I think a majority of people imagine what it would be like to own a business, or at least be self-employed at some point in their life. The rewards include freedom, prosperity and being your own boss. There are also some real and imagined obstacles, including risk, viability, age, timing, money, and the list goes on.
Here are some facts from the Kauffmann Foundation that may cause you to reconsider just what a typical entrepreneur looks like, and when would be the best time to start a business.
Is now the right time to start a business?
Well-over half of the companies on the 2009 Fortune 500 list, and just under half of the 2008 Inc. 500 Fastest Growing Companies list, began during a recession or bear market (Full report).
Companies started during recessions or bear markets include Hyatt, FedEx, Microsoft, The Jim Henson Company, CNN, Trader Joe’s, and Wikipedia.
Is the risk as great as you think it is?
I genuinely wonder which is the greater risk; putting all of your energy in the direction of looking for a job, or to build a business? I often hear that people can’t afford to start their own business, kids, bills, etc. Who says that a job search will bring a faster, or more certain return on your time and effort? I don’t even think they need to be mutually exclusive, and one can certainly lead to the other.
“Hundreds of thousands of individuals do not wait for others to ease their economic pain—they create jobs for themselves and others.”
As Dan Pallotta states in his Harvard Business Review article Discover Your Inner Entrepreneur, “We have to re-shuffle our notions about security. The danger isn’t where we think it is. The danger is in not being entrepreneurial. If you’re not creating the future, then someone else is, and that someone else will change the face of the world as you know it. But that’s not the greatest danger. The greatest danger is arriving at the end of our lives and feeling like we haven’t really lived. Risk is the currency of life. Without risk, there is no life. We have to be willing to risk failure in return for a sense that we are living. And it’s when we’re really living that we really have a shot at changing the world.”
Maybe it’s not as challenging as you think.
In Making of A Successful Entrepreneur, The Kauffmann Foundation asked company founders to rank the challenges they faced in starting their businesses. The factors that a majority considered a challenge were the “time and effort required, capital/financing, and experience.”
What is perhaps most interesting, the entrepreneurs questioned perceive the challenges to be much greater for others than what they personally faced. This would imply, either the majority of them were coincidentally lucky, or that in fact the anticipated challenges are not as great as the actual challenges. In other words, it is somewhat easier than anticipated, or it looks harder for others than it actually is.
Do you have what it takes?
The four most important factors for entrepreneurial success, according to our respondents, are prior work experience, learning from successes and failures, management teams, and luck. Do you create the luck by becoming an entrepreneur, or does it just happen?
Think you are too old to start a business?
Contrary to popularly held assumptions, Kauffmann Research reports; over the past decade or so, the highest rate of entrepreneurial activity belongs to the 55-64 age group; nearly 5,000 companies that began in 2004, two-thirds of firm founders are between the ages of 35 and 54.3; the average age of the founders of technology companies in the United States is a surprisingly high 39 — with twice as many over age 50 as under age 25.4. Too young maybe, but not too old.
Barriers to entry
It doesn’t look like there are large sources of external financing for first time entrepreneurs. Only 11 percent received venture capital, and 9 percent received angel financing for their first startups. However, given the fact technology and the internet reduce many costs and barriers to entry, financing may not be as big of an issue, at least for some businesses.
Entrepreneurs are spiritual
What struck me the most was the answer that entrepreneurs were allowed to write in. I think it points to the fact that we think we are somehow different than other people in our field, position, or role. I might be spiritual but most other entrepreneurs are not. They are harder, colder, etc…
“We allowed entrepreneurs to write in factors that they considered important but were not included in our list. The most commonly mentioned factor was the importance of faith and God. Many considered this extremely important to their success. That’s it Entrepreneurs are spiritual.”
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For more details on the research mentioned visit www.kauffmann.org