Home Starting

Optimism & Uncertainty: 2023 Survey of Early-Stage Small Business Owners

John Procopio

10 min. read

Updated November 23, 2024

We surveyed 160 small business owners to better understand the entrepreneurial landscape and owner sentiment around business planning and management. 

Our goal was to gather insights on the types of new businesses being formed and the confidence levels founders have in starting up and running a business in today’s ever-changing macro environment. 

While we surveyed many entrepreneurs, this analysis is focused on those that are up-and-running but have not generated revenue. For data on post-revenue business owners, check out part 2 of our analysis.

Here’s what we found:

Survey key takeaways

Idea confidence vs. planning hurdles: An impressive 83% of entrepreneurs exude confidence in their foundational business ideas. However, when it comes to financial planning and projections, the waters get murkier. 

Key confidence gaps: Without the aid of historical data or experience, starting-up businesses grapple with forecasting – less than half were confident forecasting sales and marketing spend (48% confident) and setting sales targets and timelines (46% confident), the lowest overall areas.

Areas of higher confidence: Startups felt greater confidence in assessing product profitability (85% net confident), understanding their target customer problem (83% net confident), defining their proposed solution (77% net confident), and estimating launch equipment and supplies (70% net confident). These were the highest areas of forecasting confidence for new ventures.

Planning: a dynamic endeavor: Contrary to the ‘set-it-and-forget-it’ mindset, 89% of respondents see business planning as a fluid, evolving task—more so in today’s unpredictable market landscape.

Top benefits in planning: Entrepreneurs cited numerous benefits: heightened clarity, enriched knowledge, boosted confidence, unlocked funding doors, and the power to weave persuasive narratives.

Bridging the financial gap: For our ambitious pre-revenue founders, turning to proven financial planning tools and embracing industry best practices might just be the game-changer. Currently, 84% of respondents have or are working on their business plan.

Optimism in the horizon: Despite the whirlwinds of uncertainty, there’s a collective sentiment tilting towards optimism. With the right planning compass, the future seems not just navigable, but promising!

Business models

The entrepreneurs represented a range of business models and industries. When asked about their core business type, 48% identified as services businesses, 21% as manufacturing/production, and 20% as retail. 

This significant portion of small and mid-sized services businesses aligns with broader labor market trends. The professional and business services industry created over 1.1 million new jobs in the last year alone (Bureau of Labor Statistics), accounting for most new job creation.

Business description & stage

There is often a bit of uncertainty and overlap in how the stage of small businesses are described, so we included these questions to gauge how entrepreneurs chose to categorize themselves and their ventures. 

When asked to categorize their business, this is how people referred to themselves:

• •46% small businesses
• •31% startups
• •30% solopreneurs/solo ventures 

The number of solo operations shouldn’t be surprising since the broader data shows that over 8 out of 10 small businesses have no employees. 

Over a quarter of our survey responders were still at the idea stage. The rest responded as: 

• •41% starting up/not generating revenue
• •32% up and running/generating revenue

Idea confidence

Regardless of whether they’re generating revenue or not, entrepreneurs still feel assured. When asked if they were confident in their business idea, respondents responded as follows:

• •over 83% agreed or strongly agreed
• •nearly 60% expressed strong confidence, selecting "strongly agree." 

This data shows the strength and confidence entrepreneurs have when planning a business that they feel passionate about. 

How confident are business owners before generating revenue? 

The next set of survey questions assessed pre-revenue (have started their business but aren’t making any sales) entrepreneurs’ confidence in their business across core aspects of modeling and planning their business idea. From estimating demand and setting prices to creating financial forecasts, founders face many unknowns in the early stages. We asked about confidence in 13 different areas to reveal where the biggest gaps lie.

