Small business owners: It's about more than money
Business owners are keen on writing their own stories and reaping the intangible rewards of following their passions
The old adage that "money can't buy happiness" apparently resonates on Main Street.
A new profile of the small business climate in the United States and in 25 of our largest cities shows that potential wealth isn't the prime motivator for most small business owners. Far from simply wanting to get rich, many seek intangible rewards, such as entrepreneurial freedom, creative expression and personal satisfaction.
For them like many young people entering the workforce opening their own business is about quality of life and a sense of independence.
"When you're a small business owner and want to make things happen, they do happen," says Octavio Pina, 54, an Allstate agency owner in Santa Ana, Calif., whose business actually lives on South Main Street. "It gives you a sense of accomplishment knowing that if you do this, you'll arrive at the point you want to be. You're making things happen for yourself and your family."
This insight about what motivates people who own small businesses is just one of many emerging from the Allstate/USA TODAY Small Business Barometer. The first-of-its-kind comprehensive study combines federal data with a national survey of small business owners to gauge the health and vitality of the nation's small business sector.
The inaugural Barometer found high levels of optimism (scoring 79 out of a possible 100 using the Barometer's proprietary data model) and innovation (73). What do small business owners get out of this working environment? Nearly half of the more than 2,600 who were surveyed said being their own boss gives them enjoyment. More than a third cite flexible work hours. And nearly a quarter get satisfaction from creating something all their own or following their passion.
The real surprise? Just one in five point to money as one of their top two motivators.
"To me, it's never been about the money,'' says Jhane Barnes, 60, a commercial interior designer in Westchester, N.Y. "What I love about owning a company is any decision you make is yours. I say what's on my mind. I only have myself to blame if something horrible happens."
At the ground level, things are looking up
Today, despite roiling economic headwinds, more than half of small business owners believe there has never been a better time to own a company. The lilt of optimism in their voices is striking, particularly among women and minorities, whose optimism hits the dial at 85 and 92 on the Barometer, respectively. Nearly a third of small business owners surveyed plan to hire new employees within the next three months a potential boon to local economies.
"The business environment is great," says Ella Springfield, 44, owner of Copper Sun Construction in Phoenix. "You ask me three years ago, it was week-to-week."
Springfield's take is reflected in other data, too. The U.S. Small Business Administration's most common general business loan was tapped a record 63,000 times in 2015, up 22% from 2014. That's good news, because according to the SBA and other federal agencies, U.S. small businesses now an estimated 28 million of them are central to stimulating economic growth and employment. They provide 49% of private sector jobs and more than 50% of the nation's nonfarm, private gross domestic product.
One of the satisfying aspects of small business ownership, Pina says, is that small businesses are just as important to their communities as they are to the national economy. Their imprint is deep, he adds.
"Many small business owners live in the same ZIP code where they do business," says Pina, who lives 3 miles from his Allstate agency. "We make an effort to reach out and understand the community. I'm involved with my city in areas that reach well beyond my business safety, vandalism, homelessness."
Other small business owners say it's the ability to control their own destinies that feeds their optimism. Many embark upon their adventures with little more than an idea and a dream.
Barnes started her fashion business in her early 20s, borrowing $5,000 in seed money from a college professor. By the early 2000s, she was a force in the high-end, designer-label menswear market, with annual sales of more than $100 million and a clientele ranging from President Bill Clinton to comedian Jon Stewart. But she was forced to shutter the operation in 2013 after the recession and now concentrates on a burgeoning commercial interior design business and an eyewear collection.
"I like being able to wake up and go and do what I want every day," she says.
Scott Thompson is in small business because he gets a kick out of starting new things and putting his fingerprints on a company. He co-founded Catapult Health, which provides companies onsite preventative health exams for workers. Then in 2014, he co-founded Genetic Direction, a Dallas company that offers Gx Slim, a $400, customized weight-loss program based on person's DNA results.
"I got the bug of starting something,'' says Thompson, 44. "Nine-to-five really doesn't float my boat. What does? The flexibility of being an entrepreneur and the ability to have so much influence and impact on the success of a company. That's what's fun."
Taking a chance
Being your own boss does come with a healthy dose of uncertainty. The Barometer finds that for U.S. small businesses, the ease of attracting new customers comes in at a score of 54. Similarly, the availability and cost of labor measures at 51. Those are both "solid" measures, according to the Barometer's scoring system, but still challenges owners must constantly find new ways to address.
Even so, business owners like Christine Gistaro start their firms because they'd rather work hard for something they create, rather than push to achieve someone else's vision.
Gistaro, 51, launched telecommunications consultancy firm TeleStrategy in 2001 from her home in Arlington, Va. Before that, she spent 15 years at an established telecommunications firm and had a short run at startup Net2000 Communications, which began red-hot then fizzled in the 2000 dot-com bust. At the time, her daughters were five and eight years old. But she had a plan she believed in, focusing on providing telecom support for outsourcing businesses and saving her customers money.
"The leap was terrifying,'' says Gistaro. "You go from a job with a salary and benefits to nothing."
TeleStrategy has since evolved to a one-stop shop for a range of telecommunications support services. Annual sales have grown 10% to 30% a year for more than a decade, and Gistaro has added staff and even opened a brick-and-mortar location.
