What accounts for the dip? It may be that would-be entrepreneurs sidelined in 2009 and 2010 by the fallout of the recession jumped in later, resulting in the upward trend in new ventures that began in 2011. Last year’s decline might indicate that rates are “settling down to more reasonable levels,” says Babson College Professor of Entrepreneurship Donna Kelley, the GEM Report’s lead author. “On the other hand, it may be an indicator of uncertainty or greater pessimism in the economy,” says Kelley.
More people may be hanging on to their jobs rather than take the risk of starting a company. They may not be seeing the kind of favorable signs that give them the confidence that people would fund their companies or buy their products, says Kelley. “We also found in our broader societal level measure of attitudes that fewer Americans believed there were good opportunities for starting a business,” she says. That percentage fell to 47% in 2015 from its high of 51% in 2014.
Those who did start companies got going with an average of $17,500. Women reported using half as much funding to start companies as men — $10,000 vs. $20,000–which suggests that women might have few resources to use at launch or that they felt they didn’t need additional resources to start. About 57% of launch costs come from entrepreneurs themselves.
And while bank loans don’t grab the headlines the way VC deals or great crowdfunding campaigns do, they remain crucial for many startups. Additional startup funding was most likely to come from banks, at 36%, followed by family or private equity/venture capital (both at 24%), government (22%), employers or colleagues (16%), friends (15%), and crowdfunding (12%).
Founded in 1999, the GEM report is created annually by Babson College and Baruch College. Among the GEM’s other noteworthy findings:
The gender gap persists. Since 2001, the rate of men’s entrepreneurship trends at about one and a half times that of women. But the rate of women’s entrepreneurship in the U.S. is higher than in most other innovation-driven economies—and twice the rate of many innovation-driven European countries. The gender gap is also greater among established businesses than new ones.
Women start different types of businesses than men. About 59% of women entrepreneurs start consumer-focused companies compared to 39% of men. Consumer businesses such as retail, consumer services, and hospitality often have lower barriers to entry, says Kelley. That makes them easier to start but also means more competition and a higher rate of failure.
Women are more social. About 12% of Americans are leading or trying to start a social enterprise, and while women account for about 39 %of total entrepreneurial activity in the U.S, they account for 49% of social entrepreneurship activity. Among women, those between the 35 and 44 are more likely to start social enterprises than women of other ages, while men maintain similar rates among age groups.
A win for women in Texas. Nationwide, there are 60% more male than female entrepreneurs. New York and Ohio show an equal mix of both men and women engaged in entrepreneurial activities. Texas is close to equal, and also has the highest rate of women entrepreneurs.
African-Americans start more businesses, but are less likely to sustain them. African-Americans start businesses at higher rates than Caucasians, 14% vs. 12%, but are about half as likely to own established businesses, 4.5% vs. 8.7%.
Entrepreneurs want money and freedom. In the U.S., 69% of entrepreneurs said they were motivated to start by the pursuit of opportunity and the desire to increase their income or the level of independence in their work.
Startups are not all unicorns and IPOs. The startup struggle is real.
You ever see that image about success with the straight arrow going up on the left that reads, “What people think it looks like,” and then a squiggly arrow on the right that wraps itself in loops and looks like a mess and states, “What it really looks like”? The more experienced I get, the more real that depiction becomes.
I’m not here to write about watered-down BS than can be found in any self-help book. I want to keep it real with you, as I’m interested in building authentic, genuine business relationships with all of my readers. It’s the reason why I write about my personal struggles
Here's a brief timeline of my personal startup struggles:
In 2011, I was building one of my startups. I had sold my car to have extra cash on my fundraising road. In the 11th hour, when my savings was about to run out, and all of my bills compounded and rent due, I received a six-figure investment.
That same year, after building my companies for the past two years, just as things were starting to take off, I was sent away to prison for two years and lost everything.
In 2013, I had $200 to my name and a whole lot of ambition.
