What small business owners wish they knew offers insights about what they learned in the early days of their startups and what they would have done differently if they could.
What Small Business Owners Wish They Knew as Startups
Reversing a downward trend that started in 2009, the 2015 Kauffman Report on Main Street Entrepreneurship shows that, while the rate of entrepreneurship still remains below that of pre-recession levels, it’s finally on the upward swing.
For instance, in 2009 there were 188.3 businesses in the U.S. for every 100,000 people. In 2014, there were 130.6 businesses for every 100,000 people. Let’s take a closer look at the makeup of the American entrepreneur from these 2014 statistics:
- 310 out of every 100,000 U.S. adults started a new business each month (up from 280 in 2014)
- More than half were started by people aged 45 – 64
- Fewer than half were started by people aged 20 – 34
- Immigrant entrepreneurs were 2x as likely to start a business as native-born entrepreneurs
- 5% of entrepreneurs were immigrants, up from 13.3% in the 1997 index
- 2% of 2014 startups were male-owned vs. women-owned businesses – putting the percentage of women-owned startups barely above the two-decade low
Statistically speaking, coming up on two years in business, more than 70% of these 2014 startups are likely still in business (Washington Post), and according to U.S. census data about small business published by sba.gov, the small business landscape in general is made up of the following business types for small employer firms:
- 44% – S Corporations
- 22% – C Corporations
- 16% – Sole Proprietorships
- 11% – Partnerships
- 7% – Nonprofits
Among nonemployer small business, 86% are sole proprietorships, 7% are corporations and 7% are partnerships. Hindsight is 20/20! With two years of business ownership behind them, studies show that what small business owners wish they knew before launching their startups would lead to some things they would have done differently.
10 Things Small Business Owners Wish They Knew as Startups
1. What Small Business Owners Wish They Knew Most of All: How to Handle Finances
68% of small business owners say their #1 biggest regret is that they didn’t spend more time learning about financial management before they launched their business. For instance, three out of ten small business owners used the same bank accounts for personal and business transactions, which can be a big problem for many reasons. Whether your business is a corporation, partnership, nonprofit or sole proprietorship, it’s imperative that you keep personal and business finances separate.
2. How to Understand Finances, Financial Statements and Taxes
3 out of ten small business owners say they wish they had hired an accountant from the beginning, and 42% actively work with accountants for advice and financial management help. When it comes to small business finances, few areas are as complex, intimidating and potentially problematic than small business taxes. There are more than 2,000 items in the IRS.gov list of current forms and publications related to business taxes. While the IRS website can help answer your questions about small business taxes, having professional help or advice from an experienced tax preparer is a must!
3. They Needed More Money
Most U.S. startups – 64% – were launched with $10,000 or less in funding; only 13% had more than $50,000. Writing on businessnewsdaily.com, Wayne Connors, managing partner of 401kInvestor.com said that entrepreneurs are overly-optimistic when projecting sales, don’t know the cost of customer acquisition and underestimate how much startup capital they’re going to need. Business coach Tom Perkins recommends that entrepreneurs have at least 6 months of working capital on hand when they launch.
While we offer startup funding, if your startup small business has been in operation for even just a few months it might qualify for one of our small business loans or a business line of credit. If your small business sells directly to other businesses, you may also be able to speed up cash flow by factoring customer invoices instead of waiting for them to pay. We would be happy to talk about small business loans and financing programs with you – contact us for more information or to get a free, no-obligation quote for business financing.
4. Had More Information About Payment and Card Processors
One of the most important decisions a new small business owner will make is deciding what type of payments to accept and finding the right payment processor. We specialize in helping our clients both in terms of the cost of merchant services and payment processing and in outfitting their organization with the most appropriate payment processing equipment, software and systems.
5. How Hard the First Year Was Going to Be
Most aspiring entrepreneurs can’t wait for the day that they can open the doors of their new business; however, 68% of small business owners say that the first year is the hardest (quickbooks.intuit.com’s $10,000 Strong and Growing). When they needed help, they turned to these sources for external guidance during the first year:
- 38% – Online search
- 23% – Friends who are also business owners
- 17% – Formal education or training
- 12% – The Small Business Administration (SBA.gov)
6. Had Written a Better Business Plan
Taking the time to write a good business plan isn’t just an exercise in business ownership. Thinking through each of the components that make up a business plan can help ensure that you have anticipated the challenges you will face in financing, opening, operating, and growing your business. The detail that goes into your plan tells employees, investors, lenders and other interested parties what your dream is and how you plan to get there.
7. Spent More Time and Money on Marketing
Even if a lot of people you know have expressed interest in your startup business concept or how convinced you are that “if you build it, customers will come,” the truth is that many small business owners over-estimate how quickly they can land customers and grow. Don’t wait until your business opens to start investing in marketing and advertising; the sooner you can begin to build brand awareness, the more likely your business is to enjoy a successful grand opening and grow to the point that revenue makes the enterprise sustainable.
Your start up marketing plan might be simple or complex. Here are some of the must-have’s and most commonly used marketing tactics you should plan to deploy from the earliest days of your business (and even before it opens its doors):
- A vision statement (what your business will look like when it’s all grown up)
- A mission statement (how you’ll make the vision a reality, often references customer types, employee culture and organizational values)
- Market research that demonstrates demand for your business – can also help you refine your offerings so they align with market place demand
- Identify target markets and ideal buyer types (or buyer personas)
- Identification of direct and indirect competitors – competitive analysis
- Differentiation – positioning of your business vs. competitors
- Marketing strategy and tactics
- Strategies; e.g.: find and attract likely buyers, produce repeat sales, increase retention, develop customer loyalty, produce referrals, etc.
- Tactics; e.g.: website, blog, email, direct mail, flyers, events, trade shows, social media, sales pros, customer service, loyalty program details, webinars, seminars, whitepapers, coupons, sales, etc.
- A marketing budget – it should never be “zero” because at a minimum your business must have a web domain, website, and probably business cards, flyers and other startup supplies
- Goals, measures and reporting
8. Had Found a Mentor
Half of all small business owners said they wish they had found a mentor who could advise them during the pre-launch and early days of running their business. Check out our article about how you can improve your small business by setting up your own small business advisory board, which can act as your personal business “Dear Abby,” giving you people who you can turn to with questions and problems during the early days of running your startup.
9. Knew When to Say Yes and When to Say No
Many small business owners wish they had more management and leadership experience. They would have known better when to say “No” in refusing outside work or being distracted from their core business products and services to pursue tangents. Others say they would have delegated more to employees, worked harder to make sure that employees felt like they were an important part of the team, and trusted staff to get work done without feeling like they had to micromanage every aspect of their startup business.
10. Didn’t Try So Hard to Be Perfect
There’s a saying in business that goes, “You win some, you learn some.” All failures are not fatal and making mistakes can be an important part of the process for new business owners. Not only can mistakes reveal how to do better, sometimes mistakes can even reveal opportunities you might have otherwise missed. Sometimes it’s about the journey, not the destination. Take the advice of what small business owners wish they knew before they started their business to heart and use their experience to become better prepared for your own business launch.