Small business owners reported increased access to credit and more willingness to invest personal savings into their ventures in 2013, according to the second annual Kauffman Foundation/LegalZoom survey of entrepreneurs.
The survey, “Who Started New Businesses in 2013,” was carried out with companies that were recently formed using LegalZoom, a nationwide provider of legal services to families and small businesses.
Thirty-seven percent of new business owners in the survey said they had met with no difficulties in starting or operating their companies—down 3 percent from 2012. But among those respondents acknowledging such difficulties, 36 percent named unpredictability and 29 percent cited lack of access to credit—dramatically down 19 and 17 percentage points, respectively, from 2012.
Suggesting a growth in entrepreneurial confidence, business founders who reported a greater use of personal savings to start enterprises leaped from 66 percent in 2012 to 86 percent in 2013.
“In previous reports benchmarking entrepreneurial confidence, various elements indicated business owners’ often optimistic outlook on the economy,” LegalZoom CEO John Suh said in a release. “But few actions correlate more directly with economic confidence than personal investment. Investing personal savings to start a business when credit is readily available signals high conviction in the future.”
Other enhanced sources of funding reported by startup owners in 2013 included credit cards at 16 percent (up 6 percent from 2012), retirement savings at 8.5 percent (up 2 percent) and bank or home equity loans at 6.5 percent (up 2 percent).
Additional survey results showed that businesses with one to four employees increased from 25 percent in 2012 to 26.5 percent in 2013. And 12 percent of respondents had revenues above $100,000, an increase of 4 percent from 2012.
“Entrepreneurs are on the economy’s front lines daily,” said Dane Stangler, vice-president of Research and Policy at the Kauffman foundation. “The fact that the survey shows small, positive growth among these companies suggests that economic recovery may be gaining vibrancy on a broader scale, as well.”
