The dream of entrepreneurship is alive and well in the U.S., but the journey from a great idea to a thriving business remains steep. According to the U.S. Census Bureau, fewer than 10% of small businesses ever reach more than $1 million in annual revenue. And while nearly half of Americans have considered starting a business, the vast majority never take the leap.
Gallup’s 2025 report, “Scaling to One Million: The Complicated Role of Capital”, sheds new light on why. The research finds that too few businesses ever grow to the level where they employ others or build sustainable wealth. The main barrier? Access to capital.
Compounding the challenge, data from the Bureau of Labor Statistics shows that around 20% of small businesses fail in their first year. Stretch that time period to five years, and about 50% fail. Without funding to support operations and growth, even the most promising businesses stall before reaching scale.
This article breaks down Gallup’s findings and offers practical takeaways for small business owners determined to overcome financial barriers and reach the million-dollar mark.
What A Fractional CFO Sees in the Trenches
I advise nearly 20 clients each month—small business owners who are navigating all kinds of challenges around capacity, growth, and scaling. Every one of them is unique in what they do, but most share one critical obstacle: they are under-capitalized.
If I had to list the top three challenges I see in small business, access to capital would absolutely be on that list. (If you’re curious, the other two would be marketing and human capital.) My clients are smart, resourceful, and often have great business models. But without the funds to expand operations, invest in infrastructure, or simply weather slow periods, their potential stays capped.
When I came across the Gallup report featured in this article, it immediately struck a chord. It captured what I’ve been seeing in the trenches for years. My goal here is to share the key insights from that report—and combine them with practical ideas—to help other small business owners build, fund, and grow stronger businesses.
Small Business Growth: The Report at a Glance
Gallup surveyed nearly 12,000 working adults and 3,500 business owners to understand:
- Why more people don’t start businesses
- What obstacles business owners face in raising capital
- How credit history affects growth
- What government and nonprofit support actually helps
You can view the full Gallup report here.
Introduction to Small Business
Definition and Importance
Small businesses are defined as companies with fewer than 500 employees, and they play a critical role in the American economy. According to the Small Business Administration, small businesses account for nearly half of the country’s economic output and employ almost half of the private workforce. These enterprises are essential to the growth and development of local communities, contributing significantly to job creation and innovation. The smallest businesses, those with fewer than 20 employees, are the backbone of the economy, and their success is crucial to the overall health of the labor market. Small business owners drive economic activity, foster community engagement, and provide essential services that support the well-being of their communities.
Aspiring Entrepreneurs Are Held Back by Capital, Not Ideas
Lack of Capital is the #1 Reason People Don’t Start Businesses
Nearly 45% of non-business owners say a lack of capital is the top reason they haven’t launched a company. Another 40% say they aren’t wealthy enough to take the risk. These figures are not surprising given the upfront costs many businesses face—from legal fees and licenses to inventory and marketing. For example, launching a simple service-based business may still require $10,000–$20,000 in startup capital, while a product-based business could require much more.
This financial hurdle persists despite the rise of lower-cost digital businesses. Even with options like dropshipping or consulting, aspiring entrepreneurs often feel the need to establish a financial safety net before taking the leap. And those who lack a strong credit profile or assets to borrow against are often stuck in a holding pattern. This perception of “needing to be rich to start” stifles many great business ideas before they ever reach a business plan.
Interestingly, the post-pandemic economy has seen a significant rise in new businesses. This surge, driven by increased household wealth and support for small enterprises, has led to millions of new business applications, highlighting the growing diversity among new business owners, including women and racial minorities.
Adding to the challenge is the psychological weight of financial insecurity. Many would-be founders, especially those from historically underserved communities, are reluctant to put their personal finances at risk—particularly if they are the primary breadwinners. Without access to affordable capital or support systems, these potential entrepreneurs often shelve their ideas indefinitely.
Even Those Most Eager to Start Say Money Is the Issue
Among those who have seriously considered starting a business, the percentage citing capital as the main barrier jumps to 49%. These are individuals who already have a business concept, and often a deep desire to make it work. Yet even at this stage, capital concerns remain the single largest reason they don’t move forward. The implication is clear: motivation alone is not enough—money still rules the path to entrepreneurship.
Consider the story of Rosa, a former restaurant manager in Dallas who dreamed of launching her own food truck. She spent two years developing recipes and researching permits but stalled after being denied a small business loan. Despite having industry experience and a strong plan, her limited personal savings and lack of collateral shut down her funding options. She’s now working part-time while saving up—delaying her dream by years.
