Beware the fuss about accidental entrepreneurs
We’ve been hearing a lot recently about so-called accidental entrepreneurs–unemployed people who start a business when they can’t find a job or, at least, need help paying the bills until they land a new spot. A New York Times story cites statistics from the Kauffman Foundation and an online legal document service as evidence:
Others among the unemployed are taking the entrepreneurial route. The most recent Index of Entrepreneurial Activity by the Kauffman Foundation showed a slight uptick of new businesses in 2008 — a full recessionary year — over 2007. An average of 320 Americans out of 100,000 formed a business each month, Kauffman said. What’s more, it found, the patterns “provide some early evidence that ‘necessity’ entrepreneurship is increasing and ‘opportunity’ entrepreneurship is decreasing.”
Accidental or by design, entrepreneurship is on the rise again this year. LegalZoom, the online legal document service, says the number of new businesses it helped to form was up 10 percent in the first half of the year, compared with the period a year earlier.
via Unemployment Can Lead to Entrepreneurship – NYTimes.com.
Also, the story cites the usual point made in such articles, that many large successful businesses were started during recessions.
Perhaps you’re picking up on my skepticism here. While I don’t doubt that there’s an uptick in startups launched by such people, I think their chances of becoming another Starbucks, Intuit or Petsmart (companies started during recessions) are tiny. Being a successful entrepreneur requires a certain drive, commitment, passion. And, for many people used to corporate life, it’s like landing in a foreign country with a strange culture–one they never get used to.
In fact, starting a business isn’t for everyone and all these happy accidental entrepreneur stories do a disservice to the vast majority of people who aren’t cut out for it.
If you can pinpoint a business that’s cheap to start and look on it as a way to make some cash during a job search, that’s great. I assume, it’s also a way to showcase your talents to a potential employer. But it’s foolish–and irresponsible–to create the impression that accidental entrepreneurship is going to be the answer for many people.
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Not so…I for one plan to put on my sunglasses and with tin cup in hand sell pencils in front of the mall while my wife plans to sell apples on the corner. My pitch for the start up is a plea to the nostalgia trend selling the first in wooden computation devices. My wife is going with, an apple a day keeps the Obamacare away.
It seems to me most people start their own businesses out of a mix of inspiration, ambition and (in a recession) desperation. I disagree it’s only useful or advisable for those wanting to showcase their talents to a future employer or make some quick cash. Whether the odds are long or not, people do it out of passion. Why ask them to take a cold shower? Even if their chances of huge success are close to nil, perhaps many of them will eke by doing what they love, and isn’t that what matters?
I’m not saying people shouldn’t start these businesses. I just think the coverage tends to be overly optimistic and unrealistic and irresponsible.
“Accidental” entrepreneurialism has long roots in rural places where there aren’t many jobs. My home state, Maine, has more than 90% of the workforce employed in small business; with many successful, long-term businesses fitting just that description.
While you’re skeptical of it, I applaud it. Many successful people discover their aptitude to start and run a small business this way.
And as we’ve been told over and over, small business is where job creation happens.
Be skeptical; but look for the good, too. We don’t need another Starbucks, but a private cafe in a neighborhood with enough population to support it is mighty nice. Being big doesn’t have to be the goal, too often it can lead to “to big to fail.”
When it comes to business, we need to remember: small is beautiful.
Yes, I’m a big believer in small is beautiful, that small businesses don’t have to become big to be successful. Also, your point about people discovering an aptitude for entrepreneurship they might never have known about otherwise is a really good one. The founder of a business incubator told me he thinks there’s tons of entrepreneurial potential in the cubicles of corporations. It’s all true.
So, yes, there are positives when people are forced into trying out entrepreneurship. I just think they need to understand the chances of success–not becoming Starbucks, I don’t mean that–aren’t great. It’s just a fact.
Anne, I reported on business in ME for a number of years, which means I reported on small business.
I’ve also run two small businesses, one as sole proprietor (freelance journalist) and one as a partnership.
I’ve talked to hundreds of small business owners both in my state and nationally, and since 2001, I’ve heard one complaint consistently: health insurance costs are the single biggest barrier to success. Companies that can’t afford it; if they don’t offer it, they have trouble attracting employees, and rising premiums have driven hundreds of companies under.
Reforming health care is crucial to nurturing entrepreneurialism.
In response to another comment. See in context »Small business owners have said consistently for a while that health care is their biggest concern. And, there’s an argument that we would see more entrepreneurial activity if it weren’t for the health care crisis.
So, small business reaction to the current health care debate is crucial. According to John Arensmeyer of Small Business Majority–I wrote about his organization before I went on vacation last week–a requirement that small businesses offer insurance (something I see anti-Obama people harp on) would affect a small percentage of companies. This is because a bill would probably just apply to businesses with more than 25 employees. And most businesses with more than 25 employees offer some kind of insurance.
At the same time, it’s crucial that health care legislation make it possible for small businesses to offer more affordable health insurance options to employees, for the reasons you state. That will make a huge difference not only to the viability and success of current small businesses, but to those people who would consider starting one but have been scared off.
I can tell you that it took more preparation, sweat and angst to obtain health care coverage for my employees, during a 2002 start-up, than it did to make a near-7-figure sale.
I don’t know where the Republicans are finding all these straw humans who are so in love with their current health care providers that they wouldn’t change a thing, but as one who’s started a handful of businesses, I can tell you that it’s damn near impossible to buy coverage that actually covers anything if you have an operation with fewer than 10 people.
Of course lack of available health insurance for small businesses stifles innovation. I think that’s part of the point of some of these corporations lobbying so hard for more of the same – if citizens can only obtain decent health coverage from big corporations, then that kind of buys a secondary insurance policy for those big corporations – insurance against competition from any smaller players.
Meanwhile, as to your original post, I agree that no one should downplay the challenges the entrepreneur faces. That said, there comes a time when some realize that there’s a better chance of being paid to do interesting work if you go into business for yourself rather than take what’s out there – even when the country isn’t in a recession.
In response to another comment. See in context »