Small Business Starts Strong, but Employment Lags

Staff Report

Thursday, September 26th, 2019

New entrepreneurs launch their businesses from a passion for their product or service, or a desire to be their own boss, and have significant experience (11.5 years, on average) in their industries, according to new survey data from SCORE, mentors to America's small businesses.

"In this fourth edition of the Megaphone of Main Street data report series, we chose to focus on startups (small businesses in their first year of operations) because the state of new businesses is generally considered a significant indicator of economic health and innovation," said Bridget Weston, Acting CEO of SCORE. "Data shows that the number of new businesses started has been steadily recovering following the 2008 recession; but, the employment created by these new businesses has not seen comparable rates of recovery. Our research suggests that challenges in finding the right target market, finding financing and hiring the right team could explain this gap."

Key findings of section one include:

Few entrepreneurs (just 15%) start their businesses due to unemployment or underemployment from a 9-5 job.

40% of new entrepreneurs got started because of a passion for their product or service.

30% wanted to be their own boss.

15% saw a gap in the marketplace that they wanted to fill.

New entrepreneurs seek full self-employment.

68% of entrepreneurs started their business with the intention of that business serving as the sole, primary income for the owner.

New entrepreneurs don't start their businesses on a whim.

Survey respondents had an average of 11.5 years of experience in their area of industry.

New business owners take comfort in being prepared.

66% of entrepreneurs rated the support of family and friends as their strongest source of support.

43% rated having a business plan as their strongest source of support.

43% reported having a mentor as their strongest source of support.

New business owners rely on networking-based marketing tactics to reach customers.

Reaching out to a personal or professional network had the highest perceived marketing success rate (65%).

Followed by speaking at events (60% success rate), and

Formal networking groups (54% success rate).