Entrepreneur–Either You Are, or You’re Not!

I’ve just about finished updating my annual Business Survival Reality report for 2015, and like prior years it doesn’t paint a very pretty picture for a lot of hopeful entrepreneurs.

Business Survival Cover - 2015The failure rate is higher than what anyone ever admits, and no one seems particularly concerned.

I know there are many specific reasons businesses fail, but I’m wondering if there is not some root cause to so many businesses turning out badly.

I wonder if there are too many people starting businesses who really shouldn’t try being an entrepreneur.

These thoughts were going through my head when I ran across an article by Mark Suster, a former successful entrepreneur turned Venture Capitalist.  It’s interesting to hear Mark’s views from both sides of the entrepreneurial issue—entrepreneur and investor.

You can read Mark’s entire post here, but I thought I would share some of his thoughts below on what being an entrepreneur is all about:

“Being an entrepreneur is about finding your inner self confidence:

  • To be constantly told “it won’t work” but to keep plugging away anyways.
  • To be kicked a lot and still keep standing.
  • To hide your demons so that you don’t scare the bejesus out of your employees.
  • To inspire others to join your cause when by all rational accounts they should not.
  • And having the cojones to have them join you anyways. Pottery Barn rule. You hire them, you own them now. As in you’re responsible for these lines on their future resume. Don’t fuck them up.
  • To swallow your stresses and insecurities and keep your optimistic game face on in the office. And on your home front. Maybe even try to believe it in your own head.
  • It’s about wanting the right speaking slot at an important conference and hounding the organizer until he lets you do it.
  • It’s telling your creditors that you need 60 extra days to pay. Please. Yes, most entrepreneurs will be nodding their heads right now. Not fun, hey? But that’s what it takes.
  • Firing? Hell, get used to it. It’s a necessity. You better be good at it. Develop a thick skin for it. Not put off the difficult fires. You don’t have the spare budget to suffer fools. Hire fast, fire faster.
  • Friday night in the office while others are at the bar. Sundays in the back of a plane. Center seat. Smelly dude next to you.
  • Investor emails. They are forwarding you yet another mother fucking link to an article about your competitors. And wondering why the hell are we not doing THIS like they are. Enough already!?!

Entrepreneurshit. It never ends. It’s not all glamour. It’s mostly not glamorous at all. It’s just something you have to do. Often because you’re unemployable.

Your impertinence would get you fired in 2 days for telling your boss he’s a fuck wit. And it’s why you probably will quit on day 366 after the acquisition.

You’re unemployable. You’re an entrepreneur.

It’s not for everybody and you shouldn’t feel bad if you aren’t one of those that chooses this life. You’ll probably be healthier and wealthier.”


Having been an entrepreneur and crisis manager over the last few decades, I can relate to everything Mark said—it’s a tough business and not everyone is suited for it.

So, I wonder … of the 6+ Million businesses that “disappeared” last year, how many of those business owners would have even started up a business if they had known exactly what it took to be a successful entrepreneur?

We’ll probably never know, but I strongly encourage anyone wanting to become an entrepreneur to do a personal self-analysis and think it over carefully. Very carefully.

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My updated Business Survival Reality report will be online in the near future… keep watch at this blog for the announcement.

Better yet, visit the subscription box above and sign up to get an occasional post including the announcement about this release.

Entrepreneurship Reverses Downward Trend

The Kauffman Foundation has been publishing the Kauffman Index of Entrepreneurship for the past 18 years and this year they have expanded their effort with additional data and more in-depth analysis.

The first installment of this new Index is titled “Kauffman Index: Startup Activity” and was released last week. This installment covers national startup data. City, state, and regional information will be released on June 6th.

The most important finding in this 2015 Index is that the decline in entrepreneurship has been reversed after a number of years of steady downturn.

These new numbers represent the greatest year-over-year increase in entrepreneurship over the last two decades.

Does this mean the U.S. is experiencing a revival in entrepreneurship?  Not necessarily, because we are still in a long-term decline of new business creation.

Take a look at the chart below, which depicts the rate of new business creation per thousand population:

New Businesses - 2914

 

The biggest disappointment in Kauffman’s new numbers is the declining number of female entrepreneurs. Since the Kauffman Index started in 1997 the share of new entrepreneurs who were female fell from 43.7 percent to 36.8 percent in the 2015 Index.

