Why Do People Start Businesses?

This article is about the underlying motives: the reasons people give for wanting a business of their own. It is different from the trigger, the event that finally makes someone start, which is the subject of The Big Push. The motive explains why you wanted to. The trigger explains why it happened when it did.

What the largest survey says

The most useful source in the United States is the Census Bureau’s Annual Business Survey, which asks business owners which reasons for owning their business were important to them. The SBA Office of Advocacy summarized the 2019 results for owners of firms with employees. Owners could choose more than one reason, so the percentages add up to more than 100.

The SBA noted that the 2019 data matched what owners had said in 2014. Two things stand out. Independence and income are tied at the top. And necessity, in the sense of having no other job, is near the bottom for owners of firms that already employ people.

What newer surveys add

Smaller private surveys ask the question differently, and they tend to force owners to pick a main reason. They are less rigorous than the Census survey, but they are more recent and they show the same themes with different emphasis.

Guidant Financial’s 2025 survey of more than 4,500 current and aspiring small business owners asked for the reason they started. The answers were: ready to be your own boss (28%), dissatisfied with corporate life (22%), wanted to pursue a passion (13%), laid off or job outsourced (10%), an opportunity presented itself (9%) and to create a legacy (9%).

Gusto’s survey of 1,590 owners who started businesses in 2022 found flexibility to be the top driver, cited by 63%. Financial concerns, meaning financial stability or supplementing household income, were cited by 41%, up from 24% a year earlier. Only 5% said they or a partner had lost a job, down from 19%.

The numbers cannot be compared directly, because the questions and the samples differ. The pattern can. Across all three, independence, money and time come first, and necessity is a minority reason in the United States.

Necessity is not rare everywhere

The picture changes outside the US and over time. The Global Entrepreneurship Monitor asks early-stage entrepreneurs in dozens of countries whether they started to earn a living because jobs are scarce. In its 2019 to 2020 global report, more than half of people starting a business agreed in 37 of the 50 economies studied, with the share lower in the wealthiest countries. In the GEM report on the United States for 2024, more than two-thirds of early-stage entrepreneurs cited job scarcity among their motives, a share that had been rising since 2022.

That looks like a contradiction with the Census figure of 7.4%, but the two measure different people. The Census survey asks owners of established businesses with employees. GEM asks people in the first years of starting, many of them alone, and lets them agree with several motives at once. Someone can start because they want independence and also because the job market looks thin.

Most founders have more than one reason

In the interviews I do, founders rarely give a single reason. They want independence and more money. They want flexible hours and an outlet for an idea. That is normal, and the surveys reflect it: in the Census survey, the average owner chose several reasons.

The mix matters more than any single motive, because the motives pull in different directions. Someone who mainly wants flexibility may be happiest with a small, profitable business that never hires. Someone who mainly wants a large income may need to build something that can grow beyond their own hours. Someone who wants to help their community may judge success by impact before profit.

Why your motive matters for the rest of the route

Your motive is not just background. It is the measure you will use to decide whether the business is working.

At How to Come Up With a Business Idea, it helps you discard ideas that cannot deliver what you want: a business with a storefront open seven days a week does not suit someone who started for flexibility. At Should You Quit Your Job to Start a Business?, it tells you what you are trading: someone starting for income should compare the business with their salary; someone starting for independence may accept less money for a while. And at Should You Sell Your Business?, it decides whether a good offer is actually good for you.

The founders who struggle most later are often the ones who never said their motive out loud. They build a business that succeeds by someone else’s measure and fails by their own.

Is now a good time?

Motive is one half of the decision to start. The other half is circumstance: savings, the market, the economy. That question has its own article, Is Now a Good Time to Start a Business?, and the wider decision is the first milestone on the route, Why Start a Business?. If you want the reasons in more depth, with the stories of founders who lived each one, the free guide The 10 Most Common Reasons to Start a Business collects them.