Gallup’s findings echo broader research from the Kauffman Foundation and SBA: access to capital is a universal barrier, but it’s even more pronounced among entrepreneurs without generational wealth or traditional financial support. For policymakers and community lenders, this signals an opportunity to create targeted loan products and startup grants that better meet early-stage business needs.
Supporting early-stage entrepreneurs through targeted loan products and startup grants is crucial. This commitment to supporting small businesses can help overcome financial barriers and foster growth, ensuring that motivated individuals like Rosa can achieve their entrepreneurial dreams.
The Credit Gap: Why Poor Credit Equals Poor Growth
Your Personal Credit History Impacts Your Business’s Potential
The report found a strong correlation between poor credit and poor business outcomes, including lower profits, lower revenues, and slower growth over time. This correlation is particularly significant because it suggests that creditworthiness isn’t just a side metric—it’s a core indicator of business health and scalability. Businesses led by owners with excellent credit history tend to have five times the revenue of those led by owners with poor credit, according to Gallup’s data.
This is not just a correlation of convenience. Owners with stronger credit histories are more likely to be approved for loans, qualify for better interest rates, and access lines of credit when they need to cover shortfalls or invest in new growth initiatives. In contrast, owners with poor credit often can’t even apply for financing, let alone receive favorable terms. For example, a Black-owned marketing firm in Kansas City interviewed for the Gallup report described how repeated rejections due to subpar credit delayed their hiring plans and ultimately limited the firm’s ability to take on new clients.
Creditworthiness also feeds into perceptions of risk. Lenders, investors, and even potential partners are more likely to trust an entrepreneur who demonstrates fiscal responsibility. In Gallup’s survey, business owners with excellent credit reported not only higher revenue but more consistent year-over-year growth. For entrepreneurs looking to scale to seven figures, this reinforces the idea that improving your credit profile can directly influence how far—and how fast—you can grow.
Seeking professional financial advice can be crucial in improving credit profiles and achieving better business outcomes.
Most Small Business Owners Don’t Seek Outside Capital
90% of Business Owners Didn’t Seek Capital Last Year
Despite how vital capital is for scaling, the majority of small businesses operate without employees, and only 10% of business owners tried to get funding in the past 12 months. Only 3% applied for a loan.
Why Business Owners Avoid Borrowing
Top reasons include:
- Fear of debt (47%)
Many small business owners are hesitant to take on debt, fearing that loan obligations will compromise their autonomy or lead to financial ruin if revenues fluctuate. This mindset is understandable, especially for entrepreneurs who have personally experienced financial hardship or who operate in unpredictable industries. However, strategic debt—when managed responsibly—can be a powerful tool for growth. Clear education around business loan structures, access to low-risk microloans, and mentorship programs from financial professionals could help demystify debt and reduce fear-driven hesitation. Engaging in regular financial monitoring and updates on a regular basis is crucial for managing debt effectively and ensuring long-term business health.
- Sufficient internal cash flow (45%)
Some business owners report that their revenue is enough to meet operational needs, so they don’t see a reason to seek outside capital. While operating on cash flow alone may feel safe, it can limit a company’s ability to invest in growth—such as hiring, new equipment, or marketing. Businesses in this position may benefit from working with a fractional CFO or advisor who can help model out how modest capital injections could accelerate performance without jeopardizing stability. Set your small business up for financial success with the right amount of cash reserves.
- High interest rates (20%)
With rising rates over the past few years, many owners see borrowing as too expensive. This concern is especially pronounced among those with weaker credit, who face steeper terms. One solution is increasing awareness of alternative lending sources like CDFIs (Community Development Financial Institutions), peer-to-peer lending platforms, or nonprofit loan funds. Additionally, improving credit scores can help lower borrowing costs over time, making future capital more accessible.
“If you start with a loan, you’re working for the bank.”
This quote from a business owner in the report illustrates the skepticism many have toward traditional lending. For many entrepreneurs, especially first-time business owners or those from undercapitalized communities, debt is seen not as a resource but as a trap. This belief—that a bank loan means forfeiting independence—is widespread. It stems from personal experiences, fear of financial instability, or stories of others who struggled with loan repayment.
However, this thinking may limit growth opportunities. Debt, when used strategically, can act as leverage to amplify results. For example, Bank of America’s Small Business Spotlight series highlighted how The Honey Pot Company—a Black-owned feminine care brand—used a modest startup loan to expand production and build inventory. That early financing laid the groundwork for national distribution in Target and Walgreens.
