In this post, I’m going to share a selection of statistics every new small business owner should know before they get started.
These statistics will help you:
- Make sure you start for the right reason
- Make sure you carefully research and plan before starting
Let’s get right to it.
Make sure you start for the right reason
You need to make sure you’re entering this endeavor with the right motivations, not just escaping one job for another. When surveyed, there are two main reasons people start their own small business:
- 55 percent of respondents said that they were opening their own small business because they wanted to be their own boss.
- 39 percent of respondents start a small business to pursue their passion.
Other common reasons include dissatisfaction with corporate jobs, noticing an opportunity in the market, and a lack of preparation for retirement.
There’s a common theme here around dissatisfaction with your current job or work environment. It appears that a lot of people start their own business for the freedom to be their own boss, and the boss of their own time. The freedom to make decisions and work how and when or where they want.
However, small business owners need to make sure they stay on top of their time and focus attention on high-value activities so that they actually get their freedom. Here’s what being a small business owner looks like in reality:
- The average small business owner works between 40 and 49 hours per week.
- 81% of small business owners work nights.
- 89% of small business owners work weekends.
While you might now be your own boss, running a small business is still the same amount of time as a full-time job. A full work week spent making sure your customers (your new bosses) are happy, and dealing with employees and paperwork. If you’re starting or buying a small business for freedom, it’s important to understand this reality.
Make sure you spend some time to decide that this is really what you want, and design your business so it’s something you’ll enjoy working on.
Make sure you do carefully research and plan before starting
Potential small business owners often get reminded of the same thing, the risk of failure. Family, friends and strangers will all remind you of this. And it’s not an unrealistic fear:
- More than 50 percent of small businesses fail in the very first year.
- More than 95 percent of small businesses fail within the first 5-years.
However, this is far too simplistic. You shouldn’t be discouraged from starting a business because most fail. What these statistics should do is encourage you to make sure you are prepared for business by doing customer and market research and making simple but effective plans.
Take a look at these statistics:
- 42 percent of small businesses fail because of a lack of market demand.
- 29 percent of new businesses reportedly fail because they run out of cash and lack additional financing options.
Other common causes for the failure of small businesses include not being able to find the right team to work with, to get outcompeted by competitors in the industry, cost-related issues, and product issues.
Do research. Talk to customers. Conduct a survey. Do whatever is needed to give yourself the confidence that there is demand for what you’re offering to customers. And make sure you have the financing in place to buy yourself enough time to launch your business and reach these customers.
Why are so many people attracted to starting a small business and working for themselves?
It’s social, an interesting challenge, and always changing.
Make sure you design the business so it’s something you’ll enjoy working on, because you’ll be working on it a lot. Then do your homework on the market, customers and product.
Before you go...
We all know that small business is about doing the little things right.
The little optimisations, the high-impact tweaks and the 1% gains you can make to your business to make it a little better, a little more profitable and even a little bit more pleasant to run.
I have interviewed 500+ business owners, surveyed thousands more, and I am always probing for their best tips, tricks and hacks to improve their business. There are three that stand out above the rest and I want to share them with you.
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