Summary

Here are more highlights from the 2015 edition of the “Kauffman Index: Startup Activity.”

  • Approximately 6,360,000 new businesses were created during 2014.
  • 63.2 percent of new business owners were male.
  • The share of new entrepreneurs with a college education jumped from 23.7 percent in the 1997 Index to 33.0 percent in the 2015 Index.
  • Those with a high school, or less, education still make up the majority of new business owners with 44.6 percent in the 2015 Index.
  • Younger entrepreneurs, ages 20 to 34, continue to decline—from 34.3 percent in the 1997 Index to 24.7 percent in the 2015 Index. (Those under age 20 are not counted.)
  • Older entrepreneurs, ages 55 to 64, continue to increase—from 14.8 percent in the 1997 Index to 25.8 percent in the 2015 Index. (Those over age 64 are not counted.)
  • Immigrant entrepreneurs increased from 13.3 percent in the 1997 Index to 28.5 percent in the 2015 Index. (See my article on immigrant entrepreneurs here.)
  • Immigrants continue to be twice as likely to become entrepreneurs as U.S. native-born.
  • Entrepreneurs are becoming more diverse, with over 40 percent of new entrepreneurs in the 2015 Index being non-white.

You can download a complete copy of the new Kauffman Index here.

Another important finding in the 2015 Index is that more new entrepreneurs are people who had jobs, but wanted to strike out on their own to explore the world of entrepreneurship. This is called “Opportunity” entrepreneurship.

Those starting a business because they have few alternatives are “Necessity” entrepreneurs, and their numbers are rapidly declining.

 The Future

It’s great to see the turnaround in new business ownership… but what is the long-term prognosis for success of the 6+ Million new businesses that were started during 2014?

The sad truth is that few of them will survive very long. I recommend that you download a copy of my free report titled “Business Survival Reality” from the sidebar. An updated version of this report will be available around mid-June, and if you enter your email in the subscription box I will notify you when the new report is ready.

So, there you have some highlights from the 2015 “Kauffman Index: Startup Activity.” Please leave your comments and thoughts below—we’re talking here about America’s future.

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The Fear of Starting a Business

Woman in Woods

 

Are there millions of people who would like to start a business—but are afraid of getting lost in the forest of obstacles we read about everyday?

Are the gurus and pundits of the business world creating a “Fear of Starting?”

I’m not talking about the issues of fear of rejection, or fear of failure—mountains of stuff have been written about those topics.

I’m talking about scaring people out of even taking the first few steps toward starting a business… people who look at the myriad of business topics that are written and talked about everyday, and then saying to themselves “There is no way in hell I can learn all that stuff.”

Here are just a few of the business topics an aspiring entrepreneur gets hit with everyday:

  • Market Research and Analysis
  • Business Plans
  • Government Regulations and Fees
  • Websites
  • Seed Money
  • Business Licenses
  • Balance Sheets
  • New Technologies
  • P&L Statements
  • Venture Capital
  • Pro forma Financials
  • Angel Investors
  • Incubators
  • Runways
  • Advisory Boards
  • Trajectories
  • Cash Flow
  • Employees and Hiring problems
  • On and On and On……

These are typical of the things that aspiring entrepreneurs see and hear about from some kind of business guru or media pundit everyday—and it scares the hell out of them!

Is it any wonder that a person considering starting a business is completely overwhelmed by all the information rushing at them? Most business neophytes don’t even know where to begin.

But, Is This Really a Problem?

Let’s take a look.

According to the Bureau of Labor Statistics (BLS), the number of eligible (16 and over) Americans participating in the labor force this year dropped to a 37-year low of around 157 million. (The 16 and over designation was established by the BLS many years ago.)

That leaves over 93 million of America’s eligible population not in the work force.

If we add the 8.5 million people who are currently unemployed to this number, we realize there are over 100 million Americans who might be candidates to become entrepreneurs.

Then, at the same time, 72% of those working tell us that they want to be independent and not be a part of the cubicle nation.

So, it would seem that the vast majority of the U.S. population 16 and over might be considered potential entrepreneurs.

I wonder then, how many of these many millions of people would actually start a small business if it didn’t seem like such a daunting task?