Strategic debt can have a positive impact on business growth and expansion, enabling companies to scale operations and reach new markets.
Similarly, Warby Parker started with a $2,500 seed loan and strategic use of credit cards before raising additional funds. Today, it’s a billion-dollar company. While debt should never be taken lightly, viewing it as a calculated risk rather than a loss of control could unlock paths to scale that are otherwise out of reach. The key lies in understanding the terms, planning for repayment, and using the funds to drive revenue—not just survival.
Owner-Employers vs. Solo Operators: A Wealth Gap
Employers Create Wealth Faster
Businesses that hire employees see significantly higher asset accumulation and are more likely to report thriving in wellbeing. This is because hiring allows owners to delegate lower-value tasks and focus on strategy, growth, and profitability. With employees in place, business owners can multiply their output, pursue larger contracts, and scale their operations more efficiently. The Gallup report notes that owner-employers are also more likely to report succession plans, making their business a more valuable asset long-term.
Hiring skilled workers is crucial for business growth and profitability. Skilled workers enable businesses to operate more efficiently and compete effectively in a competitive job market.
However, many solo entrepreneurs resist hiring due to fear—fear of making payroll, fear of losing control, or concern that no one else can match their standards. This mindset, while understandable, can cap a business’s growth potential. Shifting this thinking begins with understanding that your first hire doesn’t have to be full-time or permanent. Consider starting with a contractor, freelancer, or part-time assistant to handle administrative or repetitive work. This gives you the chance to build leadership skills while keeping financial commitments manageable.
To move toward hiring, create a simple forecast of what work you could offload and what revenue you might generate if your time were freed up. Bringing on your first team member is a leap—but one that often marks the beginning of wealth-building and real growth.
Solo Entrepreneurs Struggle to Build Wealth
Non-employer businesses are often no better off financially than traditional employees. The Gallup report notes that these solo-run ventures typically have lower revenues, smaller margins, and less asset accumulation. Without staff to delegate work or scale operations, owners often hit a ceiling in both time and income. This structural limitation explains why solo entrepreneurs are underrepresented among businesses that reach the $1 million revenue mark.
However, it’s important to recognize that solopreneurship is not inherently a failure path—it’s a tradeoff. Many choose to remain solo for lifestyle reasons: flexibility, autonomy, and minimal overhead. As digital tools, remote infrastructure, and automation become more accessible, solopreneurs can build lean, profitable operations that support a great quality of life. Technology can help solopreneurs navigate these challenges by enabling them to automate tasks, optimize workflows, and leverage emerging technologies like AI. Platforms like Substack, Shopify, and Upwork have empowered creators and service providers to earn six figures without ever hiring.
That said, building wealth as a solopreneur often requires a different strategy: focusing on premium pricing, passive income streams, or intellectual property. For example, a freelance designer might transition into selling online design courses, or a solo consultant might productize their knowledge into downloadable frameworks. Success is still very possible—but it depends on aligning goals, pricing, and growth models with the limitations and freedoms of operating alone.
Government and Nonprofit Support Works—But Few Access It
Support Predicts Growth
Entrepreneurs who received local or state support—such as grants, coaching, or networking—were more likely to report revenue growth. This underscores the tangible impact that structured support programs can have on small business development. While many entrepreneurs may be aware of these resources, the specifics of available programs and their benefits are often less understood.
Support programs across the country have a significant geographical reach and impact, influencing local economies and business performance in various regions.
One notable example is the Small Business Accelerated Growth Program in Colorado. This initiative awarded 326 grants across the state, with a significant percentage going to women and minority-owned businesses. The program focuses on enhancing access to capital and digital marketing efforts, providing recipients with the tools needed to expand their operations and reach new markets.
Another impactful program is the 10,000 Small Businesses initiative by Goldman Sachs. This philanthropic effort offers business and management education, mentoring, and access to capital. Participants have reported substantial benefits, with 63.7% experiencing revenue increases and 44.8% adding new jobs post-graduation.
These programs exemplify how targeted support can drive business growth. Entrepreneurs seeking similar opportunities should explore local economic development offices, Small Business Development Centers (SBDCs), and community-based initiatives tailored to their specific needs and regions.
H3: But Most Never Receive It
Only 5% of all owners received a grant or subsidized loan. Fewer than 10% had the opportunity to pitch to investors.
