Hiscox, a global specialist insurer that provides U.S. small businesses with the simplest way to purchase customized business insurance online or over the phone, announced today the findings of the fifth annual DNA of an Entrepreneur report. The study includes insights from 500 small and medium-sized businesses across the U.S. and provides a unique and revealing portrait of the financial pressures, stresses, opportunities and challenges faced by entrepreneurs. This year's findings reveal that although male entrepreneurs were more likely to report growth in revenue, new customers and number of employees, the gender gap is narrowing as female entrepreneurs continue to generate strong results. 

Ben Walter, CEO of Hiscox USA, commented: "Our fifth annual study of small businesses reinforces trends that we have seen while working closely with small business owners across the country. Despite challenges still lingering from the financial crisis, American small business owners have maintained their resolve and determination to launch and sustain successful enterprises. In fact, the majority of business owners we spoke to in this study believe that the continuing macroeconomic struggles have made them stronger and more determined to succeed." 

Optimism About the Coming Year

Half of all U.S. small business owners (50%) are optimistic about the coming year. Overall optimism has increased by 5% since 2011, when 45% of all U.S. small business owners reported having a positive outlook on the year ahead. However, optimism is down from 2012, when 55% of all U.S. small business owners reported being optimistic about the coming year. 

Closing-In on the Growth Gap

More male small business owners reported growth over the last 12 months than their female counterparts, with 50% of male small business owners reporting revenue growth (females: 45%), and 57% of males reporting new customer growth (females: 52%). Additionally, over twice as many male small business owners (32% vs. 15%) indicated that they plan to hire new staff in the year ahead. However, the business growth gap that exists between genders appears to be narrowing. As compared with 2011, when 43% of male small business owners reported a revenue growth versus 34% of their female counterparts, the spread between revenue growth among males and females has tightened by 4%. 

Motivation: Flexibility vs. Autonomy

According to the study, over one-third of male small business owners (34%) reported working on average between 40 to 49 hours per week, while female small business owners were most likely (34%) to work on average 29 hours or less per week. This difference is supported by the different drivers for men and women for starting small businesses as shared by the study participants. The majority of women (70%) cited "more flexibility over working hours" as the main benefit to being in a small business as opposed to a larger business or company. Alternatively, the majority of men (60%) cited "less bureaucracy" as the primary benefit of being in a small business. 

Managing New Frontiers

Small business owners are continuing to implement and leverage social media tools to communicate with customers and employees, connect with prospects, and recruit talent. Women are more likely than men to use social media in nearly all aspects of their business operations. In particular, women reported utilizing social media tools for keeping in touch with customers (45%), as well as for communications, marketing or public relations initiatives (41%). Hiring/recruitment is the only area of operation where men are more likely to use social media than their female counterparts (18% and 7%, respectively). 

Despite mainstream popularity, small business owners have yet to embrace crowd funding. An overwhelming majority of both male (92%) and female (94%) small business owners said that they had not considered alternative sources of funding, such as crowd sourcing.

Government Does Not Support Small Business

Nearly two-thirds of both men and women (62% and 63%, respectively) indicated that the U.S. taxation system does not favor those seeking to set up their own business. Both men and women also agreed (64% and 61%, respectively) that government bureaucracy is a major barrier to setting up a small business in the U.S. Interestingly, this sentiment has grown for women since 2011, up from 54%. Only 17% of male small business owners and 16% of female small business owners have approached a member of the local, state or national government for help on a small business issue. Forty-eight percent of all male small business owners and 58% of all female small business owners spent less than one hour per week dealing with government regulation. 

Triumphs and Challenges

Ben Walter, CEO of Hiscox USA, along with author, speaker and small business coach Melinda Emerson, better known as the SmallBiz Lady, led a panel discussion this week in New York City to explore implications of the findings from this year's study. The event also featured New York small business owners, Brian Moran, Founder & CEO of Brian Moran & Associates, and Jennifer Shin, Founder & Principal Consultant of 8 Path Solutions, who provided personal insights on the challenges and opportunities associated with running their businesses.

Key takeaways from the panel included: 

• Healthcare reform has the potential to structurally change the landscape for small businesses by easing the fear entrepreneurs have of losing access to their health benefits when they are taking "the leap" to start a business;

• Disruptive technologies such as social media have fundamentally changed the way in which small business owners operate and have levelled the playing field with large companies, by allowing small business owners to obtain information faster, reducing geographical limitations and providing access to scale;

• This year's eDNA study highlights the differences and similarities among male and female small business owners, but panelists agreed that fostering diversity of all kinds in the workplace spurs innovation. In turn, small business owners should be strategic in their hiring decisions in order to create a dynamic workforce;

• According to the U.S. Labor Department, unemployment fell to 7.3% in August. Despite continued concerns about nationwide unemployment levels, there is a war for talent among small businesses that are challenged to find, secure and retain qualified employees. According to panelists, investing time and resources to train and professionally develop talent will continue to be of critical importance.

"The single biggest challenge for small business owners is not finding opportunities, but finding capacity," said Emerson. "Today's small business owner is pulled in a hundred different directions trying to establish, run and grow their business. Having a strong plan that balances both the long-term and day-to-day goals is critical, and without this you will fail. Small business owners should also always be on the lookout for ways to tap into the expertise of their peers and thought leaders within the small business community, as this is one of the most invaluable assets we have in our arsenal."