About a third of small businesses get started with less than $5,000, according to recent research from financial platform Kabbage. The survey, which included responses from 600 thriving small business owners, also found that 58 percent got started with less than $25,000.
Startup Funding Statistics
In addition, 65 percent of survey respondents admitted to not being fully confident they had enough money to start their business. In fact, an overwhelming 93 percent said they calculated a potential run rate of shorter than 18 months.
But they didn’t let a lack of cash stop them from getting started. And new or cash strapped entrepreneurs can potentially learn an important lesson from these findings.
Kabbage Head of Lending, Rob Rosenblatt said in an email to Small Business Trends, “Being just a few days into the new year, it’s a time when many set goals and start new endeavors. For those considering entrepreneurship, they can learn how many successful business owners got their start.”
More specifically, these findings demonstrate how it is possible for entrepreneurs to find success even without a lot of upfront capital. There are plenty of other skills and qualities you can rely on when times are lean or when it’s difficult to get financing for an endeavor.
Rosenblatt says, “Cash flow uncertainties and short-run rates are common among small business owners, yet the true catalyst to start a business is their self-confidence and drive to succeed.”
And that self-confidence seems to be something that a lot of entrepreneurs who have found success have in common. According to the survey, 82 percent of successful business owners did not doubt they had the right qualifications and proper experience to run a company, even though many had limited cash flow to start.
In addition to being confident in their abilities, there are plenty of financial and technology tools like those offered by Kabbage that can assist small business owners looking to really get a handle on their finances and find access to the capital they need to operate effectively.
Rosenblatt adds, “2019 will be a year when we see more small businesses adopt technologies that ease the burden of financial distress, providing cash flow access and insights so they can focus more on their business and not their books.”
Of course, certain types of businesses require more upfront cash than others. According to the Kabbage survey, the most expensive types of small businesses to launch are restaurants, medical offices, and manufacturing companies.
Those respondents claim that it cost more than $100,000 for them to get up and running. Alternatively, those in accounting, online retail, and construction and landscaping were the most likely to get started with just $5,000 or less.
Since every small business is different, it’s not always necessary to compare exact numbers with other entrepreneurs. But it may be beneficial to learn that many successful businesses started out with similar financial concerns. And if you’re able to access the same level of confidence, skills and financial tools, you may be able to overcome that slow cash flow at the beginning.
Image: Kabbage