Hiscox’s eighth annual DNA of Entrepreneur report looks at the state of small businesses in the United States, United Kingdom, France, Spain, Germany and the Netherlands. The report examines the opportunities and challenges currently faced by entrepreneurs. Over 4,000 small and medium-sized businesses with up to 50 employees were surveyed. Of those, over 1,000 were located in the United States.
Owning your own business continues to be the American dream, with 50% of U.S. respondents saying they always knew they wanted to be their own boss.
Surprisingly, the study found that only 37% of entrepreneurs cited ‘making more money’ as the primary motivator to starting their own business. The biggest motivators to starting their own business were more flexibility over working hours (68%); being in greater control (61%); and the ability to work from home/remotely (57%). And, while they prioritize flexibility over working hours, entrepreneurs are taking little to no vacation as more than one in five (22%) claim to take no holiday at all.
Entrepreneurs in the U.S. are confident and optimistic. Of the U.S. companies surveyed, 70% reported revenue growth over the past year, and nearly as many, 68%, reported growth in profit. Even more companies, 73%, said they increased the number of new customers over the past year. The sectors that showed the most growth were financial services; hospitality, which includes food, drink, travel and leisure; and technology, media and telecom.
Bullish on hiring
Of all the countries surveyed, businesses in the U.S. reported the highest level of optimism for the year ahead. In the U.S., 23% of business owners intend to increase their headcount in the upcoming year. This year’s report also looked at the topic of succession planning. Surprisingly, 61% of U.S. small business owners do not have a succession plan in place.
Small businesses in the U.S. are struggling with funding with 17% reporting that bank funding is more difficult to come by this year, a figure that was just 13% in 2015. Some business owners (23%) are using their personal credit card to help finance their business. Also, given the difficulty of obtaining traditional bank financing, U.S. small businesses are turning to alternative means of funding, including venture capital (11%) and peer-to-peer (15%).
The report also found that business owners in the U.S. are more likely than those in other countries to draw income from other sources in order to support themselves, with 44% of respondents indicating that they do so. The number of business owners doing this was highest among those under 30 and over 60 years-old.
Just over a third, or 34% of U.S. business owners, think the government’s policies support entrepreneurs, a decrease from 37% last year. Respondents cited the following ‘wish list’ of government actions to support small businesses: reduce direct taxation, stimulate lending; subsidize training and professional development courses; and relax employment laws. In the U.S., 31% of respondents say political instability is negatively impacting their business.
Despite the challenges and obstacles before them, small business owners recognize that nothing great can happen without risk. They continue to take courageous strides to grow their business. The state of American entrepreneurship remains one of cautious optimism. Growth in revenue and profit is expected over the coming year. Economic and political forces continue to challenge. The risks to success are well defined, but there is the potential to manage them better. The American dream of ‘being your own boss’ is alive and well.