Why Outreach Matters
Small business owners often don’t know where to look for help—or don’t believe it will work for them. According to the Gallup report, fewer than 10% of all business owners had the opportunity to pitch to investors, and only 5% received a grant or subsidized loan. This lack of engagement is not due to a lack of programs, but often a lack of visibility, awareness, or trust in the system.
Different sectors play a crucial role in providing support and resources to small business owners. For instance, the leisure and hospitality sector, home health and personal care sector, and other industries contribute significantly to the overall job market and economic resilience.
To overcome this, small business owners should begin by identifying local economic development offices or Small Business Development Centers (SBDCs), which offer free consulting, workshops, and introductions to funding opportunities. State-level programs—such as the Small Business Accelerated Growth Program in Colorado—often publish open applications on state economic websites, and chambers of commerce frequently partner with nonprofits to host pitch competitions and grant programs.
Another often overlooked entry point is community colleges and universities, many of which run small business incubators or entrepreneurship support hubs. By starting locally and asking pointed questions—What funding programs are available for minority-owned businesses? Are there pitch competitions I can enter this quarter?—owners can begin to tap into the underutilized infrastructure that exists to support them.
Job Market and Economy
Job Creation and Openings
Small businesses have been responsible for creating nearly half of all new jobs in the United States over the past few decades. According to labor statistics, small businesses have added over 12.9 million jobs to the economy in the past 25 years, accounting for approximately two-thirds of all new jobs added during this period. The labor market has seen significant growth in recent years, with the number of job openings reaching record highs. The national federation of independent business reports that small business owners are optimistic about the future, with many expecting to create new jobs and expand their operations in the coming year. This optimism is fueled by the resilience and adaptability of small businesses, which continue to innovate and meet the evolving needs of their customers.
What This Means for Small Business Owners
Credit Is Currency
Even if you’re not seeking capital now, your credit history will determine how fast you can scale when the time comes. Gallup’s research shows a direct relationship between self-reported creditworthiness and business outcomes. Owners with excellent credit not only report higher profits and revenues but also experience more frequent year-over-year growth. In contrast, owners with poor credit were five times more likely to report difficulty obtaining loans—and their businesses showed lower profits and slower expansion. This demonstrates that credit is not just a gatekeeper for financing, but a reflection of business readiness in the eyes of lenders and investors.
The most recent data highlights the latest statistics on credit and business outcomes, showing a clear trend that businesses with strong credit profiles are better positioned for growth and stability.
A strong credit profile increases your ability to act on time-sensitive opportunities: hiring a key employee, securing inventory at a discount, or expanding into a new market. Even if you’re not pursuing capital today, your credit score acts like a silent business partner—one that can either open or close doors when growth accelerates.
Avoiding Debt May Cost You Growth
Not all debt is bad. Strategic use of capital can unlock new opportunities—especially if you’re looking to hire or expand. Gallup found that owner-employers who took on debt were significantly more likely to experience revenue growth than those who didn’t. Yet nearly half of business owners who avoided seeking capital said they did so because they “didn’t want to take on debt.” While caution is prudent, this blanket avoidance may come at a cost.
Think of debt not as a weight, but as a lever. When used wisely, financing can fund high-return activities—like marketing campaigns, new hires, or equipment upgrades—that accelerate income and efficiency. For instance, SBA microloans, often less than $50,000, have helped thousands of small businesses bridge critical cash flow gaps and hit new growth milestones. Instead of fearing debt, small business owners can reframe it as a calculated investment in the future. Working with a financial advisor or fractional CFO can help model this kind of ROI-based approach.
Practical Next Steps for Entrepreneurs
Build or Repair Your Credit Now
Improving your credit profile is one of the most important steps to prepare for future growth. Here’s how you can make measurable progress:
- Paying bills on time: Set up automated payments for your credit cards and business accounts. Even a single late payment can drop your score significantly, so use tools like Mint or your bank’s mobile alerts to stay on top of due dates.
- Reducing credit utilization: Aim to use no more than 30% of your available credit. If you’re consistently above that, consider requesting a credit limit increase on your existing accounts or spreading expenses across multiple cards. Use a spreadsheet or a free credit utilization calculator to monitor this ratio monthly.
- Avoiding new hard inquiries: Space out any credit applications, as each hard pull can reduce your score temporarily. If you’re rate shopping (e.g., for a business loan), do it within a 14- to 30-day window to limit the impact.
During economic downturns, maintaining a strong credit profile can help businesses stay stable and navigate challenges such as job losses. You can also download your full credit report for free annually at AnnualCreditReport.com to check for errors and begin a credit repair process if needed.
