Survey: Is the American Dream of Owning a Business Attainable?

How small business owners define the American dream.

The original definition of the “American Dream” was based on the prospect of equality, justice, and democracy. Evolving into the belief that anyone can become what they strive to be—the opportunity for upward mobility, economic success, and attaining the life one has always dreamed would be fulfilling. 

As times have changed, so has the idea behind the dream. While traditional components, such as homeownership (46%) and starting a business (34%), are still identified as important by small business owners, 67% identify freedom to live how you want as the primary component of the American Dream.   

Small business owners remain optimistic but see growing challenges.

Starting a business is a significant step in obtaining the American Dream, and entrepreneurs can face many challenges. There’s no one solution for all businesses. But making a plan and accessing tools make it easier in today’s environment, where small business owners are one click away from equipping themselves in advance. Some of the biggest obstacles to tackle for small business owners include the following:

1. Funding a business
2. Finding and keeping customers
3. Finding and keeping good employees

According to the survey, small business owners primarily face challenges related to the economy (23%), inflation (21%) and other financial concerns (14%). Hiring remains a primary challenge for 11% of small business owners. 56% of small business owners state that large corporations, such as Amazon and Google, have a negative impact on growth opportunities for their business.

Generational differences

Millennials are a highly entrepreneurial group of business owners, with ages ranging from 27 to 42. In this high-rate environment with rising costs, layoffs, and the Great Resignation, we’ve seen a surge in startups. And according to Bloomberg, “creating successful companies is a young person’s game.” 

But being an entrepreneur is not just for the young at heart, it’s the American Dream for people of all ages, with 31% of respondents aged 45+ stating that starting a business is part of achieving the American dream. Perhaps unsurprisingly, those owners 45 and above place greater importance on retirement (46%), while those under 45 place more importance on becoming wealthy (36%) as part of the American dream.

At a certain age, the American Dream can seem easy to give up on or unattainable. The analysis finds a clear correlation between age and sentiment among small business owners. Those over 45 are more pessimistic, seeing the American Dream as more challenging to attain in the current environment. In contrast, those under 45 find it slightly easier to achieve. But entrepreneurship is a reality for both the young and old, with 89% of those age 45+ still believing owning a small business is attainable.

The two generations also fund their businesses differently. While both generations rely heavily on personal funds to start their businesses, those under the age of 45 have started to turn to alternative sources as well, such as crowdfunding (6%) and online lenders (5%).

Access to funding is key for small businesses.

Access to capital and lower expenses are the key factors for creating an environment where entrepreneurs can start a business.

• 66% of small business owners state having a financial safety net would have had the most impact on their ability to start a business, followed by access to capital at 53%. 
• Of the respondents, 52% state that living in an area with lower business costs and a lower cost of living would be helpful. 44% state lower taxes would have an impact. 
• 54% of SMB owners started their business with personal funds with another 12% relying on friends and family. 
• 79% of SMB owners needed less than $100,000 to start their business with 43% needing less than $10,000.

Although 49% of respondents believe it’s somewhat or much harder today than in the past to achieve the dream of owning a small business, online loan marketplaces are making it much easier. Lendio is committed to helping entrepreneurs find the right small business loans for their small businesses, so they feel supported and optimistic in achieving their piece of the American Dream. 

*Disclaimer: The information, methodologies, data and opinions contained or reflected in Lendio’s Small Business Owner Pulse Survey (the “Survey”) are proprietary of Lendio and is intended for informational purposes only. The Survey does not constitute business or legal advice, and is not a substitute for professional advice. The recommendations provided by Lendio are general industry recommendations, and are not a substitute for your business judgment. The Survey is based on responses to a survey provided by Lendio, but the opinions of those businesses may change over time. Thus, the Survey is not warranted as to its merchantability, completeness, accuracy or fitness for a particular purpose. The Survey is provided “as is” and reflects Lendio’s opinion at the date of their elaboration and publication. Lendio does not accept any liability for damage arising from the use of the Survey in any manner whatsoever. While every effort has been made to ensure that this Survey and the sources of information used herein are free of error, Lendio is not liable for the accuracy, currency and reliability of any information provided in the Survey.