Overall, American small business owners are approaching 2019 with economic optimism and increased confidence, according to a survey from Guidant Financial and LendingClub.
The companies surveyed more than 2,700 current and aspiring small business owners about their views on the current state of small business with questions ranging from their confidence in the economy to obstacles they faced pursuing business ownership.
With very little change from year to year, most small business owners choose to go into business because they were “ready to be their own boss” (26%) or to “pursue their own passion” (23%).
Current business owners rated their level of happiness as an average of eight on a scale of one to 10 (10 being the happiest). A substantial 53% surveyed ranked their happiness at nine or above.
Small business owners are also confident in the state of small business in today’s political climate. Only 24% of small business owners surveyed rated their confidence under five on a scale of one to 10 (10 being the most confident). As in the previous year, the average small business owner’s answer on the confidence scale was seven.
Employee recruiting and retention grew as a challenge in 2018. Small business owners reported a significant 15% increase in challenges with recruiting and retaining employees. The majority of small business owners (41%) only employ two to five employees.
Similar to 2017, the majority of small business owners also considered a lack of capital or cash flow one of their major challenges, followed closely by trouble with marketing and advertising, time management, and administration work.
78% of all respondents are currently profitable, a 6% increase from the previous year.
2018 brought a notable increase in health, beauty, and fitness businesses such as wellness spas, salons, and gyms with a 34% increase. There was a rise in food businesses and restaurants, a 14% increase. Business services continued to reign as the largest segment, at 11%. Home services overtook automotive businesses this year for the 5th spot.
While the top five forms of funding remained the same as 2017, there were numerous shifts in less-utilized forms of financing. The share of mortgage refinancing increased by 33%, SBA loans grew by 29% and home equity line of credit grew 27%.
Cash remains the most popular funding method with 32%. Rollovers for Business Start-ups (ROBS), a method of using retirement funds to start a business without incurring tax penalties, remains in second place at 13%.
“The results from 2018 are reflective of the overall economy in many ways as we continue to work with entrepreneurs who believe that now is a good time to become a business owner,” said David Nilssen, CEO of Guidant Financial. “Small businesses are taking advantage of economic growth to advance their dreams.”
“Through policy recommendations and our work with the Responsible Business Lending Coalition, LendingClub has been a staunch advocate for small businesses since 2014 when we began facilitating small business loans,” said John Spottiswood, GM of LendingClub Business Loans. “We know these hard-working owners need access to affordable and fair credit to thrive and we’re proud to support these entrepreneurs.”