T-Minus Five: Report reveals more than half of US small business owners surveyed give themselves five years or less to make it or break it
Xero's new report uncovers what motivates entrepreneurs to become self-employed, how generational perspectives vary and shows COVID-19's effects on business owner outlook
DENVER, May 18, 2021 /PRNewswire-PRWeb/ -- Xero, the global small business platform, today released "The Tipping Point: Making the Jump to Self-Made", a new report that examines the "tipping point" for starting a business, and the driving forces that prompted individuals to take a leap of faith and venture out on their own.
The report, which surveyed 1,200 small business owners across the United States, found that nearly half (46%) of respondents cited a passion for entrepreneurship as their defining moment to starting a business. The other half referenced other factors that prompted them to start their own gig, including horrible bosses and leadership at previous jobs (13%), and not getting promoted or recognized for their contributions (9%).
Taking control of their own destiny
According to the survey, one of the strongest motivators for starting a small business is the belief that it provides greater flexibility and control when you are your own boss (45%). Passion/purpose in work (28%) and financial reasons (15%) were also strong motivators.
Generation Z respondents are more likely to be driven by values and purpose, citing passion/purpose for work (41% vs. 28% overall) as their top motivator. They are least likely to cite flexible working conditions/being their own boss (24%) compared to the other generations: Gen X (52%), Gen Y (47%) and Baby Boomers (42%).
"My decision to start Twenty Six was serendipitous and a knee-jerk reaction to a pandemic that's uprooted millions worldwide," said Rashida Gayle, founder of Twenty Six Entertainment, a full-service sports and entertainment agency. "My ability to pivot wasn't luck or being financially stable, but years of strategy in place. Being my own boss allows me to control how I want to grow and my advice for other entrepreneurs is to stay flexible, create a strategy to stay focused, and set attainable goals."
T-minus five years
More than half (58%) of the small business owners surveyed gave themselves five years or less to make it or break it. The newer businesses give themselves an even shorter timespan on average to make it as a business. Only a third of business owners surveyed have no time limit to determine success or failure.
How the survey respondents define success has also changed over time. When they made the move to branch out on their own, nearly half of small business owners (48%) defined success as achieving profitability and making more money than they were previously (34%).
Fast forward to the present, with their businesses up and running - creating a legacy (28%) has gained importance in the eyes of small business owners, particularly among the younger generation. Thirty six percent of Gen Y and 28% of Gen Z noted creating a legacy as the most important factor, with 21% of Baby Boomers responding the same.
Cautious optimism
While the report found that small business owners are generally positive about the health of their business over the next few months, Gen Z respondents are much more optimistic than their Baby Boomer counterparts.
When asked about their business' outlook in summer 2021 compared to now, 33% of Gen Z believed it will be "much better" versus just 9% of Baby Boomers who said the same. Further, the newer businesses are more optimistic about business outlook – 39% of those in operation for less than one year see the outlook improving to "much better" in summer 2021 compared to 8% of businesses in operation for more than 20 years.
When the going gets tough…
The survey found that COVID-19 has not negatively impacted the majority of the small business owner respondents' desire to continue their operations. In fact, 29% say the pandemic has increased their desire to run a business, particularly among younger business owners (43% of Gen Z vs. 18% of Boomers) and women (34% vs. 24% of men).
"When looking at the results, the outlook differences between newer and older businesses not only relate back to overarching perspective, but also preparedness. The majority of newer businesses have been set up on technology platforms and enabled through digital means since their inception," said Ben Richmond, US Country Manager at Xero. "They're ready for, and in many cases, are expecting disruption, so they've made their foundation malleable and open to pivots."
Additional findings from the report include:
- Men are more likely (34% vs. 28% of women) to say risk was an obstacle to starting a business, while women (28% vs. 18% of men) are most likely to cite self-belief and self-doubt as a challenge.
- Are entrepreneurs born or bred? Business owners surveyed are split in their thinking, with a slight tilt toward the belief that entrepreneurs are bred at 57% overall. Gen Z is the only generation that leans toward being born an entrepreneur at 52%.
- While most of the business owners say they started their business for increased flexibility and control, being the boss doesn't equate to less stress. In fact, that was cited as the biggest misconception about starting a business (47%). Another top misconception is that starting a business will be more fun than working for someone else (25%).
"After spending 12 years working in an accounting firm, I realized it was time for a change. I needed more flexibility and a chance to control what I'm responsible for," said Tate Henshaw, Co-Founder of Arc Business Management. "I never imagined starting a business during a pandemic, but the timing was right, so I went for it. As a founder, the job is certainly more stressful, but I appreciate having greater control over my schedule and how things are done."
For more information and to view the full report, see here.
ENDS
Survey methodology
The research was carried out via an online survey developed by Xero in conjunction with CoreData. The survey was sent out to 1,200 small business owners (0-99 employees) in the US between March 23, 2021 and March 31, 2021.
About Xero
Xero is a cloud-based accounting software platform for small businesses with over 2.7 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero offers an ecosystem of over 1,000 third-party apps and 300 plus connections to banks and other financial partners. In 2020 and 2021, Xero was included in the Bloomberg Gender-Equality Index and in 2020, Xero was recognised by IDC MarketScape as a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications vendor assessment.
Media Contact
Lauren Kido, Xero, +1 (408) 506-6087, [email protected]
SOURCE Xero
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