The Barometer finds that local business owners like Gistaro are willing to make tough sacrifices, with many forgoing salary and time with family and friends to make their businesses work. As with Gistaro, those sacrifices are paying off: More than three-quarters of those surveyed say business growth has been steady or increasing during the past year.
"Small business owners are a very special breed," Pina says. "It's a little bit like being a warrior."
Optimistic and unbowed, women embrace small business
The ranks of female entrepreneurs are growing by the day as they blaze new paths and plow through stubborn obstacles
To make a name for herself in the men's fashion business, designer Jane Barnes literally changed her name, becoming Jhane Barnes in 1979 so her company would seem more gender neutral.
At the time, female business owners were seen as a novelty, and sexism was pervasive. But today, with more women-owned American businesses than ever 10 million, and growing at a rate of 1,200 a day women are increasingly calling the shots.
"I do the hiring and firing, contacting clients, dealing with the economy, networking with my peers," says Sharon McCarty Armstrong, 54, an Allstate agency owner in Atlanta. "I am a small business owner this is me."
This rise of women in small business is reflected in more than just the record numbers of firms owned by women. Over several decades, women have been steadily changing the business environment in America, turning "noes" into "yeses" while encouraging work-life balance for their employees and themselves. Women are rushing toward opportunities that were once reserved for men, following their passions and building the types of businesses where they would want to work.
"Having your own business means you get to play where you want to play," says Laura Yamanaka, 59, president and co-founder of teamCFO, a small business in Los Angeles that provides accounting and financial services to other companies.
In this diverse world of small business, optimism is a common thread that emerged in the Allstate/USA TODAY Small Business Barometer, a first-of-its-kind comprehensive study that gauges the health and vitality of the nation's small business sector. The Barometer, which combines federal data with a national survey of small business owners, found women to be even more optimistic than their male counterparts. Women's optimism scored an "excellent" 85 (out of a possible 100 using the Barometer's proprietary data model) versus a "strong" 74 for men.
The Barometer gauges the small business atmosphere from "solid" to "strong" for both genders, and speparately, women's overall Barometer reading at 62, nudging just ahead of men's 60.
Freedom and flexibility
"The process of starting a business is essentially the same for men and women," says Candida Brush, a professor of entrepreneurship at Babson College, a private business school in Wellesley, Mass. "They have the same motives and characteristics."
Not only are women optimistic about small business, they also highly value the independence afforded by going off on their own or with a partner. Women surveyed for the Barometer ranked the top three benefits of owning a small business as "being my own boss" (43%), "having flexible hours" (40%), and "having a sense of freedom" (27%).
McCarty Armstrong first started out in small business with a carrier company that delivered packages in Atlanta. It was a side gig while she worked as a sales executive at a telecommunications corporation. When she lost her job during a downsizing, she took her severance and bought an Allstate agency. She's since purchased a second agency and merged it into her business.
"More and more women are feeling empowered to own their own businesses," she says. "It's out there for us to achieve." Her husband Harvey Armstrong, a retired NFL player, picks up their daughter from school and provides support at home so McCarty Armstrong can focus on the business.
For many women who dive into the world of small business, the allure is a world that encourages creativity and allows entrepreneurial freedom. This was the draw for Erica Cohen. In 2009, Cohen, 40, abandoned a fast-growing nationwide restaurant chain with a stellar reputation and with partner Lori Barbera, 45, invested in a hot-pink gourmet food truck to launch Baby's Badass Burgers in Los Angeles.
"As the restaurant grew from a mom-and-pop enterprise to a major hospitality chain, I wanted to go back to my roots,'' she says.
As a result of appearances in the movie Chef and on reality shows including NBC's Shark Tank, Cohen and Barbera have been able to expand their food truck concept, which they say pulled in more than $1.5 million last year.
However, Cohen's fast-rise story belies ongoing inequities in men's and women's access to capital. On average, women start their companies with just over half as much capital as men $75,000 vs. $135,000.
Brush says that based on her research, women also run into trouble at the bank, where they're often offered shorter loan payback periods and higher interest rates than men. "It's a form of unconscious bias and a perception that women are less qualified, less motivated," she says.
Challenges and opportunities
Once the business is funded and on its way, women are more likely than men to cite work-life balance as a business challenge, according to the Barometer survey findings. In fact, women are as concerned about juggling home and career priorities as they are about cash flow.
Laura Yamanaka, a member of the National Women's Business Council who co-founded teamCFO in 2000 after working for several big corporations, says she and her partners would rather have less of a return and a more balanced life for themselves and their employees. "One, it's the right thing to do," she says. "And two, it makes business sense because people are not going to burn out."
Amanda Petro, 27, was pregnant and living in Baltimore when her 50-year-old father died in 2014, leaving his Cocoa Beach, Fla., plumbing business in limbo. Not wanting her dad's employees to lose their jobs, the former assistant shoe store manager moved to Florida to run the business.
"I wanted (the employees) to like me," says Petro. "I also think they were testing my limits and playing on my heartstrings to see what I'd stand for. I don't think they would have done that with a guy."
Despite the learning curve, Petro Plumbing is flourishing. The business has retained its customer base and is bringing on 10 new clients a month, Petro says.
Barnes, 60, the former fashion designer, has experienced the highs and lows of business ownership over her more than 35 years in the trenches. Her menswear lines faltered in the Great Recession, but she has retrenched and now focuses on interior design and designer eyewear. The rewards are well worth the occasional turbulence, she says.
"When you have your own company, that's your life."