Too often, research defines its respondents based on what they look like on paper – age, income, education level, gender – and uses those statistics to imply meaning to their behaviors. But in fact, people can look very similar with regard to demographics, and make their decisions based on dramatically different motivations.
When it comes to small business owners, knowing age, gender and company size can provide some insight, but it doesn’t reveal who they are – why they started their business in the first place, and how they feel about the experience of being an entrepreneur. There’s no insight into what makes them tick. There’s no revelation regarding the pain points they face.
Demographic stats are about the who. We wanted to understand the why.
A Different Approach to Small Business Analysis
We believe small business owners are much more than snippets of demographic data, so for the 2014 Infusionsoft Small Business Market Survey, we challenged that notion. We studied the attitudes of small business owners to gain a deeper understanding of the behaviors, challenges and mindset of the small business market.
We surveyed nearly 800 American small businesses, half of which are Infusionsoft customers and half of which have never used Infusionsoft.
The participants were comprised only of true small businesses: those with 25 or fewer employees. For the project, we partnered with Audience Audit Inc. ™, a research firm dedicated to understanding respondent attitudes, to craft a series of questions that would give us a deeper perspective on the modern small business owner and their experience.
The results of the analysis were exhilarating; four distinct, robust profiles of small business owners that we defined as:
- Passionate Creators (25%)
- Freedom Seekers (23%)
- Legacy Builders (28%)
- Struggling Survivors (24%)
The characteristics of the profiles weren’t determined ahead of time; instead, they evolved as a direct result of what our respondents shared with us. Each profile, regardless of their affiliation with Infusionsoft, was recognizably different from one another. Everyone surveyed was a small business owner, but how they felt about being a business owner was polarized based on their profile.
The Passionate Creators started their business out of love for what they do, and believes whole-heartedly that passion is a crucial quality of successful small business owners.
Running their business gives them a sense of accomplishment and pride. When asked about their goals as a small business owner, ”doing the work I love” was a top achievement for this group.
48% of Passionate Creators stated they had always known they would run their own business.
73% of the business owners within this profile identified themselves as “entrepreneurs” — more than any other profile.
When compared to the other profiles, Passionate Creators operate at an arguably more successful level.
- They own more businesses: 41% own two or more businesses
- They create more jobs: 32% employ five or more employees
- They take their work outside of their home: 43% work in an office as opposed to home
- They stay in business longer: 43% have been in business for more than ten years
- They make more money: 14% reported 2013 revenues over $1M
They are also the most optimistic profile, with 30% expecting “much higher” revenue in 2014.
Passionate Creators are also the most marketing and tech savvy of the bunch.
- They aren’t afraid to spend on marketing: 48% spend $500 or more per month on marketing activities.
- They diversify their marketing strategy: 65% use social media, 70% email to a list, 48% use content marketing and 39% leverage search engine marketing.
Passionate Creators are intent on sharing their success and know-how with the world around them.
- They give of their money: 47% donate funds to charitable organizations in their community
- They give of their time: 27% mentor other entrepreneurs and 22% speak to audiences about small business
Freedom Seekers started their small business because they value the ability to control their work experience. They want to be in charge of their schedule, career path and work environment.
When asked about their goals, this group was up for anything and everything that liberated them from the shackles of a confining corporate experience.
The survey found that 68% of these freedom-loving small business owners rated, ”living the life I want” as their top success metric. And they held strong to their free-seeking roots when it came to any other reasons for owning a small business:
- 57% do it to find flexibility in their schedule to spend time with their family
- 52% want to be in control
- 42% want the flexibility in their schedule to travel
The small business owners in this profile made it clear over and over that they had no desire to be chained to 9 – 5 schedules or trapped beneath a glass ceiling.
This troop wants things simple and manageable. 45% of them are the only employees in their business, and they are the least likely of the four profiles to have more than one other employee. Not surprisingly, they cite, “time to get everything done” as their biggest challenge.
In tackling the challenge of chasing daylight, they have adopted automation.
