Small Businesses are crucial in maintaining the economy despite the numerous challenges that they face. To run their business, entrepreneurs must find fundings, maintain cash flows and taxes, and pay their employees. Here is a list of 15 small business financial statistics to explain how finances and other important factors are run!
1. According to research, 30% of businesses fail because the owner runs out of money.
The number one reason why most businesses fail is due to lack of an available market. Moreover, most fail because they have the wrong team, get outcompeted, or encounter pricing or cost issues. Other top reasons that most businesses fail are poor marketing, non-user-friendly products, and lost focus on the business.
2. Big Banks approved only 26.9% of Small Business Loans.
Another problem is that bigger banks refuse loans for small businesses, and most of them are covered by small banks or alternative lenders who demand different interest rates.
3. Most Businesses comprising at least 45% of owners, did not know that they had a business credit score
It is more likely for owners with a business credit score to get approved for loans. However, most owners either do not have a business credit score or are unmaintained; therefore, it is challenging to assess loaners’ risk.
4. A majority of owners believe that governments aren’t as supportive of small businesses to open or grow their businesses.
Entrepreneurs often believe that the government is more interested in funding larger businesses and more established companies over small businesses.
5. A high percentage of SBA Loan Failures
A high percentage of SBA Loans went into default after the borrowers could not pay back their lenders; therefore, it turned out to be risky for lenders to trust small businesses.
6. Most Small Businesses can be started for less than $10,000!
It is estimated that most home-based businesses can get a head start with less than $10,000. Also, it is extremely important to determine a budget allocated to each operation of the business. It gives you a realistic idea of your business. Based on this, the owner can set up marketing and advertising budgets.
7. More than 50% of Entrepreneurs believe that a cofounder will help them kick their business to success.
Having a business partner allows more security into the start-up and splitting the workload effectively to get more work done. Moreover, having a business partner enables a second opinion, which is crucial in making businesses successful.
8. Less than 50% of small businesses are profitable
While less than 50% of businesses are profitable, most are either just breaking even or are suffering losses.
9. More than 85% of small business owners earn less than $100,000 annually.
While most business owners are earning a small amount of money annually, some claim that they don’t pay themselves at all.
10. 60% of small business owners claim that they aren’t well versed in accounting and finances.
One of the top challenges that small businesses face is managing cash flow, organizing paperwork, and keeping track of receivables.
11. 50% of small business owners feel that they pay too much in taxes
Despite low earnings, small business owners think that they spend a lot more in taxes, and there must be reforms to cut down on the taxes so that they can sustain themselves better.
12. Less than 30% of small businesses allow purchases through their websites.
Many businesses use their websites for content marketing only; therefore, they miss out on a massive market for their products and an opportunity to raise profits.
13. More than 33.33% of Small business owners have raised compensation for their employees in the past year.
Small businesses contribute a considerable sum to the country’s economy and employ more than half of its workers.
14. More than 50% of entrepreneurs who own a home are more likely to start a business.
Real estate can be a valuable asset for small business owners; that’s why it is more likely for people who have access to real estate to start their own business as it costs less money.
15. 80% of Small businesses are crucial for boosting the economy
It is no doubt that small businesses contribute most to the economy by employing workers, exports, and taxes; therefore, small businesses must be prioritized in every country by lawmakers.
If you are a budding entrepreneur, these are some of the statistics and strategies you must keep in mind to succeed in your business.