Starting one’s own business is a common dream among Americans. A survey by Digital.com published in 2022 found that 2 in 5 people planned to start a business that year. A new study by GOBankingRates found that 42% of Americans have considered starting a business. But starting a business is no small feat, and the GOBankingRates study illuminates what is holding Americans back from this endeavor.
According to our research, these are the reasons that stop people from starting a business.
- Not enough money: 43.58%
- Don’t know what type of business to start: 15.76%
- No interest: 15.66%
- Not enough time: 12.94%
- Already own a business: 12.06%
Let’s unpack these reasons and then explore a couple additional reasons that may stop people from starting a business — or at least cause them to heavily hesitate.
When considering that most Americans don’t even have an emergency savings fund, it makes sense that so many would be reluctant to start a business due to not having enough money. But there could actually be a way to launch a business even without a big upfront investment.
“Many would-be entrepreneurs think they do not have the money to launch a firm,” said Christena Garduno, an entrepreneur and marketing expert who owns Media Culture. “But it is important to remember that not all businesses require substantial initial investments. Alternative funding possibilities for entrepreneurs include loans, grants, crowdsourcing and bootstrapping. Effective budgeting, planning and resource allocation can also help to utilize existing resources and lessen financial burdens.”
Uncertainty About Business Type
Because they are unsure of the business they want to launch, many people put off starting one.
“This ambiguity can be debilitating and result in inactivity,” said Garduno.
“To overcome this obstacle, it is crucial to undertake in-depth market research, examine one’s interests and skills, look for mentorship from seasoned businesspeople and participate in entrepreneurship courses or programs. Through these exercises, people may develop new perspectives, pinpoint their entrepreneurial specialization and find lucrative company possibilities that complement their talents and interests.”
Managing both personal and professional obligations is an understandable challenge. Effective time management can help with this.
“Many people hesitate to start a new business because they are concerned that they will not have enough time to devote to it,” said Garduno. “However, prioritizing tasks and managing time is crucial for business success. To make the most of their time, experts advise entrepreneurs to concentrate on developing effective processes, assigning responsibilities and defining achievable objectives. People may carve out the required time to focus on their business by striking a balance and making deliberate decisions.”
Already Own a Business
If you already own a business, you may be wondering, “Should I really start another?” It could be the wisest move to make.
“Launching a new business may seem intimidating for those who already run one,” Garduno said. “However, broadening one’s portfolio of businesses or looking into new opportunities inside an existing company might be a chance for development and creativity. Maintaining an open mind, accepting change and leveraging existing resources, networks and expertise is essential. Business owners may find new opportunities for growth and success by embracing their entrepreneurial spirit and looking into new possibilities.”
Dealing With the Paperwork
One reason that could be holding people back from starting a business, which was not covered in GOBankingRates’ study, is the onus of dealing with all the paperwork.
“Another major obstacle to starting a business is operating the paperwork and accounting side of the business,” said Melanie Musson, a small business finance expert with Clearsurance.com. “You might be an expert in a field, but if you don’t know how to do the paperwork and structural organization, you can’t be successful. People can learn to do it, but it’s not something many feel comfortable with until they find a way to learn.”
Fear of Failure and Risk
Another roadblock people face when thinking about launching a new business is fear of failure.
“As a businessman myself, I believe that the fear of failure and aversion to stress or hard work are key factors that stop people from starting their own businesses,” said Nikita Sherbina, the co-founder and CEO of the startup Aiscreen.io. “Many individuals may be deterred by the risks involved and the demands of entrepreneurship, preferring the security and comfort of a stable job.
“However, from my personal experience, embracing the challenges and overcoming the fear of failure can lead to great success and personal fulfillment in the business world.”
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Methodology: GOBankingRates surveyed 1,028 Americans aged 18 and older from across the country between June 27 and June 29, 2023, asking ten different questions: (1) How do you support small businesses? (Select all that apply); (2) Which small businesses do you most frequent?; (3) How often do you spend money at small businesses?; (4) Do you prefer to spend money at a small business over a chain or major retailer?; (5) Would you choose to spend at a small business over a major company even if it meant paying a higher price?; (6) What do you prefer about a small business over a chain or major retailer? (Select all that apply); (7) Over the past three years, how has your relationship (or spending) with small businesses changed?; (8) How do you interact with small businesses the most?; (9) Have you ever considered starting a small business?; and (10) What is preventing you from starting a small business?. GOBankingRates used PureSpectrum’s survey platform to conduct the poll.