We recently came across some interesting statistics from a survey of business owners done by the United States Census Bureau.  We have highlighted some of the more interesting stats and provided our takes below:

One in 10 businesses (10.4 percent) was started or acquired by owners who used a credit card to finance the start-up or acquisition of their business. A similar percentage (10.7 percent) financed their start-up or acquisition with a business loan from a bank or financial institution.

Ken’s Take:

If you make yourself billable you can certainly start a business with little or no money.  Having low personal overhead allows this as well, as your business and personal finances will be closely linked in the beginning.  Being prompt and professional on billing and collections will allow you run on less working capital.  Cash is king, protect it!

Ryan’s Take:

The fact that 1 in 10 businesses is started with credit card debt scares me a bit. I guess that is the risk-adverse part of me talking.  But those credit cards are likely consumer, which means if the business fails you are personally liable.  Even from the beginning, try to remove personal liability by incorporating your business or creating an LLC.  Additionally, these legal entities reduce your risk of being personally sued and losing everything.

Among firms with payroll any time during 2007, 75.4 percent had full-time paid employees and 58.0 percent had part-time paid employees. In addition, 5.3 percent of employer firms used paid day laborers; 7.3 percent used staff from a temporary help service; 1.3 percent used leased employees; and 36.1 percent used contractors, subcontractors, independent contractors or outside consultants.

Ken’s Take:

The first people you hire are the most important.  Image, first impressions, and honesty are what you need.  A reputation takes years to develop, but can be destroyed in a day.

Ryan’s Take:

I was surprised that such a high percentage of businesses had full-time employees.  This makes my comments from an earlier post on employee motivation especially important.

About 2.1 percent of all firms operated as a franchised business.

Ken’s Take:

I have never owned or operated a franchise.  I have friends who have done so with mixed results.

Ryan’s Take:

Franchises are great because they provide protective cover for a new business.  They usually provide tested business processes, branding, advertising, and consultants to get you started.  However, all these things come at a cost.  The initial fees usually high and their cut of sales can dig into your precious profits.  Franchises don’t really fit my personality, but they might be a good fit for some people.

About 62.9 percent of owners reported working 40 or more hours per week in their business; the same was true for 34.3 percent of owners of non-employer firms.

Ken’s Take:

More than 40 hours is the norm for a business owner.  That being said, you must balance your life and be at the right place at the right time.  Family is really why we work so hard.

Ryan’s Take:

This obviously comes with the territory.  Doing the work (usually) and then managing the business eats up a lot of time.

Business owners were well-educated: 50.8 percent of owners of respondent firms had a college degree.

Ken’s Take:

Bill Gates and I could not wait to graduate.  We were in a hurry to get into the business.  Though college is not for everyone, I would certainly advise it.  It opens doors and provides a nice “plan B”, if needed.

Ryan’s Take:

In the business world people only really care about results, but an education can give you credibility and tip the scales while trying to close a deal.  I have found my education to be very valuable and I have constantly gone back to review things I learned in business school.  Additionally, you can’t under estimate what an education does for your network.  Those contacts are invaluable.

About 36.5 percent of owners were 55 or older, with another 29.6 percent between the ages of 45 and 54. On the other hand, 31.7 percent of owners of firms were between the ages of 25 and 44 and only 2.2 percent were younger than 25.

Ken’s Take:

I fit into all these categories.  My first business at 21, 14 businesses by age 55.  In my youth I had energy, stamina and optimism.  In my grey hair I have wisdom and experience.  Which is more valuable?  Energy, stamina and optimism carry the day when pared with a good mentor.  Oh, to be young again.

Ryan’s Take:

Stay tuned, at 31, I still don’t have businesses to call my own.

More than three in four owners (77.1 percent) reported that they founded their business, while 15.8 percent of owners reported that they purchased their business. Another  7.3 percent of owners reported they acquired their business through an inheritance, transfer of ownership or as a gift.

Ken’s Take:

I have founded 2 companies and bought 12, so I am obviously not the norm.

Ryan’s Take:

So many businesses fail it is not surprising that many do not last long enough to be sold.  It is also likely that the successful businesses are highly valued by their owners and never put up for sale.  The American Dream is starting from nothing and it seems evident from these numbers.