‘no’ now. It doesn’t feel personal.”
The pandemic had a profound impact. Small business owners reported reduced sales (45%), supply chain issues (36%), canceled orders (33%), payment delays (28%), and temporary closures (28%).
Notably, 51% say revenue was down compared to the previous year and 48% are worried that the current pandemic and economic challenges will affect the future of their business.
However, 7% did report that they started their business during the pandemic.
Government aid played a limited role
Although 86% of owners were aware of federal relief in the form of loans and grants, such as the Paycheck Protection Program (PPP), only 18% were able to successfully take advantage of it.
To survive, many small businesses implemented a pivot strategy, creatively rethinking how they operated. Many moved to selling their goods online or offering services through video conferencing. Bars and restaurants offered delivery and to-go food and beverages, many for the first time. Retail manufacturers also shifted gears to produce much-needed PPE, such as hand sanitizer and masks.
Business registration gives credibility
The choice of business structure is an important decision for any small business owner due to the legal, financial, and operational implications.
However, only 40% of survey respondents, compared to 60% last year, chose to register their business with the state. Sixty-four percent of these registered as an LLC while 21% chose to operate as an S corporation. The main drivers for creating a separate legal entity for the business were to limit any liabilities (70%), compliance (66%), and “to give my business credibility” (54%).