You might expect fewer business launches in a year like this one, but despite all the extra challenges brought on by the COVID crisis, the number of new businesses started in the U.S. hit a 13-year high in 2020.
A solid customer base is critical as it helps business founders get their company established. Yet new data from business news and how-to website The Manifest shows that 36 percent of founders say that their biggest challenge was building a customer base.
Business founders can look for a customer base early in the process of creating their company by identifying knowledge or product gaps in the market that their company can fill.
Other challenges include maintaining a strong support network. Just 11 percent of founders expressed worries about maintaining a support network outside of their business venture. Support networks can include business partners, family members, and close friends.
Income potential and passion are driving factors for starting a business
More than one-quarter (26 percent) of business founders started their own business to improve their income potential.
Despite the economic uncertainty that resulted from the COVID-19 pandemic, 3.2 million employer identification number applications were received in 2020. Many entrepreneurs took advantage of new opportunities and consumer demands by starting a new business and establishing a new source of income.
Other business founders relied on their hobbies and interests to launch their business. One in five (21 percent) of founders started their business to pursue a personal passion.
Although some markets are highly saturated, passionate individuals can find success by effectively branding and marketing themselves and their company. The internet serves as a useful tool for new entrepreneurs, allowing them to create a website or blog with little overhead costs.
Women in business face unique challenges
Female business founders expressed more worries about starting a business than male founders did, with 83 percent of female founders expressing these apprehensions compared to 75 percent of male founders.
Women face a variety of social and structural barriers in the workplace. A 2019 study found that female founders were 63 percent less likely to receive funding from venture capital firms. These barriers disproportionately affect women of color.
Female founders identified access to funding (20 percent) and paying off debt (11 percent) as their primary challenges. By comparison, only 7 percent of male founders expressed the same worries about debt.
Despite these hurdles, the number of women-owned businesses in the United States increased by 21 percent in 2019.
Potential founders should take these factors and challenges into account when looking to start their business venture.
The Manifest’s survey included 501 startup founders.55% of respondents are female, 45% are male. 44% of respondents are age 55 and older; 42% are ages 35 and 54; 10% are ages 25 to 34, and 4% are ages 18 and 24.