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Study Finds That Most U.S. Small Businesses Are Home Based

By | 07.08.13

Study Finds That Most U.S. Small Businesses Are Home Based

According to a recent survey of U.S. businesses (2012 Global Entrepreneurship Monitor report), the majority of entrepreneurs across the country not only start their small businesses out of their houses but also continue to run their established businesses from home. According to the survey, 69 percent of startups are home based, as are 59 percent of established enterprises (that have been in business for 3.5 years or more). Interestingly, only one-fourth of the entrepreneurs surveyed had no employees working for them, indicating that many home based small businesses are not solo enterprises but rather full-fledged business operations. Here are some other insights that emerged from this study.

  • Most home businesses are in the consumer sector: While most normally associate home based small businesses with freelancing, independent contracting, and consulting functions, only 33 percent of all businesses surveyed actually fall into this category. Rather, 41 percent of these businesses include companies in the consumer sector, including Internet retail businesses and real estate.
  • Most startups are self-funded: According to the Global Entrepreneurship survey, 82 percent of startup funds come either from the entrepreneur him- or herself or from family members or friends. In fact, the report cites a 2009 study that found that only 1 in 1,000 entrepreneurs in the U.S. receive venture capital funding. However, the costs involved in starting a new business these days are far from prohibitive. According to the study, entrepreneurs require an average of $15,000 in startup funds.
  • The majority of entrepreneurs are either young or old: While this survey found that entrepreneurship is not necessarily limited to a certain age group, most business owners are either younger or older. In the survey, over 30 percent of young entrepreneurs and over 25 percent of senior citizens indicated that they intend to start a business. And of those senior citizens still working, more than 42 percent run established businesses and 10 percent own startups.
  • Women are more likely to operate home based businesses: Of all the small startup businesses that are operated out of the home, 72 percent are operated by women and 61 percent by men. Likewise, in terms of established businesses, 68 percent of women continue to operate them out of the home versus 53 percent of men.

Reference

Campbell, Anita. “69 Percent of U.S. Entrepreneurs Start Their Businesses at Home.” Small Business Trends. 7/2/13.

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