They are using software to automate: 57% utilize automated software, 2nd only to Passionate Creators. Their usage spans across many elements of their business:
- 57% automate bookkeeping
- 61% automate email marketing
- 47% automate payment processing
- 46% use CRM software
- 44% have an email autoresponder
- 38% automate contact management
They get organized: 23% use project management and 22% use membership site management software tools.
Owning a small business allows Freedom Seekers the opportunity to live the lifestyle they’ve always wanted. It allows them to work where and when they want, and do what they want.
Of all the profiles, Freedom Seekers are the least likely to believe they may work for someone else in a corporate environment setting in the future. Being in control of their business offers them the flexibility that many were unable to achieve working in a corporate atmosphere.
- They avoid the office: 81% work from home.
- They take what they learned in corporate and turn it into a business: 29% provide business coaching or consulting.
Escaping the confines of a traditional job can be a powerful motivator for small business owners and it can give them what they want if they can find tools to help them make the most of their time.
Business owners within this profile believe small businesses are more ethical and vital to the economy compared to larger corporations.
This group started their business to bring something new to the marketplace – something no one else offers. They are practical in their approach to business ownership in that they saw an opportunity and went for it.
Business ownership provides them with a sense of stability for their future and the future of their family and they have created a business to help secure their retirement or hand down to their children. For these reasons, many of them take tremendous pride in the businesses they have created and are in it for the long haul.
Legacy Builders are committed to making their business successful and ensuring it provides the stability and financial support they expect.
- They are laser focused on their business: 80% run only one business.
- They are here to stay: Only 26% have considered closing and only 24% have considered selling their business.
When confronted with business issues, Legacy Builders are more likely to turn to family, friends and coworkers for guidance. They trust their intuition and time-tested processes above all else.
They are less dependent on technology: 45% don’t have a website and 21% do not use any bookkeeping, email marketing or payment processing tools.
They don’t make the most of marketing: Even among those with a website, many don’t use email, content marketing, SEO, pay-per-click advertising or marketing automation to generate leads.
With 40% of Legacy Builders citing “figuring out which software can improve my business” as a key area of difficulty, this group is reaping the rewards of hard earned dedication while also suffering at the hands of progress.
The Struggling Survivor profile represents the cold, hard truth of business ownership: sometimes running a small business is scarier than it is rewarding.
They feel the urge to flee: A whopping 53% have considered closing their business.
Regardless of business model, tenure or experience, most small businesses are familiar with the fear of failure, but that fear is deeply rooted in this group and they face the very real challenges of ownership every day.
Struggling Survivors said they have significant concerns, misgivings and doubt about the value of owning a small business. They acknowledge that corporate jobs are more secure, and even go a step further to admit that you have to be a little crazy to start a business.
Time is the top challenge for every profile, but more than any other profile, the Struggling Survivor struggles with managing the day-to-day operations of their business.
Not seeing the benefits: Struggling Survivors are the least likely group to report reaping the benefits often associated with entrepreneurship – financial security, more time with family and friends and an improvement in their attitude and outlook. They are the least optimistic about the prospects for their business in 2014, with only 20% saying they will do much better than in the previous year.
They are jack of all trades, masters of none: 51% run their business alone. They are spread too thin wearing most of the hats within their business with a to-do list that includes:
- 80% handle administrative duties
- 89% manage sales
- 85% tackle marketing and advertising activities
- 84% take on customer service
- 68% are in charge of financial tasks
- 72% are responsible for managing vendors
- 61% provide their own website content
- 62% are performing IT and technical duties
They are in the deepest throws of the small business struggle and feel disrespected by peers, and even unsupported by family members. Yet, even with a perceived lack of support, their never-ending to-do lists and the uncertainty they feel about owning a small business, they are the most likely of the four groups to volunteer in their community (34%). And, despite many of them having seriously considered throwing in the towel, they continue to work towards their dream of independence and security.
Which are you?
As you read our findings, our hope is that you felt a strong connection to one of the profiles. Good or bad, it’s important to understand who you are as a business owner. Recognizing your own strengths and weaknesses, as well as those within your fellow community of small business owners, is what will help propel everyone towards innovation and improvement.
To read the whole survey analysis and find out more about who small business owners are click here.
Which profile do you identify with the most and why? Comment below.