September 16, 2019
By Mary Miller
Contributing Editor, Main Street Monday
Main Street Monday – Score’s Fall 2019 “Megaphone of Main Street” Highlights Challenges Facing Start-Ups
The challenges faced by start-ups, companies in business for less than one year, are the focus of Score’s “Megaphone of Main Street” this fall.
A snapshot into findings taken from 1,000 entrepreneurs across the nation finds the following:
Finding the “Why”
- 15% of entrepreneurs begin start-ups due to unemployment or underemployment.
- 40% start a business due to a passion for the product or service.
- 30% are looking for flexibility or the ability to work for themselves.
Most entrepreneurs have an average of 11.5 years of experience in the field or industry.
- 66% find support from friends and family.
- 43% are prepared with a solid business plan and taking advantage of a mentor.
- 42% of entrepreneurs start out with less than $5,000 in cash reserves.49% of entrepreneurs start out with more than $10,000 reserved for the start-up business.
- Almost a quarter of respondents began with more than $50,000.
- 78% did not seek nor obtain outside financing, choosing to rely on personal savings or alternate income (from other forms of employment). Falling in line after personal savings and income, bank loans were the next biggest sources of financing (8.2% of all start-ups surveyed) and loans from friends/family rounds out the list (4.8% of all start-ups surveyed).
- Breaking down all outside sources of financing, including loans from friends/family, 10% of all start-ups received more than $25,000.
- Financing was most commonly used to purchase equipment (63%), secure initial inventory (48%, marketing (48%) and to lease or secure a business location (41%).
Finding the Right Team
- During the first year of operation, most entrepreneurs conduct the majority of business themselves out of necessity. Contractors are hired as needed, providing support in areas of expertise such as legal, manufacturing, accounting and technology.
- 46% of start-ups were looking to hire employees during the first year of business and 8% are looking to hire in the next year.
- 52% of entrepreneurs report difficulty in hiring competent workers and filling available job openings.