The idea of starting a small business can be as intimidating as it is alluring. If you’ve got the entrepreneurial spirit, happiness means the chance to pursue your own vision. At the same time, there’s the big worry: What if you fail?
Thankfully, it’s as true in business as in any other aspect of life: The more you arm yourself with knowledge, the more prepared you’ll be. To that end, we’ve gathered 7 essential statistics for anybody thinking about starting their own small business. We hope they help!
1. Small businesses constitute 99.9% of all U.S. companies.
Because big companies garner greater name recognition, they’re the ones we probably spend more time consciously thinking about. And yet, they constitute only .1% of America’s total number of companies. If you’re feeling alone in your pursuit to start a small business, take heart: There are lots of other entrepreneurs like you out there. And that means there are lots of great resources available, from blog posts to meet-up groups. Seek out opportunities to learn from others who have been exactly where you are right now.
2. 42% of small businesses fail because there isn’t a market for their product or service.
This one might sound scary, but trust us: It’s much better to consider the ramifications of such a stat before you launch your business rather than after. Don’t just assume there’s a strong market for your product or service. Instead, you should conduct some extensive research. Is any company out there doing more-or-less what you plan to do? How successful have they been? Do they operate in your area? Will they be a competitor? The more questions you’re able to answer, the better.
3. The average small business owner uses $10,000 in startup capital.
For a first time business-owner, even the basics can be pretty mysterious. For instance, how much does it cost to start a company? That’s a pretty important question. And the answer, of course, depends on a number of factors including industry and location. However, having an average in mind should give you a useful starting point. According to the Wells Fargo Small Business Index study, the average small business owner uses about $10,000 in startup capital.
4. 82% of small businesses that fail do so because of cash flow problems.
This stat serves to reinforce the importance of the previous one. Even if your business has great potential, an inability to pay the bills will bring it to an early death. As you make decisions about things like office space and new hires, really think about your overhead. Will you have the cash to keep everything afloat if it takes a while for your fledgling business to earn revenue?
5. 74% of the workforce is open to changing jobs.
When it comes to hiring your first employees — whenever that time may come — don’t assume your pool of potential candidates only contains those without a current job. This stat suggests that many people aren’t thrilled with their current job — or that, at the very least, they’re open to hearing new offers. Don’t rule out recruiting people away from other companies whose performance way of doing business you generally admire.
6. On average, small business teams spend 23% of their workdays manually inputting data.
When a business is new, that means its processes are new. They haven’t been streamlined yet, and therefore leadership likely hasn’t chosen technologies that could support those processes and save employees’ time. Better to hold off on expensive platforms until certain aspects of the business have solidified, right? Well, if employees are spending one workday per week manually inputting data, you’re losing a ton of time that could otherwise be used to grow the business and move it toward profitability. You’re probably better off researching affordable, flexible technologies that can help your team now and in the future, whatever that future may look like.
7. 75% of small businesses are using tech platforms for sales.
Many people believe CRM platforms are only useful for big, established companies who have tons of clients and leads to deal with. However, a good CRM isn’t just about managing volume — it’s about finding customers faster and keeping them happy. And those activities are important to any business, no matter the size.
If you have questions or concerns about starting or growing your small business, we’d love to hear from you. Let us know how we can help!