Pick up nearly any business journal these days, and you’ll find stories about impressive ‘get rich quick’ type entrepreneurs:
- VC-funded start-ups
- start-ups using SPACs
- day traders making millions off of cryptocurrency
- Instagram influencers and TikTok teens with millions of followers.
It’s just so easy to be a millionaire these days! At least it sounds that way if you follow the news.
And then add on top of that all the stories about the “Great Resignation” – the 4 million Americans quitting their jobs every month for the past six months. But when you review the data, it sounds like people are leaving a job with a large employer to find another job with another large employers. Sure, there are some aspiring entrepreneurs in the bunch, but much of it is more of a re-shuffle than a resignation. As a matter of fact, in December of 2021, while there were 4.3 million “quitters” there were also 6.3 million new hires.
You know what you don’t see in the news nearly as often?
- Stories about small business owners taking pay cuts to keep paying their employees when there is a downturn
- Employees who quit their job to start their own business, knowing they could do a better job than their former employer
- Machine shops that have been passed down to a second or third generation, with no social media presence
- Technology firms financed by personal savings and deferred compensation of owners hoping to become an ‘overnight success’ in six or seven or ten years.
What is your start-up story?
The majority of small businesses (over three-quarters) are self-funded, relying on personal savings accounts to launch and fund their business. And about one-third of new businesses are able to get started with only $5000 or less. The average funding of a new business is around $10,000, while the average funding of a VC seed round is $2.2 million. Quite the difference!
Here in my Midwestern small town, we don’t see a lot of VC fund firms coming around. The expectation is that if you want to start your own business you are bootstrapping it. Even the banks aren’t as inclined to fund very small businesses, because the small loans needed to start-up aren’t worth the time to review them.
As a result, the small businesses in this area don’t make the national news, unless the U.S. President or a senator is visiting for a photo op in a manufacturing shop that supports his (or hers, but mostly his) ideals.
What is your start-up story? How did you fund your business when you got started? I’d be willing to hazard a guess that it was more bootstrapping than VC funding.
Who is the everyday entrepreneur?
The Small Business Association defines “small” as 500 or fewer employees. There are 31.7 million small businesses in the United States, by the SBA definition. But out of those, just over 80 percent, or 25.7 million of these small businesses are one-person businesses (or “non-employer businesses” per SBA). The remaining 20 percent, or 6 million small businesses, employ nearly half of the workforce.
Small businesses account for nearly two-thirds of new jobs created in this country according to the SBA. They are also more likely to be the developers of emerging new technologies than big businesses.
So, while the VC-funded Silicon Valley startups and the giant public corporations dominate the news, it is these small private businesses that drive the economy, growing and hiring employees and seeking out innovation daily.
What motivates small business owners to leave the giant corporations and set out on their own for the risky and often thankless path of ownership? Apparently, it’s the fault of the giant corporations. The top two reasons for starting a small business are the desire to be your own boss (rather than report to one) and dissatisfaction with Corporate America.
What motivated your decision to start your business? And would you ever go back to corporate America or are you forever an entrepreneur now?
Running a business on an island
Alright, we’ve established with some data that small businesses are the lifeblood of the economy and the main source of new job creation. They are the top innovators, run by people who are fed up with Corporate America. Does that ring true to you?
If that’s the case, then why do so many business owners feel isolated as they make decisions about running their business? This is especially the case for the smallest small businesses. Certainly, a business with 300 or 400 employees runs differently than one with 2 or even 40 employees. If you are the business owner of a very small business, then you are likely the main decision maker in the company. No Corporate Boards, C-Suite, VPs of Long Range Planning or VPs of Financial Analysis or anything like that (as I brought up in a recent blog post).
In my roles as Team Lead and Market Research Specialist for the National Center for Economic Gardening, I get the honor of interacting with small business owners across the country on a regular basis. I hear about their top concerns for their businesses and have seen how similar the concerns are across all industries. Top issues typically revolve around finding new employees and finding new customers. Not a big surprise!
What are your top concerns as a small business owner? Do these issues match your own?
Who supports the everyday entrepreneurs?
While small business owners might alone in the decision-making process, it doesn’t mean that there are no supporters of small business out there to help. The business owners I work with are quick to acknowledge the valued relationships they have with organizations devoted to helping small business. This includes government organizations like the Small Business Development Centers located across the country, local Chambers of Commerce, Economic Development Organizations, and trusted sources like their bank and their accounting firm.
The one thing that separates all of these trusted sources from you, the small business owner, is that you are still the sole decision maker. These resources can provide you with information, loans, financial analysis and networking help, but the strategic decisions about where you want your company to be headed are all on you.
And that is a very important difference. I have worked as an employee of several very large companies that have a Board, a C-Suite and a team of strategy experts determining the direction for the company. Then as an employee, I am told what the corporate strategy is for the year and how that filters down to my personal goals and tasks. And even those running the corporation have a team of experts focused on setting the strategy and laying out the path.
Three Cheers for the Everyday Entrepreneur
It is that difference that stands out to me. The path of the company, the goals, the future of the company are all up to you, the small business owner. What a remarkable thing to be in charge! What a terrifying thing to be in charge!
Now I may have some of those responsibilities in my own solopreneur business – but that is nothing at all like the ‘everyday entrepreneurs’ I work with. I don’t have employees who are counting on my business decisions for their income and to support their families. With no employees, I haven’t had to make decisions about raises or hiring or layoffs. And I won’t be passing my business down to my children.
I am your number one fan, small business owner. As a consultant that works with small businesses, and as a spouse of a small business owner, I understand and appreciate all you do to start and grow your small business. I have made it my mission to work alongside you, to offer tools and information and platforms to bring small businesses together so we can all help each other.
It’s time for everyday entrepreneurs to get the recognition they deserve.
Be sure to thank your fellow small business owners for all they do for this country and their community! I appreciate the weight that rests on your shoulders.
Hey small business owners – how do you find time for strategic planning for the future of your business? Consider a Business Owner Roundtable Group
We need to come together to help each other as we work to stay profitable and relevant in a world that is way too focused on big business and VC startups. The best way to do that is to meet with other small business owners and hold each other accountable to decision making and strategic planning. Join a virtual business owner roundtable group and see what a difference it makes!