What does it take to
start a business?
One in ten adults in the US today has started a business.
Australia is not far behind with one in twelve, and Brazil is ahead with one in eight according
to the Global Entrepreneurship Monitor (2000). By contrast, the older established countries
are less entrepreneurial: for example, Germany (one in 25), the UK
(one in 33), Finland and Sweden (one in 50) and Ireland and Japan
(fewer than one in 100).
What is an entrepreneur? And why do people start businesses?
A classic definition of entrepreneurship: "Entrepreneurship is the process of creating or seizing an opportunity and pursuing it
regardless of the resources currently controlled" (Timmons, 1994: 7).
According to Stolze (1999:13):
'Long ago I read one author's comment that, Entrepreneurship is
a profession for which there is no apprenticeship. No matter how many books you have
read, no matter how many courses or seminars you attend, no matter how much advice
you get from "experts," no matter how many small companies you work for, there is no
substitute for the actual experience of doing it yourself.'
Catlin and Matthews (2001:6) list the following classic entrepreneurial
strengths:
* Vision and a pioneering spirit
* Being able to see possibilities where others do not
* Always searching for new opportunities and challenges
* Possessing energy and passion
* Having a drive to succeed and achieve results with high standards of excellence
* Being creative - idea generators, able to 'think out of the box'
* Constantly striving to do things better
* Proactive and focused on the future
* Intelligent, capable and decisive
* Having a strong sense of urgency
* Confident about taking risks
* Problem solvers seeking new challenges and believing that nothing is impossible
* A determination to succeed, be wealthy or 'make a difference'
Stolze (1999:16) divides the reasons why entrepreneurs start businesses into two
categories: reactive reasons and active reasons. Reactive reasons are negatives that push people
out of working for other people; active reasons are the positives that pull people towards the
idea of working for themselves.
Reactive reasons
1. Inequity between contribution and reward. People who are high
achievers tend not to enjoy working in large organizations. According to Stolze: 'They want
rewards based on accomplishment - not on seniority, conforming to the corporate culture, or
political clout.'
2. Promotion and salary policy. Large organizations tend to categorize
people and mavericks do not fit the conventional promotional paths and salary bands.
3. Adversity. One of the commonest reasons - basically, job insecurity.
When the job is not safe, people tend to think about alternatives. According to Stolze: 'I get
very upset when a young college graduate seems unduly concerned about a retirement plan, fringe
benefits and so forth. Long ago, I concluded that there is only one kind of job security that
means anything - your ability to get another job fast.' Redundancies may also mean severance packages,
allowing people to fund their own businesses.
4. Red tape and politics. Stolze says they are 'shortcomings of all
large organizations that drive the entrepreneurial type bananas. Politicians and bureaucrats are
rarely entrepreneurs.'
5. Champion of orphan products. Those of us who have cared about products
or services outside the mainstream can understand how negative a large organization can be
about 'orphan products'. This can be a first step towards the entrepreneurial leap.
Active reasons
1. Wanting to be one's own boss. According to Stolze: 'Many entrepreneurs
have personality traits that make it difficult (if not impossible) for them to work for others.'
Running their own business is the only solution. But also, there is the opportunity of
professional satisfaction, seeing a job through, using time more flexibly, and so on.
2. Fame and recognition. Stolze does not consider this to be a common
reason for starting a business, considering that there are 'more extrovert egotists' in
established large organizations. In fact, he believes that starting one's own business is often
a lesson in humility.
3. Participation in all aspects of a business. The all-round experience
is elating and challenging. Being able to see the whole picture is more interesting than being
one 'cog in the wheel.'
4. Personal financial gain. This can be important for some people, but not
all. Potentially, the gains are much greater than normal wages.
5. Joy of winning. Gaining pleasure from a sense of achievement.
References
Catlin, K. and Matthews, J. (2001) Leading at the Speed of Growth: Journey from
Entrepreneur to CEO, John Wiley & Sons.
Stolze, W.J. (1999) Start Up: An Entrepreneur's Guide to Launching and
Managing a New Business, Career Press.
Timmons, J.A. (1994), New Venture Creation: Entrepreneurship for the
21st Century, Fourth edition. Irwin Press.
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