Small Business Facts

Reasons for Running a Business

^{November 2022 · by Brian Headd, Economist}

At a Glance

While making money is a large reason business owners work for themselves, personal reasons can be
just as important.

Owners sought both autonomy and increased income.

In 2019, 64 percent of owners of firms with employees said wanting to be their own boss and having
greater income were very important reasons for owning their own businesses. In addition, 57 percent
wanted a better balance between work and family (Figure 1).

^{(Source: U.S. Census Bureau, Annual Business Survey)}

Self-employment is more driven by opportunity than necessity.

Only 7.4 percent of business owners with employees started their ventures because they could not
find a job. Meanwhile, 56 percent felt starting a business was the best avenue for their ideas to create
goods and services. (Source: U.S. Census Bureau, Annual Business Survey)

Owners in educational services and information industries have unique
motivations.

In most industries, owners had motivations similar to the total figures by selecting wanting to be their
own boss (or empowerment) and greater income as top reasons for running a business (Figure 2).
Finance and insurance was the top industry motivated by income. Healthcare and social assistance
was the top industry motivated by empowerment. On the contrary, owners in educational services
and information industries reported that being an owner was the best avenue for their ideas.

^{(Source: U.S. Census Bureau, Annual Business Survey)}

Reasons for being an owner haven’t changed much over time.

In 2014, reasons for running a business were similar to the 2019 results. Most owners wanted to be
their own boss or wanted greater income. The least cited reason was that owners could not find a job.
(Source: U.S. Census Bureau, Annual Business Survey and Annual Survey of Entrepreneurs)

Women have different owner motivations.

Most owner demographic categories shared similar reasons for being an owner. Over 60 percent of
African-Americans, Hispanics, Asians, Nonminorities, and men felt that wanting to be their own boss
and earning a greater income were very important reasons to be an owner. However, for women, the
top reason for becoming an owner was work and family balance. In total, 59 percent of women felt
that this was a very important reason to own their own business.

^{Small Business Facts are produced in the Office of Economic Research of the SBA Office of Advocacy.
Questions? Send an email to Advocacy@sba.gov.}