Pre-revenue entrepreneurs felt most confident in:

• •Which product/service ideas will be most profitable (85% net confident)
• •Understanding their target customer problem (83% net confident)
• •Defining their proposed solution (77% net confident)
• •Estimating launch equipment/supplies (70% net confident)

Key takeaways

The areas where pre-revenue entrepreneurs felt most assured align closely with the hands-on work and expertise they likely already possess. Previous surveys we’ve conducted show 85% have at least one year of experience in their industry, and nearly 60% have almost 5 years. This depth of knowledge contributes to higher confidence in aspects like:

Defining their offering 

With experience in their field, founders feel more attuned to the problem to be solved and their proposed solution. They know their customers’ needs and how to uniquely deliver value.

Estimating launch needs

Operational experience equips entrepreneurs to gauge the required equipment, tools, supplies etc. to get their business up and running. They have insight into launch necessities from related work.

Choosing profitable offerings

Founders often have existing expertise around which products or services will have the best market viability and profit margins. Their industry immersion aids this.

In essence, pre-revenue confidence shines brightest around decisions and assessments closely tied to the founder’s hard-won skills and knowledge. When there is operational experience, certainty is stronger. 

Uncertainty leads to less confidence

• •Aligning their team on direction (70% confident)
• •Estimating market demand (69% confident)
• •Forecasting expenses (61% confident)
• •Assessing funding needs (59% confident)
• •Setting prices (58% confident)

The aspects where founders felt less assured require making projections and predictions—exercises prone to uncertainty if they haven’t been up and running for long or don’t have real data to use. Estimating market demand, aligning teams, and creating financial forecasts involve looking ahead and doing “what-if” modeling. Yet this is also where rigorous planning becomes critical.

Pay attention to cash flow

Running cash flow projections can increase confidence in unknowns like funding needs and pricing. Modeling worst/best/most likely scenarios helps founders prepare and assess options. As one entrepreneur noted, “The financial plan helped me see the possibilities.”

Rely on research

Likewise, research on growth metrics and customer acquisition costs allows more informed projections. Rather than guesswork, data-driven modeling boosts certainty in market size estimates.

Embrace teamwork

Tools that facilitate transparency and communication can provide greater confidence in areas like team alignment. Shared access to plans, budgets, and projections keeps everyone in sync.

Trust the planning process

While forecasting and estimating may feel less sure, embracing business planning and analysis fosters insight. As entrepreneurs do the work of modeling and scenario planning, conviction follows. Excellence in execution builds confidence.

Uncertainty in the numbers

• •Forecasting sales and marketing spend (48% confident)
• •Setting sales targets and timelines (46% confident)

The aspects generating the least certainty tap into sales, marketing, and financial projections— even experienced CFOs would struggle to accurately predict these areas for a brand new business. Forecasting sales and marketing spend relies on analysis of customer acquisition costs, conversion rates, and more.

Founders are still gathering intel to make informed projections on targets. Likewise, setting sales targets and timelines requires weighing factors like seasonality, lead time, and market growth. This explains the low 46% confidence score.

However, as one entrepreneur put it, “forecasting gets easier as you have more data.” Business management systems that compare actual results to projections are key. With real revenue and expense numbers, founders can refine estimates over time. The key is understanding that there is a broader growth planning process here, and setting the initial forecasts (and generally documenting assumptions) is just the journey’s first stage.

The need for business planning

The last set of questions for pre-revenue entrepreneurs assessed confidence in business planning and creating initial forecasts. 

In terms of seeing planning as an ongoing endeavor, the vast majority (89%) expressed confidence, agreeing it is not a one-off activity. As one noted, “Planning brings clarity by answering awkward questions.” Likewise, most agreed the pandemic (76%) and inflationary environment (80%) make planning more essential than ever. The need for projecting financials followed similarly at 77% which makes sense given you need a written plan plus a 1,3, and 5-year financial forecast to be on strong footing.

Of those surveyed, 63% had or were working on their business plan. 12% of respondents had no plans to create a plan. For those in the planning phase, we wanted to understand what was the hardest part.

Business planning challenges

Financial forecasting woes

By far the most commonly cited hardship, financial forecasting poses a double-edged puzzle. Estimating profits, predicting performance, and crunching numbers proves tricky without historical data to inform projections. As one founder put it, it requires too much “best guesswork.”

