Together, the responses of these startup entrepreneurs represent the voices of the next generation of American small business owners on Main Street, USA.
Key research findings include:
Part 1: Finding Your Way, Finding Customers
- 46% of startup business owners cited pursuing a passion or a dream as their main motivator for starting a business.
- The two biggest challenges for startups are finding the right target market (27%) and competition (23%).
- The most common sources of funding for startups are personal savings (38%) and bank loans (34%).
- 60% of startup owners report spending more than 40 hours per week on their business.
- The most common reason for startup failure is a lack of cash flow, according to 29% of respondents.
Part 2: Finding Financing
- Only 22% of startup owners received the full amount of financing they requested, while 44% received none or only a portion of what they requested.
- Personal savings (38%) and bank loans (34%) are the most common sources of startup funding.
- 31% of startup owners sought funding from family and friends, while 25% used credit cards to finance their businesses.
- 40% of startup owners say they did not receive adequate information about financing options, and 29% say they do not understand the different types of financing available to them.
- 63% of startup owners reported using their own personal credit score to secure financing, while only 25% reported using a business credit score.
Part 3: Finding the Right Team
- 38% of startup owners say finding qualified employees is their biggest HR challenge.
- 22% of startup owners say they are unable to find the right employees with the necessary skills or experience.
- 61% of startup owners handle hiring and HR tasks themselves, rather than outsourcing to an HR consultant or service.
- 33% of startup owners say they have no HR policies or procedures in place.
- 56% of startup owners use social media to recruit new employees.
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 survey data from SCORE.
A recent SCORE survey found that many entrepreneurs rely on personal savings and second jobs to fund their businesses during the critical first year. Additionally, a lack of financial management skills can also impact small business success.
According to a report by SCORE, many startup small businesses are struggling to hire skilled staff and are turning to contractors or specialized talent instead. The report also found that hiring and retaining talent is a major challenge for these businesses, with nearly half reporting that they have difficulty finding the right employees.
The Megaphone of Main Street data report series by SCORE provides insights into small business trends and challenges in the United States. The reports cover a range of topics such as the impact of the COVID-19 pandemic on small businesses, financial management strategies, and marketing tactics. The data is collected through surveys of small business owners, providing valuable information for entrepreneurs, policymakers, and other stakeholders interested in the success of small businesses.