And this is where the problem begins.

Decline of Entrepreneurship

I wrote an article some time ago about the decline of entrepreneurship in the U.S. and pointed out that the long-term unemployed were simply “giving up.” I wonder how many people are not in the work force because they have just given up?

Well, why do so many people just “give up” instead of starting a business, and why don’t more of the 72% that want out of the 9 to 5 cubicle life go ahead and start that business they have been thinking about?

I suppose there are a number of psychological as well as material reasons a person does not start a business, but I can’t help but wonder if we folks in the business industry have developed an atmosphere of complexity in the starting and running of a business that actually creates a “Fear of Starting.”

Is this how we present the path to starting a successful small business?

Long Dark Tunnel

(Image courtesy of Pakorn)

What do you think—are there people out there who would love to start a business, but are too intimidated by all they read and hear to get started?

I would really like to know what you think.

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Are You Cut Out to Ride The Entrepreneurial Lion?

lion-roar

 

Toby Thomas, CEO of EnSite Solutions, has a favorite analogy where he compares being an entrepreneur to a guy riding a lion:

“People look at him and think, ‘This guy’s really got it together! He’s brave!’ And the man riding the lion is thinking, ‘How the hell did I get on a lion, and how do I keep from getting eaten?”‘   —Toby Thomas

When you really think about it, you can see the truth in Thomas’s analogy… it’s hard enough to start a business (getting on the lion), but then, when you can’t make the business work (controlling the lion), it is often impossible to get out of the business without losing everything you worked hard for (getting eaten by the lion).

Unfortunately, there seems to be way too many people who, with little knowledge, or forethought, take a running leap onto the lion’s back and then wonder: “What the hell do I do now?”

Well, it seems that most of the time they get eaten.

I believe that just jumping on the lion—while unprepared to ride it—is the main reason that over 5 Million businesses “disappear” every year in the U.S. Most of them simply “get eaten.”

If you are going to “get on the lion,” you had better know whether you belong up there—that you have the “right stuff” to be an entrepreneur… otherwise, you will be one of those who get eaten.

The truth is: not everyone can be a lion-tamer—just like not everyone can be an entrepreneur. In other words, not everyone who starts a business should be starting one.

Can You Ride the Entrepreneurial Lion?

So, how do you know if you should even be considering starting a business… that you are entrepreneurial material?

That is not as simple a question as it might seem. That’s why I’m in the process of researching and preparing a small book on entrepreneurship.

This upcoming book is not about how to start a business—this book is about whether, or not, you should start a business.

The book will cover: the real definition of an entrepreneur; what the characteristics of an entrepreneur are; and what it takes personally to become a successful entrepreneur… to control the lion. It will also include a self-administered test that can give you a good idea about your chances of starting a successful business.

If you are a current entrepreneur, or still aspiring to become a small business owner, and you want to know whether or not you should be riding the entrepreneurial lion, leave your email address in the subscription box at the upper right and I’ll let you know when the book becomes available.

Or, if you think you can ride the entrepreneurial lion without knowing how to tame it—go ahead, give it a try…  jump on……..   Here’s what you will be facing:

Roaring-Lion-785x1024

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Big Jobs Gain in November … Really?

The media and the White House are having a field day celebrating the great news of the recent employment numbers… 321,000 new jobs added in November and a steady low unemployment rate of 5.8%.

The news also continues to dominate all of the first 10 pages of Google (I didn’t look beyond 10 pages).

Truly that is good news for 321,000 people who were looking for work, and I am happy for them.

But, here’s a group that can’t be all that thrilled about the current employment situation—the millennials (18 to 34 years of age).

Here’s why:

A recent survey by the U.S. Census Bureau shows that the millennials are much worse off today than the same age group over the prior three decades, as follows:

  • Only 65% of millennials currently have a job.
  • Close to 20% of them live in poverty.
  • Millennials with jobs earned an average $33,883 a year between 2009 and 2013—compared to $35,845 for the same age group back in 1980 (current dollar adjustment).
  • Over 30% of all millennials live at home, mainly because they can’t find a job.
  • Only about 2% of this age group (18 to 34) are veterans. In 1980 veterans comprised about 10% of this age group.

