A new study from Sage, the cloud-based accounting software company, challenges the notion that budding entrepreneurs are super young, overwhelmingly male, and obsessed with money.
Sage teamed with two companies: Qualtrics to poll 524 startups in the U.S. and Canada—all in operation for less than five years—and ReRez Research to poll 102 firms who nurture startups. Sage's 2015 State of the Startup study reveals the face of entrepreneurship today. And more often than not, that face belongs to a woman.
The study showed that, at 57 percent, "women are more likely to start a startup than men," said Connie Certusi, executive vice president of small business solutions for Sage North America. They are also risk-takers. "Women are also more likely to not have had experience in the past." Men, meanwhile, are more likely to have held an executive position (23 percent) before founding their startup compared to women (14 percent).
Female entrepreneurs are also more likely to start a retail business (20 percent) or healthcare company (8 percent) compared to men (11 percent and 4 percent, respectively). Women also reported a better work/life balance (55 percent) than men (47 percent).
Women & Gen-X Entrepreneurs Take the Wheel
Millennial success stories may grab headlines, but Gen-Xers and baby boomers are the ones driving the startup scene forward.
Generation X, adults aged 30 to 50 for the purposes of this study, "accounted for more than 50 percent of the new startup founders," said Certusi. Millennials accounted for only 17 percent, baby boomers came in at 29 percent, while Gen-X lead with 55 percent. "As they age, they found it easier to start a business," she noted.
When asked if starting a business gets better with age, 46 percent of baby boomers at least somewhat agreed with the sentiment, followed by Gen-Xers (37 percent) and Millennials (35 percent). Yet, when it comes to running their businesses, there is a "striking generational difference," Certusi said.
"Baby boomers are more than two times as likely to ignore social media marketing," she said. Indeed, they lagged behind in practically all Internet marketing. In email marketing, for example, baby boomers trailed at 38 percent, behind Gen-Xers (50 percent) and Millennials (56 percent).
First Freedom, then Money
Though their business approaches differ, the survey respondents generally found common ground on the reasons why they started their businesses.
"In a word, new business founders are looking for freedom," stated the report. "The top-three reasons they cited for launching their startup were to 'be my own boss', 'turn my passion into a business' and 'burning desire to work for myself.' Money came in a distant fourth."
Starting a new, sometimes risky venture, boiled down to "passion and pride" for respondents, said Certusi. "They had an idea and wanted to bring that to reality."
Secrets to Startup Success
Top-tier startups—businesses that display superior performance in top-line revenue and profitability among other metrics—were more likely to have more than one founder calling the shots (59 percent). "They tended to have a partner that was in the business with them, someone there to share some of the startup burden and augment their skills," Certusi observed.
Successful startups were also "78 percent more likely to create a business plan before they launch," she said. They also were more likely to consult with professional advisors; use the latest Internet marketing tactics; and strike a sanity-saving work/life balance.
Not all startups are on the right path, however.
Nurturers, or senior executives that routinely lend startups an ear, and occasionally a hand, said that two out of five startups will eventually shutter their doors. Usually, they fail as a consequence of taking on too much debt, not controlling costs and skimping on market research before embarking on a new venture.
For some businesses, their books simply don't pass muster. Over a third of nurturers (36 percent) don't trust the financial information they get from entrepreneurs, a situation that can be remedied with the help of an accountant and software that tracks every last cent.
Pedro Hernandez is a contributing editor at Small Business Computing. Follow him on Twitter @ecoINSITE.
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