The market madness

Gauging product demand, analyzing competition, and identifying their unique value proposition gives many founders fits. Understanding the complex machinations of the marketplace takes skill and research.

Kickoff challenges

Just starting the planning process itself is a hurdle, with many pointing to challenges simply completing the plan or breaking ground. Inertia and analysis paralysis are very real foes.

Communicating clearly

Another sticking point is ensuring open and accurate communication, whether with clients or in presenting the plan. Packaging details clearly and concisely is an art and science.

Miscellaneous obstacles

From product pricing to securing locations, no two business plans face the exact same maze of challenges. But recognizing the core issues provides focus and direction.

In essence, business planning is a jigsaw puzzle with ever-changing pieces. But identifying recurring struggles provides entrepreneurs a roadmap to overcoming hurdles blocking their path.

Our takeaways about pre-revenue business owners

One of the joys of working with so many entrepreneurs is the constant reminder of their innovation and zeal for pursuing a better vision of the future. Our early-stage small business owner survey respondents offered that in spades showing that the entrepreneurial landscape is vibrant and diverse, brimming with innovative ventures across industries. Small businesses embody the heart and hustle powering our economy from multi-location wine collections to solo photography studios. After all, 99.9% of businesses across the US are small businesses and 47% of all U.S. employees are employed by a small business (U.S. Small Business Administration Office of Advocacy).

This survey provided a snapshot of the startup journey, revealing high visionary confidence yet lower certainty around financial planning. But with the right tools and perspective, these hurdles can be overcome. Despite economic uncertainty, the entrepreneurial drive endures. Through comprehensive planning, research, and embracing business management best practices, these passionate founders are poised for growth. The restaurants, salons, apps and community organizations of tomorrow are being dreamt up and documented today. Small business sentiment remains optimistic, innovative and focused on the future. 

About our new business respondents

Given the variety of the 160 businesses mentioned, it’s evident that there’s a rich tapestry of entrepreneurial spirit in the respondents. Here are some broad themes or sectors from the group:

Business categories

• •Service (27%): Consulting, training, wellness services, car washes, etc.
• •Retail - Brick & Mortar (20%): Clothing, apparel, accessories, gift shops
• •Manufacturing/Production (16%): Food, beverages, snacks
• •Retail - Ecommerce (11%): Clothing, apparel, accessories, gift shops
• •Other (26%): Photography, community development, transportation, etc.

Target markets (self-identified)

• •Solo Business/Solopreneur (42%): Primarily B2C businesses
• •Small Business (31%): Mix of B2C and B2B
• •Startup (23%): Some B2B like software and real estate project management

Key offerings

• •Physical Goods (47%): Food, beverages, clothing, accessories
• •Services (27%): Consulting, training, wellness, car washes
• •Digital Products/Platforms (11%): Software, apps, digital transformation
• •Other (15%): Photography, community development, etc.

Business stage

• •In Early Stages (61%): Indicated new/growing/pre-revenue businesses
• •Established (17%): Have been operating for some time
• •Just an Idea (22%): Still conceptualizing

Main takeaways:

• •Diverse range of business models and industries
• •Emphasis on tangible goods and services more than digital so far
• •Most focused on consumers and local/regional presence vs B2B or national
• •Majority are early stage businesses looking to establish and grow 

How the survey was implemented

We surveyed two groups: 

• •Pre-revenue entrepreneurs still developing their ideas and in the process of starting up; and 
• •Post-revenue entrepreneurs operating existing businesses (which will be covered in a soon-to-be-released article) 

Our aim was to benchmark confidence across important startup activities like business planning, financial planning, forecasting, pricing, funding needs, and more. The survey provided a snapshot into the challenges entrepreneurs face in different stages of the startup journey. 

These insights equip us to better address the pain points and needs of early-stage business owners so we can better educate and aid them in their paths to success.

Stay tuned for the second part of this small business survey focusing on the opportunities and challenges of up-and-running businesses already generating revenue. It’ll be an interesting look into where the owner/ operators’ mind-set is in this continuous fast-changing, macro environment. Thank you for all of those that took the time to contribute to the data sets.

John Procopio