Survey: One-third of Americans Thought about Starting a Business Last Year
Tuesday, August 7th, 2018
LendingTree, the nation's leading online loan marketplace, today released its survey of aspiring small business owners, as the company celebrates a new milestone for its small business vertical – surpassing $1 billion in loan volume through LendingTree's small business marketplace.
Starting a business is something that many Americans think about pursuing, but mental or financial roadblocks can cause hesitation. Of the 3,387 Americans who were originally surveyed, almost one-third (31.6 percent) have thought about starting their own business in the past year, although nearly half of those would-be entrepreneurs have yet to take any steps toward their dream of becoming a business owner. The hesitation is caused by a variety of reasons, but access to sufficient capital is by far the most common reason for not starting a business.
LendingTree (in conjunction with Qualtrics) further surveyed the 1,067 Americans who said they thought about starting a new business in the past 12 months to gauge attitudes toward small business ownership and the perceived challenges regarding financing. The survey was conducted online June 14-21, 2018.
Key findings include:
Nearly one-third (31.6 percent) of those surveyed have thought about starting a business in the past year.
Access to sufficient capital is by far the most common reason for not starting a business — 42 percent say access to enough capital is a primary impediment.
One-third of respondents said they are considering a Small Business Association (SBA) loan, making it the most popular source of small business financing. Conversely, one in four said they won't need to borrow to start their small business.
Inertia is an impediment for many. Just under half (46 percent) of respondents said that they haven't taken any steps to start a business, like registering a company, applying for a business loan or working on their business part time.
Some 25 percent of respondents said their primary motivation for starting a new business was wanting more purpose. Only 14 percent said they don't want a boss.
Twenty percent said they were willing to forgo an income to get their business off the ground, while 16 percent refused to tolerate any salary cut. About 23 percent were not willing to take on any personal debt to start a business. On the other hand, 19 percent were prepared to risk $25,000 or more.
The entrepreneurial spirit is strong
Among those who have contemplated starting a business, most people want to do so to add more purpose to their life. Purpose is the most commonly-cited motivator, even exceeding wealth, for people who want to open their own business.
Some would like to be their own boss (14.4 percent), while others found inspiration in entrepreneurial friends, family and TV shows. Several people have thought about starting a business to advance their careers and get out of a dead-end job.
According to the Small Business Administration, small businesses have been steadily growing in the number of firms, income, jobs and new businesses, a trend that LendingTree's small business loan marketplace has been party to. LendingTree's small business marketplace has grown to exceed $1 billion in small business loans issued through LendingTree's network of lenders and its subsidiary, SnapCap.
"We couldn't be more thrilled to officially reach this milestone," said Hunter Stunzi, SVP of Business Loans at LendingTree, and co-founder of SnapCap, which was acquired by LendingTree in 2017. "We're proud to support the small business owners of America. A small business loan may be a commercial transaction, but like many small businesses themselves, it is often highly personal to the business owners, and we're honored to help business owners through loan process."
Financing challenges hold businesses back
Despite thinking about starting a business, many would-be entrepreneurs are holding back. Nearly half of those surveyed (44.6 percent) haven't taken any steps toward launching a business. Lack of capital (42 percent), limited opportunities (24.2 percent), and inopportune timing (19.6 percent) are also cited as the primary reasons for not starting a business.
However, just over half (55.4 percent) of those surveyed have taken small steps, such as working part-time on further developing their business (19.6 percent) and applying for loans (13.2 percent). Others have gone as far as registering their company (11.4 percent) and bringing on a business partner (11.4 percent).
Many of those thinking about opening a business have at least considered how they would finance their venture, and SBA loans are the most popular choice.
Nearly one-third (32.8 percent) of potential entrepreneurs said they are considering an SBA loan for their business, while roughly 25 percent said they are not considering using any financing to fund their operation.
About 15 percent of people are considering non-SBA business loans, slightly fewer than those who plan to use their cash savings or a credit card. A small portion of entrepreneurs are considering dipping into their retirement savings, home equity or 401(k), which could be a risky move if the business flops.
Most popular source of financing by generation
Millennials: SBA (24%)
Gen X: SBA (25%)
Baby Boomers: No financing (37%)
"Growing and running your business profitably takes incredible patience and skill," said Hunter Stunzi, SVP small business, at LendingTree. "Of the many hats small business owners wear, CFO is perhaps the most critical. Managing capital requires you to build and maintain relationships with multiple lenders; don't put all your eggs in one basket. While one lender may take months to approve you for a large equipment loan, an online lender may approve and fund you in the same day. Both lenders should have a place on your balance sheet."