Going it alone, at the start of business ownership, can be the best way to save money and get your company off the ground. But when it’s time to grow your business, getting funding is a smart way to make it happen faster. In honor of National Small Business Week, TSheets wanted to find out how self-employed people approach business growth, and part of that meant finding out what the role of funding plays in that growth.
The survey asked 1,062 self-employed business owners if they’ve ever sought funding, how difficult it was to acquire, and whether they received all the capital they needed.* The majority of small businesses surveyed employ no more than 10 people, have been in business between one and three years, and profited under $50,000 last year.
Three-quarters of small businesses don’t seek funding
Overall, 74% of small businesses surveyed said they’ve never sought funding for their business. Of those who said they have sought funding, more than a quarter admitted the process was difficult. What could be even more discouraging is that nearly 40% who sought funding said they didn’t receive any of the funds they requested.
But the need is still there, and small businesses work hard to reach their business goals and reach new customers. Why the need for funding? Again, growth plays a huge role in the decision to ask for capital. Of the people who said they had sought after funding for their business, 71% said they needed the funding to help the business grow. When compared to other responses, growth is clearly the most common motivation for looking to outside sources for funding.
Top 3 reasons small business owners seek funding:
- Business growth
- Pay debts
- Run payroll
It’s not always easy, but funding your small business is possible
Only 22% of business owners said the process of finding funds was easy. 78% were met with some level of difficulty. At the end of the day, 31% said they received some of the funds but not all that she asked for, and 30% said they received all of the funds they asked for. According to the survey, fewer women than men sought business funding, but women were more likely to receive some or all of the funds they requested.
If you’re a brand-new small business owner or the owner of a business who’s looking to move from the bootstrap stage to faster growth and greater profitability, The Small Business Administration recommends looking into funding your business with venture capital, crowdfunding, and loans. Meanwhile, Fundera has a comprehensive guide on how to get a small business grant. Angel investors and finding the right partnership could also help you find the capital you need to take your business to the next level.
*Methodology: TSheets by QuickBooks commissioned Pollfish to survey 1,067 U.S. adult business owners with or without employees. The poll was conducted in April 2019 with a margin of error of ±5 percentage points. The margin of error is larger for subgroups.