small business and founding a start-up. Today, I would define a “start-up” as a business, often technology-related, founded by one or more entrepreneurs typically with the goal of remaining with the business for a limited time. They may hang around through a limited number of funding rounds or may a plan to divest themselves of ownership in a few years. The idea of staying active in management of the new venture for more than a few years probably gives them hives, especially as they have likely never held down a job in the same company for very long. And they likely intend to repeat the whole crazy process again someday. This kind of behavior admittedly is pretty out-of-the-ordinary and is exactly what makes entrepreneurs the subject of a lot of studies trying to find out why they do it. What those studies have revealed is that entrepreneurs tend to be creative procrastinators and problem solvers who have tons of ideas for new ventures all the time. They typically put off deciding exactly what to do for a long time, however, as they ruminate on their ideas, deciding which risk to take and exactly how to pursue it. Entrepreneurs are also intensely curious about a wide variety of seemingly unrelated subjects they may eventually distill into a single idea they decide to pursue. They are not only okay with making mistakes, they understand that each mistake brings them closer to the answer they seek. They are extremely adaptable, adjusting their idea with each failure, and even stepping back for a while to reconsider their entire concept. Finally, they are driven by their passion for seeing their idea fully realized often more than any particular amount of money it will bring them. That passion will sometimes lead them even to downsize their lifestyle in order to afford to do their venture because they have a high level of confidence but know that money is uncertain, possibly for a long while. In short, these traits make entrepreneurs terrible at climbing the corporate ladder and remaining in a steady job. For example, because they are highly confident and see making mistakes as “progress,” so they rarely C.Y.A. They are relentless and sometimes undiplomatic when pitching their idea for doing something a better way. They loathe micromanagement and progress monitoring because it slows them down. And they are usually not motivated by recognition or to some extent even money, but rather by realization of their vision (whether it jives with corporate goals or not) and then being handsomely compensated. Founders/owners of small businesses, though all to often referred to as “entrepreneurs,” really are entirely different breed. People who “buy a job” likely enjoy working in their industry and the recognition of being a leader in that field. Further, they have done it for a long time or have worked in jobs of increasing responsibility through out their careers leading up to the job they enjoy. They have carefully laid out a plan for transitioning from working for someone else into working for themselves, usually in the same or a related field. Before transitioning from their job with someone else, they may have cultivated industry contacts who they can call upon for business once they are running their own firm. Then, they may wait until they and their families “are ready” for the transition. They usually intend to stay with their new small business for their entire career and want to build something of value for their families, often involving their children in the business, as a way of providing for them after the founder passes. The thought of their small business failing terrifies them, and their alternative in the event their business fails is often to get another job in the same industry and, likely, to never try running their own business again. Sometimes, these people buy a going business rather than starting their own. But the main point is entrepreneur/start-up founders and small business founder/owners are totally different kinds of people. Start-ups require a completely different skill set and psychological make-up that abhors the strictures of corporate life. And success in big business working for someone else in a highly specialized role cannot prepare you for starting up a new venture from nothing. To lump the two populations together, therefore, does the potential small business founder/owner a grave disservice. On the one hand, confusion between start-ups and small businesses may discourage someone best suited to founding or owning a small business from going forward because they buy into the mythos that starting any new business is a high-stakes, young person’s game, requiring you to be a crazy risk-taker. Alternatively, that same small business founder may fail should s/he ends up in the wrong kind of new business. Unable to gauge risks the way an entrepreneur does and unprepared for the wide variety of skills founding a start-up requires, diving head first into founding such a start-up may not be the best fit. Further, when seeking a business more amenable to his/her risk aversion, that same person may end up in a bad franchise or MLM deal thinking they are “less risky” than a “pure” start-up. Simply understanding the distinction between founding a start-up and “buying a job,” therefore, can help ameliorate many mistakes and pave the way for better success in a new venture, when the life-long “corporate” types include in their transition planning that business founding comes in several flavors better suited to their native personality and accumulated skill set. ——————————————- “Originals: How to Spot One, How to Be One,” NPR, March 1, 2016. “10 Traits All Successful Entrepreneurs Share,” Entrepreneur, March 11, 2015.]]>
Deals • Entrepreneurship • Formation • Information • InvestmentAre you cut out for entrepreneurship or should you just "buy yourself a job"?