Later that year, while working with another person, our relationship went sour and all of my clients and funds were gone. I had to scramble again to figure out how to keep persevering in the face of negative circumstances.
Startup struggles happen, and it’s at these points that our strength, tenacity, resiliency, courage and motives as entrepreneurs are tested and sharpened. Here are some tips and examples of struggles of other entrepreneurs to help you get through these rough patches:
1. Realize you’re in good company.
Henry Ford went broke five times before he founded the successful Ford Motor Company. Bill Gates failed with his first business, Traf-O-Data. Steve Jobs was kicked out of Apple. While J.K. Rowling was writing the original Harry Potter book, her life was a self-described mess: she was going through a divorce and living on government aid and in a tiny apartment with her daughter before building her $15-billion brand.
Reading stories about successful entrepreneurs is encouraging and helpful. Being an entrepreneur can be lonely, and when we realize we’re in good company it alleviates pressure from difficult circumstances.
2. Embrace change.
There are countless examples of entrepreneurs, technologies and companies disrupting competitors, business models and entire industries. Look at what Facebook did to MySpace, Napster to the music industry, Craigslist to local newspapers and Amazon to bookstores (and countless other spaces). The disruption occurs when companies fail to embrace underlying change.
As entrepreneurs, we must realize there are countless opportunities in times of change. The reality is that change is typically a threat, something (a situation, competitor or technology) that can cause damage to your business, and if we don’t embrace the change we risk total extinction. A great book to read that helps explain this is theInnovator’s Dilemma by Clayton Christensen.
Did you know the glue used on Post-it Notes was created by accident when scientists were trying to create a super adhesive for space exploration? Talk about getting creative.
More often than not, the struggle will force you to get creative about how you’re approaching your startup. I've learned that it is in these lows I find my most creative ideas.
4. Develop your resiliency.
Mark Suster, the outspoken Los Angeles venture capitalist from bothsidesofthetable.com and Upfront Ventures, wrote about his personal story of resiliency when his company was out of cash and scrambling to figure out its next steps.
Many have said resiliency is the most important trait an entrepreneur can possess. Resiliency is a learned trait that can be the result of personal or professional experiences, so it is great to realize that when you're being tested you're most likely building resiliency.
5. Focus on the big vision.
Early on when building his first company with his brother, Elon Musk used to sleep on a couch and would shower at the YMCA. When building Tesla and SpaceX, Musk was down to his last $3 million and had to sign it over to make payroll for Tesla as the company floundered to find its market position. He never doubted his vision, and went all in.
Big vision can help you look past obstacles and tough circumstances. Keeping your focus on the big vision will empower you and your team to overcome in the face of your wildest adversity.
Startup success takes work. Nobody said it was easy, but it’s worth it. Use your struggles to help you develop the necessary skills that will ultimately lead to success.
Opening up a credit card while you're young can generally be helpful to your all-important credit score. That's because the earlier you open up an account, the longer your credit history.
But with great spending power comes great responsibility.
If you overspend and aren't able to pay off your balance in full every month, you risk falling into a debt trap that can haunt you well into adulthood.
"Carrying a balance on a credit card, the interest will just eat you alive," said Certified Financial Planner Michelle Brownstein, who is also a senior vice president at online financial advising firmPersonal Capital.
Responsible use of a credit card is a major factor in your credit score -- which is the three-digit number that lenders use to assess your creditworthiness for a loan.
Your credit score is based on various factors, including your bill payment history, how much of your available credit you use, types of credit and your credit history (ie: how long you've had lines of credit).
And it's not just lenders who are checking out credit scores and history. Landlords, employers and even cell phone companies are also known to run credit checks.
But Millennials seem to be a bit hesitant to jump on the credit card bandwagon. A recent survey from Bankrate shows that one-third of people between the ages of 18 and 29 have a credit card.
Brownstein opened a credit card at 18, and said that decision enabled her to buy a condo in San Francisco at 26.
