Entrepreneurs Expect Modest Startup Costs For Most New Ventures -New Study Shows They Seek To Cover Costs Without Bank Loans

Entrepreneurs project modest startup costs for
most new ventures, according to a study released today by the Office of
Advocacy. Solo entrepreneurs expect median startup costs of $6,000, while
the median cost expected by team ventures is $20,000. More than 80 percent
of the entrepreneurs studied expected to cover their startup costs without
bank loans, although on average they had saved only $2,000 towards that
goal.

"Not all new ventures require large infusions of capital," said Dr.
Chad Moutray, Advocacy’s Chief Economist . "Everyday ordinary Americans
strike out on their own to grab their piece of the American Dream. It
doesn’t take a lot of savings to participate in the ownership society, just
a good idea and lots of hard work and perseverance," he said. His remarks
came at the report’s release during the annual meeting of the Collegiate
Entrepreneurs Organization in Chicago.

The study also showed that optimism about their business potential
underlies the entrepreneurs’ activities. On average, solo entrepreneurs
believe they will have business income of $90,000 in the fifth year of
their venture, while team ventures expect an income of $125,000 in the
fifth year. The higher team venture projected income makes it more likely
that such ventures will result in new job generation.

Expected Costs of Startup Ventures

http://www.sba.gov/advo/research/rs232tot.pdf

conducted by Blade
Consulting with funding from the Office of Advocacy, used data from more
than 800 nascent entrepreneurs’ individuals who are in the process of
starting a business gathered over a two-year period. The data are
contained in the ongoing Panel Study of Entrepreneurial Dynamics (PSED),
supported by the E.M. Kauffman Foundation.

The Office of Advocacy, the "small business watchdog" of the
government, examines the role and status of small business in the economy
and independently represents the views of small business to federal
agencies, Congress, and the President. It is the source for small business
statistics presented in user-friendly formats and it funds research into
small business issues.

For more information and the complete text of the model
legislation, visit the Office of Advocacy website at http://www.sba.gov/advo.

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Created by Congress in 1976, the Office of Advocacy of the U.S. Small
Business Administration (SBA) is an independent voice for small business
within the federal government. Appointed by the President and confirmed by
the U.S. Senate, the Chief Counsel for Advocacy directs the office. The
Chief Counsel advances the views, concerns, and interests of small business
before Congress, the White House, federal agencies, federal courts, and
state policy makers. Economic research, policy analyses, and small
business outreach help identify issues of concern. Regional Advocates and
an office in Washington, DC, support the Chief Counsel’s efforts. For more
information on the Office of Advocacy, visit http://www.sba.gov/advo, or call
(202) 205-6533.

** Visit Advocacy’s Regulatory Alerts page to learn about and comment on
proposed federal rules that may affect small business:
http://www.sba.gov/advo/laws/law_regalerts.html. **

Contact: John McDowell (202) 205-6941
SBA Number: 03-49 ADVO
[email protected]