Starting a business can be terrifying.
Many startup myths threaten to hold back even the best-intentioned entrepreneurs.
The statistics don’t do much for confidence: 20 percent of new companies fail in their first year, and only 50 percent survive through their fifth year.
In spite of those sobering numbers, today, there are close to 400 million entrepreneurs worldwide.
Many people looking to start a business hesitate because they’re don’t know what it will take to get started. They wonder, for example:
- What percentage of entrepreneurs are successful?
- What is the average age of an entrepreneur when they start a business?
- What is the job outlook for an entrepreneur?
- What is the average salary of an entrepreneur?
- How often do new businesses fail?
- What is the main reason that entrepreneurs fail?
Let’s look at the essential facts and statistics to help you understand what being an entrepreneur really looks like, how you can increase your chances of success, and what you can expect once you start living that startup life.
Here are the most important statistics every entrepreneur must know:
1. General facts and statistics
How many new businesses fail?
You’ll want to do everything you can to foster the success of your new business.
As we explained in Powerful Branding Lessons From The World’s Best Brands:
A brand is the sum total of the experience your customers and customer prospects have with your company.
A strong brand communicates what your company does, how it does it, and at the same time, establishes trust and credibility with your prospects and customers.
Your company’s brand is, in many ways, its personality.
Your brand lives in everyday interactions your company has with its prospects and customers, including the images you share, the messages you post on your website, the content of your marketing materials, your presentations and booths at conferences, and your posts on social networks.
While the failure rates for new startups are high, business failure rates are actually in a pattern of long-term decline. According to Entrepreneur, the rate that entrepreneurs in the US have failed has fallen by 30 percent since 1977.
If you’re looking for some thriving industries, consider:
- Virtual and Augmented Reality (VR/AR),
- Medical Marijuana,
- Financial Technology, and
We won't ask for secrets or specifics.
2. Ideal locations to start a business
Where can you find cities with great environments to foster startup success?
The United States provides a phenomenal environment for promoting startup ecosystems, ranking 1st out of 138 countries using the Global Entrepreneurship and Development Index.
In fact, 6.02 percent of the US adult population owns their own business as their primary source of income.
Not sure where in the US to start your business?
We’re partial to Chicago.
Chicago is home to many successful startups, including crowdspring,
Chicago boasts a thriving startup scene, an incredible 10 times a return on investment, and pretty outstanding hot dogs.
KPMG’s survey backs us up, with more than 800 tech leaders ranking it in the top ten tech innovation hubs worldwide.
Beyond Chicago, there are many other great cities in the US for startups and entrepreneurs.
If you’re feeling especially restless and adventuresome, embrace your inner globetrotter. Here are 11 cities worldwide where startups are flourishing.
What if you can’t afford the rent?
Not sure you can afford an office in one of these fantastic, but expensive, cities?
Consider a coworking space.
Co-working spaces tend to provide businesses with savings up to 30 percent, which can be huge savings for new companies with a lot of expenses to contend with. Such spaces offer a great solution for affordable office space and for networking.
At the end of 2017, nearly 1.2 million people all over the globe had spent time working from a co-working space. Co-working spaces have grown an impressive 89 percent in the last 12 months, and 300 percent since 2010.
Here’s a good look at coworking spaces in Chicago.
3. Where does the funding come from?
80 percent of entrepreneurs funded their business out of pocket.
The remaining 20 percent?
Ah, the kindness of strangers… or Mom, Dad, and Aunt Susan. These entrepreneurs benefited from the generosity of family, a bank, or interested investors.
4. The profile of the average entrepreneur
What does the average entrepreneur look like?
It’s typical to picture the “average” entrepreneur as a twenty-something, but this is a myth.
According to a First Round survey, the number of startup founders in their twenties falls somewhere around 20 percent. A paltry 3 percent are between the ages of 21 and 25.
Founders of the companies with the highest growth clocked in with an average age of 45.
Also contrary to the popular myth, the average entrepreneur isn’t an unwashed college dropout living in his parents’ basement.
While it is true that 51.6 percent of businesses started out running from someone’s home, many of those entrepreneurs were well educated.
39 percent of business owners have a bachelor’s degree or higher.
In a survey run by the Kauffman Foundation, 95 percent of the business founders surveyed had at least a bachelor’s degree, and 47 percent had even more advanced degrees.
Stay in school if you want to be successful.
When you think of an entrepreneur, you probably picture a man, right?
While startups are still dominated by male entrepreneurs, women are starting to grow their presence.
While only 40 percent of new entrepreneurs in the United States are women, the rates of female entrepreneurship are increasing. At an average of 10 percent across 51 different economies, the growth rate for women as entrepreneurs hit ten percent, higher than the comparative five percent growth rate for men.
