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Small Business in America: Job Engine and More
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Many have pointed to the small businesses across America as being the one saving grace to the struggling economy. Small Business accounts for 60 to 80 percent of all new jobs in America, is pumping money into the economy and is providing consumers with the products and services they need to accomplish their goals.
This has inspired us to study Small Business in America to see who these small business owners are and what they have been doing to help finance their companies, especially during the downturn in the economy.
Small Business Characteristics
Small businesses who responded to the U.S. Census Survey and other surveys have helped illustrate the picture of small business in America.
Home-based business reigns supreme in Small Business in the U.S., with 1 in 2 small businesses being home-based. These home businesses represent a wide array of individuals, with 46 percent being minority owned. And while 57.1 percent of home-based businesses bring in less than $25,000, there were those (6.9 percent) who are bringing in $250,000+ in receipts.
Small Business is serving a large consumer base, with 72.7 percent reporting at least 10 percent of sales were to individuals, 35.3 percent indicating at least 10 percent of sales were to other businesses, 5.2 percent indicating at least 10 percent of sales to local government, and 1.9 percent indicating at least 10 percent of sales were to federal government.
Just over a quarter (28.2 percent) of Small Business is family-owned. But many of these businesses are in their first generation of ownership, with 77.1 percent of all Small Business respondents indicating they founded their business and only 7.3 percent indicating they acquired the business as a gift or through inheritance.
The results of the surveys find that the businesses are owned by a diverse group of individuals. Ages range from younger than 25 to 55 or older, with the majority of owners (66.1 percent) being 45 or older.
Just over half (50.8 percent) are college educated with the others relying solely on experience and mentors for their business success.
And, while becoming a business owner typically results in long hours and periods of financial struggle, 61 percent of owners have indicated that they are highly satisfied with their choice of being a business owner.
Funding the Start-Up
Just as the owners and businesses are varied, how they have financed their ventures has varied as well, with 10.4 percent indicating they started or acquired their business through the use of a credit card and 10.7 percent financing their start-up with a business loan from a bank or other financial institution.
Credit card have long been used by businesses to help with the purchase of day to day supplies, with 80 percent of owners indicating they use credit cards to provide working capital for their business ventures. Surprisingly, only 60 percent of respondents indicate they use business credit cards, meaning they are taking on the extra liability of using a personal credit card for their business purposes.
Small Business is also looking toward banks and credit unions to help launch their companies through business loans. Many have also looked toward the Small Business Association for assistance. The Small Business Association offers loans to minority-owned business across the U.S. with more than 11,000 loans going to minority-owned businesses in 2009.
Funding Your Own Start-up:
Before you fill out that stack of credit card and loan applications, consider this – 25 percent of small business credit card applications and 60 percent of small business bank loans have been rejected this year. By taking the extra time to research each individual credit card or loan, you will know what requirements there are surrounding the loan and if it is the best fit for your company. Also, putting together all of the necessary paperwork, writing a business plan and getting your personal and business credit in order will help increase your odds of being approved for the financing and business credit cards with rewards you need to get your business up and running.
(Research by Andrew; Infographic by Boris; Writing by Meghan)
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