Survey Performed by Guidant Financial
Commentary by Benjamin Weiss of Flippa
Small business ownership has never been more exciting. As the world hurdles towards an increasingly digital future, it’s easier than ever for the average person to start their own business. Compared to the days of yore, when starting a business might have meant renting space in a commercial or industrial building, purchasing office equipment, investing in manufacturing machines and supplies, hiring a small team, spending 60+ hours each week in an office or at your shop, and getting out about town when you found the time, handing out flyers or purchasing expensive advertising in newspapers or local television to attract customers to your business, investing in a digital asset and starting a business from the comfort of your home office is a relative walk in the park.
Flippa works each day with small business entrepreneurs, allowing them to own their future by investing in online businesses that they can build into incredible profit centers. Recently, we at Flippa teamed up with our friends at Guidant Financial to gain a bit of insight into the world of small business ownership, particularly in the online industry, and some of our findings were highly intriguing. Enough so, that we wanted to share a bit here with you in the hopes that it can get those entrepreneurs on the edge of investment excited to take the plunge and to let those already deep in the waters know that they are not alone in both their successes and their struggles. Digital entrepreneurship can be a wild ride, but one that people are standing in line to join.
Why did you go into business for yourself?
The first thing that stood out to us in this study was the reasoning behind the majority of digital entrepreneurs deciding to take the step into business ownership. While we would have originally assumed that a number of business owners came out of necessity – having either lost their corporate job or been thrust into a new life scenario that they weren’t prepared for – only 5% of those surveyed claimed these reasons.
So, why do most people start their own business? 65% of respondents were simply ready to be their own boss. Dissatisfied with corporate America and through with trying to climb the ostensible “corporate ladder”, online business owners are seeing the digital community as a worthwhile and relatively easy leap. Switching from the suit and tie commute downtown to the tshirt living room hustle is an exciting opportunity and one that allows you to live life by your own rules.
Interestingly enough, the second highest response, with 55% of respondents reporting in favor, was the desire to purpose their passion. Long are the days when you’d go to work to get a pay check and come home to your family and your hobbies, dealing with the grind as that is just how life works. The modern business person wants to enjoy every aspect of their day, the pay check only being one part of the equation. Having the opportunity to work in a category that brings a smile to their face is increasingly important.
What is the toughest part of running your own business?
Running a business isn’t all fun and games. There are plenty of challenges, many of them dependent completely on the business, but there are a number of business aspects that seem to affect a whole lot of small business owners.
50% of respondents claim that a lack of capital is one of the toughest parts of running a business. This comes as no surprise to us at Flippa as it’s something that we hear quite often as a reason for owners to sell their companies, particularly if they own multiple – they simply need more capital if they want to grow, often selling one business to finance another. It’s quite common that a business owner can find their pace after a few months of growth, start generating a steady profit, and then hit a wall. Without putting every penny back into the company or finding outside investment for tools, staff, or marketing, it can be tough to grow, but certainly not impossible.
Relatively surprising to our team was that nearly 50% of respondents also claim that marketing and advertising is one of their biggest hurdles. Perhaps it’s because so many Flippa users are experts at SEO and ad retargeting schemes, but it was a bit of a shock to hear how tough the marketing aspect of running a business can be for many owners. So, if this is you, don’t worry, you aren’t alone. Luckily there are plenty of resources out there, even within Flippa’s own blog, that can help you conquer the world of digital marketing, and trust us, it’s much more affordable to advertise in the digital age than ever before. With audience targeting and the many ways to split a budget, the return on ad spend (ROAS) can skew greatly in your favor once you learn a few tricks.
The other surprise to us was that 36% of respondents have a tough time with time management. There are two likely scenarios for this response. First, this may simply be the outcome of moving from a structured, corporate environment to one in which you are completely responsible for your own time and tasks. While this can sound fantastic, there is a real learning curve to this change in business lifestyle. Secondly, there are a lot of factors involved in running your own business that a new owner might not have thought about at the beginning. Everything from tax paperwork to responding to customer support messages can fall on the shoulders of the sole business owner and until you lock down a system that works for you, or outsource a bit of help, it can feel a bit overwhelming.
How happy are you as a business owner?
Sure, running your own business can be tough at times, but when it comes down to it, how many of those surveyed are happy about their situation? Turns out that 73% of respondents are either very happy or somewhat happy to be running the show with another 17% not feeling one way or another about the situation. So, the answer is yes. The overwhelming majority of small business owners are either happy with their situation or if nothing else, not mad about it.
What was the total cost to launch your business and if you had additional capital, what would it be spent on?
Fascinatingly, 77% of respondents started their business for under $50,000. This is truly incredible. Can you imagine starting a brick and mortar business for anything near that number? Rent alone in a high traffic area can cost more than that per annum. This stat is one of our favorites of the entire survey as it goes to prove how important many of the seemingly small listings on Flippa can be to the right owner. When it comes to digital assets and online businesses, the old adage of “it takes money to make money” is thrown out the window. Sure, it takes a bit of money, but what it really takes is initiative.
So, how would these owners spend their money if they were given a bit of capital to throw around? The majority (60% of respondents) would tackle their marketing plans. Spending on advertising is incredibly important these days, particularly with the relatively recent changes to social media algorithms making it tough to crack through the noise organically.
What are your plans when the time comes to move on?
It certainly doesn’t surprise us, but it definitely makes us giddy to know that 72% of respondents claim that they would plan to sell their web business on a marketplace such as Flippa when the time comes to exit their business. This is the reason that Flippa exists. There are more digital assets in the world than there are cars, yet there aren’t used asset shops on every corner. We exist solely to help small business owners own their future by giving them the opportunity to sell their hard work to other eager entrepreneurs.
What is the primary reason for not taking the first steps in purchasing or starting an online business?
No real surprise here, both funding and and a bit of self motivation are the primary factors. While there are a number of relatively affordable starter site businesses available on Flippa, it can be a bit frightening to put your savings into a business for the first time. Investing in yourself is the best investment that you can make, but it doesn’t mean it’s easy. If money is tight and you aren’t ready to jump into the deep end, take a look at some of the starter sites available on Flippa and consider working on a little side project before going full steam ahead. Get your feet wet, learn the ropes, and then take the opportunity to become your own boss.
The movie towards owning your future with an online business is building rapidly. People are becoming more and more fed up with the traditional corporate lifestyle and are finding ways to make money through entrepreneurship in the digital space. It can be tough at times, particularly thinking about finances and marketing, but overwhelmingly, those who take the step in to ownership are enjoying their lives.