30 Jul State of the Startup 2015
If you open the world’s financial journals you’ll read article after article about the world’s largest corporations. Yet small businesses matter every bit as much, and in some ways more, to our economic health.
Consider a few facts:
- Nearly all businesses are small (99.7 percent in the U.S.; even more outside the U.S.).
- Roughly half the world’s workforce work for small businesses.
- Nearly two-thirds of new jobs in our economy come from small businesses.
- Nearly half the GDP and almost ALL of
U.S. exports come from small business.
Where do these small businesses come from? According to a recent Gallup poll, more than 400,000 new businesses will launch in the U.S. in 2015. However, as positive as all of this sounds, many new small businesses fail before they reach five years.
As the world’s economy sits at a crossroads, more founders are considering new businesses than ever before. The question before them is, what separates the successful startups from those struggles?
2015 Sage State of the Startup study
To get a complete picture of how startups operate, Sage recently commissioned two in-depth studies on new businesses. The first canvassed 524 new business startups in the U.S. and Canada.
They talked to 175 companies founded within the past 12 months, 175 companies that are between 1 and 2 years old, and 174 companies that are between 3 and 5 years old.
In all cases, they spoke to the founder of the new business.
To add perspective, they also spoke with 102 senior executives at companies who routinely nurture new business startups. These executives worked at a variety of companies from formal venture capital firms to accounting practices.
They spoke with senior managers who interact with new business startups on a frequent basis.
Gender differences
Women are a third more likely to found startups than men. Women bring their own unique perspective to startups in terms of the type of business, how they run things, and their own work/life balance.
Generation gap
What is the best age to found a startup? Our findings show 30-50-year-olds, also known as Generation X, overwhelmingly dominate the playing field, founding more than half of all new business. They, too, bring their unique perspectives to bear in many areas, especially marketing.
The entrepreneurial journey
Entrepreneurs are the mythic heroes of our economy. We relish retelling the stories of superstar entrepreneurs such as Steve Jobs, Biz Stone, and Debbi Fields. But are they typical? Most new businesses stay small and don’t change the world (at least, not all by themselves).
Let’s start with a 360° view of what a “typical” new business looks like, according to our research.
Interestingly, most founders pursued business-related degrees in college as opposed to technical degrees (32% have a degree in business administration and management).
Finally, starting a new business is hard. Founders cited the top three challenges they face as struggling to grow revenue, add customers and secure capital. Day-to-day life can be grueling, with long hours and lots of hard work. Why do founders do it?
In a word, new business founders are looking for freedom. The top three reasons they cited for launching their startup were to “be my own boss”, “turn my passion into a business” and “burning desire to work for myself.” Money came in a distant fourth.
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