The economy may be improving for Wall Street firms furnishing cheap capital to corporate America at large, but a recent poll compiled by Sam’s Club and Gallup indicated two-thirds of new microbusiness owners rely on non-retirement, personal savings as the lead source of funding for their businesses.
Of the small, upstart business owners surveyed, 43% use credit cards and one in five use money from friends and family. The Sam’s Club/Gallup Microbusiness Tracker also found that despite new and alternate funding sources for small businesses, less than 3% of microbusiness owners use government loans, 2.4% have used small business loans and another 1.9% used crowd-funding to support their business venture.
The quarterly survey of 1,004 U.S. firms with five or fewer workers also found U.S. microbusinesses started in the past year are 30% more likely to use personal savings to maintain their business than a mature company owner. Microbusiness owners reported that in the past 12 months, two in five microbusiness owners (40.4%) have had to dip into personal or retirement savings to improve their bottom line, while 42% have increased the price of their goods and services, according the Sam’s Club/ Gallup poll conducted in May.
The Sam’s Club survey also explored the emotional and economic concerns of the country’s smallest businesses that employ one out of every 10 Americans. The survey reveals that more than half (54.9%) expect the economy to worsen, yet 70% are energized by their work and 65.2% are confident they have the talent to grow their company in the future. Confidence is also reflected in their perception of the future and their impact on the community.
As a group, 71% are confident in their company’s future and 67% feel they have a positive impact on their community.
“Despite concerns over worsening economic conditions, U.S. microbusiness owners are confident in nearly every dimension of work and life. This vital segment of the U.S. economy is passionate about their choice to pursue a small business venture and unwavering in their commitment to serving consumers with an intense focus on quality no matter how many other factors or challenges they may face,” Rosalind Brewer, president and CEO of Sam’s Club, noted in the survey report.
One of the few areas of emerging anxiety for microbusiness owners is a concern about long-term investments with 43% indicating they are worried about retirement.
The survey revealed other surprising findings about putting money away for the future.
The more you make the more you worry, according to the survey. Nearly half of microbusiness owners generating $50,000 or more in revenue (44%) are anxious about saving for retirement, compared to those making less than $10,000 (42%).
Having a nest egg weighs more heavily on female microbusiness owners, with 47% of women, compared to 41% of men, concerned about retirement savings.
Geographically, business owners near the East Coast are the most nervous about the saving for the future (49%) while Midwest microbusiness owners are the least apprehensive (39%).