WASHINGTON, October 10, 2019 /PRNewswire/ — Small business owners rely largely on personal savings and income from another job to fund their first year of business, according to original survey data released by SCORE, America’s Small Business Mentors . Notably, 60% of entrepreneurs have enough money saved to sustain themselves for at least three months, although the majority (78%) do not seek, much less obtain, external financing.
Small business owners rely largely on personal savings and income from another job to fund their first year of business, according to original survey data released by America’s small business mentor SCORE. Notably, 60% of entrepreneurs have enough money saved to sustain themselves for at least three months, although the majority (78%) do not seek, much less obtain, external financing.
These original survey data constitute the second part of the Main Street Megaphone small business startup data report and focuses on how entrepreneurs find funding during their critical first year.
The main conclusions of the second part of the data report are as follows:
New entrepreneurs started their business using personal savings (66.3%) and income from another job (27.6%).
- During their first year of operation, most startups (78%) did not seek, much less obtain, external financing, instead relying on personal savings or income from another job.
- Among the 22% of startups that sought funding in their first year, the most effective sources of funding were loans from friends and family (77% successful) and loans from banks or other institutions financial (58% success).
Half of new entrepreneurs are starting their business, while the other half are financially prepared.
- 42% of entrepreneurs were startups, starting with less than $5,000 in cash reserves.
- However, almost half (49%) started their activities with more than $10,000 in banking;
- A quarter (24%) had more than $50,000.
New entrepreneurs spend outside funds on equipment, inventory and marketing.
- 63% of respondents used the external funds received to purchase equipment.
- 48% of respondents used outside funds to purchase initial inventory.
- 41% used outside funds to rent or prepare a business location.
“Surprisingly few startups receive outside funding, forcing the majority of new entrepreneurs to get creative and rely on personal savings and income from other jobs to fund their first year of business,” said the CEO of SCORE. Brigitte Weston. “SCORE offers a wealth of resources, including mentoring, articles and online workshops, to help entrepreneurs with their financial education so they can make informed decisions about how to successfully launch and grow their business. “
For more information on how new small business owners finance their first year of operation, download this infographic and full Main Street Megaphone: Startups.
About The Main Street Megaphone
This report constitutes the fourth edition of SCORE Megaphone of Main Street Data Report Series, which presents original and statistically significant survey data on the U.S. small business landscape. Survey data was collected from 1,000 new small business owners in all 50 states and Washington DC, representing new small businesses of varying sizes across broad industry coverage. Other sections of this data report focus on the challenges new entrepreneurs face in their first year of business, including finding their place in the market and hiring the right team.
About SCORE
Since 1964, SCORE has helped more than 11 million aspiring entrepreneurs. Each year, SCORE’s 11,000 volunteer business experts provide free small business mentoring sessions, workshops and educational services to clients in 300 chapters across the country. In 2018, SCORE volunteers helped create 32,387 new businesses and 103,300 non-ownership jobs.
For more information about starting or operating a small business, or volunteering with SCORE, visit SCORE at www.score.org. Follow @SCOREMentors on Facebook, Instagram And Twitter for the latest small business news and updates.
Funded in part through a cooperative agreement with the U.S. Small Business Administration. Any opinions, conclusions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.
Contact details
Betsy Dougert
800-634-0245
(email protected)
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