Explore Local Support Networks
Building your network can unlock funding, mentorship, and marketing exposure. Start here:
- City or county small business offices: These agencies often house economic development teams that can direct you to low-interest loans, grants, and technical support.
- Chambers of commerce: Attend networking breakfasts, pitch nights, or small business roundtables. Many chambers partner with banks, accountants, and attorneys who offer free consults for members.
- Nonprofits and accelerators: Look for organizations like SCORE, SBDC, or local business incubators. Many of them offer free coaching, funding competitions, and bootcamps that can help you build out your business plan.
Support for minority-owned businesses, particularly racial minorities, is crucial. These groups, including Hispanic entrepreneurs, make substantial contributions to the economy, and their businesses play a significant role in the landscape of small business ownership.
Keep a “Resource Rolodex” in a spreadsheet listing key contacts, events, and application deadlines. Revisit it quarterly.
Start With Small Wins
If you’re unsure where to begin, take a low-risk step forward:
- Apply for a microloan: Look into programs like Kiva, Accion Opportunity Fund, or your local CDFI. Many offer loans under $10,000 with flexible terms for first-time borrowers.
- Attend a free workshop: Many SBDCs and universities offer training on financial management, digital marketing, and business planning. Use these to upskill and build momentum.
- Schedule a 30-minute fractional CFO consult: Book a free session with a SCORE mentor or local fractional CFO to talk through your next move. Even one conversation can clarify priorities and unlock confidence.
Remember, small wins compound. The important thing is to begin with action you can sustain—and build from there. Small wins are particularly crucial for new startups, as they help build confidence and demonstrate progress, which is essential for long-term success.
Future Outlook
Next Year’s Projections
According to recent data from the Census Bureau, the number of new business applications has surged in recent years, with over 19 million new applications since the end of 2020. This trend is expected to continue, with many small businesses anticipating significant growth and expansion in the next year. The Small Business Administration reports that small businesses are expected to create over 1 million new jobs in the next year, with the fastest-growing industries being healthcare and social assistance. However, small business owners also face significant challenges, including tight credit conditions and increasing competition from larger companies. Despite these challenges, the outlook for small businesses remains positive, with many expecting to increase revenues and expand their customer base in the coming year. The resilience and determination of small business owners will be key to navigating these challenges and seizing new opportunities for growth.
By following this structured approach, the new sections are seamlessly integrated into the existing article, providing a comprehensive and cohesive reading experience for small business owners and entrepreneurs.
Conclusion: Scale Requires Strategy
The Gallup/JPMorgan/Kauffman report makes it clear: Capital alone won’t scale your business, but lacking it can keep you from trying.
Take the story of The Lip Bar, founded by Melissa Butler. Starting from her kitchen in Detroit, Melissa began making vegan lipsticks after work. When she appeared on Shark Tank in 2015 and was rejected by investors, many might have quit. But she didn’t. Instead, she secured a small business loan through a local Detroit development fund and reinvested every dollar into growing the business. With the support of alternative funding sources and a strategic debt plan, The Lip Bar expanded into over 1,000 Target stores and is now a multi-million-dollar beauty brand led by a woman of color.
Small businesses like The Lip Bar contribute significantly to communities around the world, enhancing accessibility and safety in numerous countries and showcasing a commitment to making a difference on a global scale.
Melissa’s journey is a powerful example of how capital—used wisely—can fuel transformation. It’s not about the size of the loan; it’s about the strategy behind it. Building a million-dollar business isn’t reserved for the already-wealthy or well-connected. It’s for the entrepreneur who’s willing to build their credit, ask for help, and invest in their growth.
As Butler herself said in a recent interview, “Betting on yourself is the first investment. Everything else flows from there.”
If you’re a small business owner or aspiring entrepreneur, now is the time to build the roadmap to your first million in revenue—starting with belief, strategy, and smart use of capital.
Let’s Uplevel Your Finances
If you’re looking for clarity around your finances, support in building a funding strategy, or simply a second set of eyes on your growth plan—I’d love to help. I offer a no-obligation, completely free consultation for small business owners who are ready to take the next step.
There’s zero risk. Just a conversation.
Whether you’re stuck on how to fund your next hire, unsure about your margins, or curious about how a fractional CFO could help your business grow, reach out via my Contact Us page. You don’t have to do this alone. Let’s talk about how to make the numbers work for your vision.