From the above, it appears that even though this generation has more education, are more diverse, and many of them speak multiple languages… they are having a tough time making their economic way in the U.S.

eeyore-150

Now, before you write me off as some kind of eeyore—Consider This!

Of the 535 lawmakers in Washington, over 50% of them are millionaires—excluding real estate holdings such as their homes… while only around 5% of their constituents are millionaires—including their homes.

In addition, our lawmakers annual salaries are $174,000 (plus perks and benefits), while the per capita annual income in 2012 was $28,051 (with no perks and few benefits).

 

So, here’s what I think: Our lawmakers and policy creators at all levels of government are totally out of touch with the people they are supposed to represent and serve.

Furthermore, I think it’s time to make our voices heard in Washington—not through riots and property damage to our neighbors, but through communication and the voter’s ballot. Somehow, our voices need to rise above the big money lobbyists and campaign contributors.

If we are going to have an actual sustained growth in our economy where everyone (who wants one) has a job—or better yet—an opportunity to start a business of their own—there must be change.

There needs to be some major changes in our representative government so we the people are being represented… instead of just the lobbyists and campaign contributors.

O.K., that’s what I think, now, what do you think? Are our lawmakers too out of touch with the real world to make the U.S. a better place for our younger generations (all of us for that matter)… or am I just being an eeyore, and everything will likely turn our fine for everyone anyway?

How do you feel about it?

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Exposing The Shadow Workforce

Some time ago, I posted an article titled “Wanted—Entrepreneurs.” The article discussed the decline of new entrepreneurs in the U.S.

Here is the chart again, showing this decline: (in thousands)

New Businesses Started

(Numbers [x1.000] from the Kauffman Index of Entrepreneurial Activity) 

In that article I went a step further by presenting a chart showing that more people were actually leaving the workforce than were finding a job.

Here is the chart showing this situation:

Share Giving Up

(Chart by Ben Casselman at FiveThirtyEight.com)

At the time, I suggested that perhaps the decline in new entrepreneurs was the result of many people simply giving up and leaving the workforce to subsist on government largesse.

Since then, however, I was directed to a recent study conducted by Edelman Berland, “Freelancing in America: A National Survey of the New Workforce.”

This study uncovers some interesting data about a shadow workforce the business community seems to look down on—the Freelancer.

Let’s look at some of the highlights from this study:

  • 53 million Americans—34% of the U.S. workforce—are working as freelancers.
  • 21.1 million of this group work full time as freelancers—freelancing is their only job.
  • 5.5 million of this group work as temporary workers on a single long-term project at a time.
  • 2.8 million of this group are business owners with employees, but still identify as a freelancer.
  • The remainder of the group work as an employee and as a freelancer on the side.
  • This entire group adds $715 Billion to the economy through their freelancing.

I should point out that this study did NOT address the issue of mobile or home-based employees… that is an entirely different segment of the modern workforce.

Most important, I believe, is the finding in this study that should make everyone in the business community sit up and take notice: 53% of this group got into freelancing by choice, not necessity. Freelancing was their chosen career path—it wasn’t by happenstance.

So, why did all these people choose to go into freelancing instead of the traditional job market? Here is what a couple of them said in the study:

“I prefer the freedom to choose what sort of work I do without my schedule being controlled and my choices being commanded by someone else. I can express myself and be appreciated for it as well as bring beauty to the world by way of my work.”

“I have more control over where I work, when I work, and what I do for my work.”

This study makes it clear that we are in a new era of work. But it is more than just an economic change—it is a cultural, political, and social shift perhaps as great as the Industrial Revolution.

If this shift continues (and I believe it will), it will have a tremendous impact on our lives, our communities, our government, and certainly on how we view our economy.

After reading this study, and in view of the above charts, here’s what I’m thinking:

Yes, there are many people leaving the U.S. workforce entirely, but it appears that there are also a large number of people leaving the workforce—or not ever joining it in the first place—for the purpose of setting themselves up as freelancers. Primarily for the reasons expressed above.

If we were to add all the new freelancers who earn a full-time living on their own terms, to the number of new entrepreneurs each year, I wonder what the first chart above would look like?

So, what do you think?

  • Are we seeing a new workforce revolution unfolding?
  • Is freelancing a new form of entrepreneurship?

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