Here’s some rosy data about business ownership: 9 out of 10 business owners have no regrets, almost as many would do it all over again, nearly ¾ are better off financially since starting their business, and more than half have “financial peace of mind” and enjoy what they’re doing so much that it’s hardly a job. Makes you want to run right out and start a business, doesn’t it?
If fact, “run right out” is how most people in business for themselves got started. Nearly 80 percent confess to having been unprepared when they launched. And 85 percent started up on their own or with others—most with personal assets or other household income. Only about 1 in 5 took a loan from the bank, credit cards, or friends and family to start up, and even fewer bought their business (12 percent) or inherited it (2 percent).
The stats come from a survey of more than 500 business owners who’ve been in operation for at least 5 years. A recent Harris Poll, commissioned by Bank of the West, asked experienced owners to “pay it forward” to would-be entrepreneurs by sharing their advice about the risks and rewards of business ownership.
"Through our close relationships with business owners, we’ve seen firsthand how important a ‘take the plunge, don’t hesitate’ attitude can be toward starting a business,” Michelle DiGangi, executive vice president of small and medium enterprise banking at Bank of the West, said in a statement about the survey results. But, she added, “We’re also reminded that it’s just as important for small business owners to create a plan, consult a financial expert, and make sound hiring and marketing decisions to maximize the level of success they can achieve."
Here is the key advice experienced owners who were surveyed have for those starting out:
- Separate business finances from personal finances
- Maintain a healthy cash reserve
- Manage cash flow
- Create a budget and stick with it
Though few regret going into business, there are some things they’d have done differently. Among the mistakes many said they have made:
- Didn’t do enough marketing and promotion
- Hired a friend or family member who was less costly, rather than the right person for the job
- Didn’t have the right tax and/or legal support
- Didn’t invest in enough technology
- Was unprepared to deal with hardships such as slow times, taxes, and healthcare benefits
- Neglected hobbies, relationships, and own health
- Would have benefited from the advice of an expert
Asked to define success, most business owners say revenue growth or customer growth is their measure. Asked how they achieved that, more than three fourths said “service” and more than half also cited “expertise” and “price.”
As for the outside expertise they most valued: More than half say they have relied on accountants, financial advisors, their personal networks, and attorneys. For more data and insights from the survey, check out the Bank of the West blog.