"My credit limit was nothing ... but I got into the habit of paying it off," she said. "I don't think I would have been able to get a mortgage if I hadn't done that."
But taking on credit at a young age can be risky.
It's easy to overspend when you're swiping plastic, especially when you're young and not used to managing your own money.
And first-time credit cards tend to come with higher interest rates, which means carrying a balance can lead to a debt pileup that takes years to pay off.
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Some experts recommend waiting until after college when there's a steady paycheck to open a credit card.
"A credit card should be associated with a job," said Carla Dearing, CEO of SUM180, an online financial planning service geared toward women. "If you are taking on debt, you need a way to repay that debt."
The government passed legislation in 2009 to protect college students from taking on too much credit card debt. The CARD Act requires those under 21 to show proof of income or have a co-signer before opening a credit card.
To help avoid credit card overspending, experts advisedkeeping a budgetthat tracks your income and your spending, and then being selective with what costs go on the credit card.
"Think of a credit card like a debit card. Never spend more than you have in your bank account," said Brownstein.
And because credit utilization is a factor in your score, experts recommended keeping your spending well below the card's limit each month.
Becoming an authorized user on an already-established credit card can also help build credit. Authorized users can spend freely on the card, but aren't liable for payments, which means cardholders should be selective with who they allow to jump on their cards.
A successful commercial real estate broker for decades, Ron Burkhardt was always diligent about saving for the future. But he, like many Americans, wasn’t always confident he was doing the right things financially. In fact, according to the 2016 Northwestern Mutual Planning and Progress Study, 66 percent of Americans believe their financial planning needs improvement.
“I knew I should be doing something with my money,” he said. “I had investments but nothing that made me feel comfortable about my fina
It’s a sentiment Brandon Matloff, Burkhardt’s wealth management advisor with Northwestern Mutual, sees often when he starts working with clients. “People are saving, but they aren’t sure how all the things they’re doing financially fit together and whether what they’re doing will get them where they want to go,” Matloff said.
Matloff believes that in order to go from simply saving your money to saving as part of a financial plan, you should take the following steps:
1. Set your goals. “I think it’s important to step back and understand what you want your money to do for you. What’s important to you?” said Matloff. “Once you’ve answered that question, we can help you coordinate and synchronize all aspects of your financial life into one plan that considers all of your objectives.”
In Burkhardt’s case, his income is entirely commission based, so saving for a rainy day was important. “My business is very volatile. My salary is 100 percent based on commissions. I have no idea today what is going to happen next year or the year after that,” he said.
He also wanted to protect his income in case something happened to him and to accumulate wealth for retirement.
2. Get organized. “People have stuff all over the place,” Matloff said. He finds that people often haven’t taken the time to look at a balance sheet to see their total financial picture. Simply taking the time to put everything together in one place is critical. This can also help you identify any gaps in your planning.
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Burkhardt was able to use permanent life insurance to tackle three goals at once. The death benefit can provide income for his fiancée if something should happen to him. But his life insurance is also accumulating cash value, which he can access if he needs emergency funds or someday use to supplement his retirement income.
When looking at the whole picture, Matloff typically works with a team of professionals, including certified public accountants, estate planning attorneys, tax attorneys and others. “We have access to a network of professionals, so it’s easy to bring together the right team,” he said. “And a financial plan is an ongoing, breathing document that changes from year to year.” So once you implement your plan, it’s important to revisit it on a regular basis.
Since he started working with Matloff, Burkhardt is more confident about his finances. “I have a plan, and I know how it’s helping me achieve my goals,” Burkhardt said. “I certainly sleep better at night.”
The Northwestern MutualVoice Team is a group of professionals who share insights and opinions from experts and industry leaders across the enterprise. Our vision is to inspire others to take action and plan for their financial future through topics ranging from financial planning, retirement planning and distribution strategies, wealth accumulation and preservation, to leadership, philanthropy and innovation.