Budding entrepreneurs waiting to secure funding before launching their ventures may not need to wait too long before getting started. According to a recently published survey, starting a business often takes less funding than expected.
Data collected by online lender Kabbage suggests that most successful entrepreneurs started out with low funds. Of the 600 "thriving U.S. small business owners" surveyed by the company, 58 percent responded saying they started with less than $25,000. From that same group of respondents, Kabbage's data suggests that one-third started with less than $5,000.
"We sought to understand the cash-flow concerns successful business owners faced when starting their company," said Rob Rosenblatt, Kabbage's head of lending.
Confidence leads to success
Starting a new business venture can be a formidable task. As such, it's easy to understand why 65 percent of the entrepreneurs who responded to the survey said they "were not fully confident" that they had enough money to get started.
Furthermore, 93 percent of responding entrepreneurs said they expected a run rate of fewer than 18 months. Within that group, 25 percent expected a run rate of less than half a year, and 36 percent didn't even calculate their run rate.
"The data shows cash flow and run rate uncertainties are all too common among small business owners," Rosenblatt said. "While it may seem daunting, it's their tenacity and self-confidence to succeed that champions their doubts and compels them to start the amazing journey of entrepreneurship."
Survey data confirms that self-confidence, despite financial uncertainty, is a quality shared by successful entrepreneurs. While most respondents said they were uncertain of their potential success, 82 percent said they "did not doubt they had the right qualifications and proper experience to run a company."
Industry-related costs vary
Along with determining how much money entrepreneurs were starting their businesses with and how confident they were in their prospects for success, the survey sought to find out which industries were more cost-intensive for small business owners.
According to the survey, the most expensive types of small businesses – those that cost more than $100,000 to launch – were restaurants (38 percent), medical offices (23 percent) and manufacturing companies (19 percent).
Conversely, small businesses that cost the least money to start were accounting (45 percent), online retail (44 percent), and construction and landscaping (39 percent). Each of those ventures cost $5,000 or less to get off the ground.
Options for funding
As small business owners and entrepreneurs get started, there is a variety of funding options available to them. When looking for options, it's important to keep some of this year's small business financing trends in mind, like returning to traditional bank loans and exploring the realm of online lending.
Entrepreneurs may also want to look into financing methods that exist outside of the banking industry. Community development finance institutions, crowdfunding services like Kickstarter and Indiegogo, and small business grants through initiatives like the Small Business Innovation Research and Small Business Technology Transfer programs are some of the ways to secure extra funding in 2019.
Check out our Best Alternative Small Business Loans review for more options.