For more about this, read about 5 key traits that make women successful entrepreneurs.
Does having experience matter?
Company founders were 125 percent more successful if they had worked previously in a similar industry as their new companies.
Tellingly, when 51 percent of entrepreneurs were asked, “What’s the best way to learn more about entrepreneurship?” they answered with a decisive “Start a company.”
Entrepreneurs who began their careers working for someone else before venturing out on their own benefited significantly from their industry experience. Armed with experience as the best teacher, these entrepreneurs had about a 30 percent chance of success in their business venture.
Compare that to the first-time business owners with a comparatively meager 18 percent chance of success, and you might want to sit things out until you get to know how the industry sausage is made.
Don’t beat yourself up if you do try and fail, though. Entrepreneurs with previous failures increase their chance of success the next time 20 percent.
What should you study to be an entrepreneur?
An entrepreneurship education might mean an actual entrepreneurship degree.
You might find more versatility – and more interest – in a broader category of business education. The well-rounded approach might better prepare you for the challenges you’re bound to face in an entrepreneurial career.
While no straightforward path in education will lead you to startup success, a business-related degree can’t hurt. Combine any education with something directly related to your field.
For instance, if you want to open a restaurant, having some kind of hospitality training is essential.
If you’re looking to create an app for the financial tech world, having education in finance and technology is pretty important.
For an idea of where to start, take a look into any of the following:
- Business management
- Business analytics
- IT/Software Engineering/UX or UI Design
- International business
- Hospitality management
Looking to improve your education level to strengthen your odds of success, but not sure you have the time to travel all the way to your nearest university?
There are many online programs that can help you improve your business skills.
5. Living the startup life
Being an entrepreneur isn’t easy, and it takes a certain personality type to truly be successful.
Problem-solving, self-discipline, and flexibility are all critical components of successful entrepreneurs, and will come in handy when tackling the challenges – and rewards – of the startup life.
What is the average annual salary of an entrepreneur?
According to a study from American Express OPEN, the average entrepreneur pays himself or herself an annual salary of $68,000. According to the same study, 15 percent of entrepreneurs feel that they need to work a second job to help make ends meet.
The core takeaway is there may not be a big payoff at the beginning, but things can still come up roses with more effort and time.
But the hours are good, right?
A survey of hundreds of entrepreneurs revealed:
- 19 percent work 60+ hours per week,
- 30 percent work 50-59 hours per week,
- 33 percent work 40-49 hours per week,
- 14 percent work 30-39 hours per week, and
- 5 percent work less than 30 hours per week.
The upside of this is that 73 percent of the business people surveyed said their hours were more flexible now than when they worked for someone else.
The long hours don’t necessarily mean that you’ll be working without breaks, based on the survey results. The same survey found that when it came down to vacations:
- 44 percent take 16 vacation days or more each year,
- 26 percent take 11 to 15 vacation days,
- 19 percent take 6 to 10 vacation days,
- 11 percent take 1 to 5 vacation days, and
- 2 percent never take any vacation days.
That last 2 percent may be burning the midnight oil just a little too intensely, but the stereotype of the endlessly hustling entrepreneur is a hard one to shake for some.
Based on these numbers, the idea that a startup will take as many hours as you can give it seems to hold true.
This attitude is changing, however, as people start to push back on the idea that you need to continually be on the move to succeed. Many entrepreneurs have stepped back and reevaluated their attitudes towards work. Johnathan Goodman wrote about this for Entrepreneur.com:
As entrepreneurs with so many hats to wear and fires to put out, it’s all too easy to get pulled in multiple directions and lose sight of what’s truly important and what’s not. It took me a long time to realize that “hustling” every day didn’t get me to where I wanted to be any faster. So, I stopped the hustle, prioritized the most important areas of work and spent my spare time on things that make me happy. The result? More success in business and a higher quality of life.
This approach may not work for everyone trying to start a business, but it’s worth considering. We’ve examined entrepreneur health and wellness before, and work-life balance is a vital part of that.
Even so, you should prepare yourself for long hours. It’s unlikely that you’ll see a short-term payoff until your business gets off the ground.
If you’re looking to improve your mindset and your capacity to put your head down and get it done, check out How Self-Discipline Can Unlock Your Business Success to strengthen your self-discipline skills.
As you’ve seen, the road an entrepreneur travels on is rarely paved with gold, but with effort, discipline, a well thought out business plan, and a little bit of luck, you may find your way.
No matter what direction you may go, knowing the numbers and being prepared is a critical part of success.
But there’s one thing more important than being prepared. As Simon Sinek said, “dream big. Start small. But most of all, start.”
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