Entrepreneurship

A report on what motivates people to become Entrepreneurs

Entrepreneurship

Entrepreneurship | 11/15/2010
A report on what motivates people to become Entrepreneurs

I was born in India the land of entrepreneurship where normally everyone has an entrepreneur
gene in his blood. It’s like god created us to be entrepreneurs. What is so attractive about being
an entrepreneur? I guess the feeling of accomplishment like in movies where the hero starts
out with nothing and raises up levels to gain fame, money and power. Here in India everybody
tries to become an entrepreneur in one way or the other at least once in his life. Straight from
the farmer buying up land and farming plus trading on his own or the US return MBA kid
starting up his own consulting firm in India, everybody is an entrepreneur .But still out of the
population of 1.3 Billion and counting only around 200 million become actual entrepreneur(i.e
around 18% of the population )for the long term out of which only thousands succeed to see
the daylight of satisfaction and profit plus recognition.

So why is it that thousands of hopefuls take the leap of faith even though they know only a few
succeed and most fail? Every day, new businesses open. More and more people want to
become entrepreneurs because of the many benefits and privileges that are available as you
venture into business. The business world is not exactly easy. As a matter of fact, it is
complicated and could be quite stressful, but despite the negativities and pressures attached to
it, many people still want to become entrepreneurs - why?

What leads a person to strike out on his own and start a business?

Before we explore into the uncharted territories let us try to understand the Magical term
“entrepreneurship”. The origin of the word “entrepreneurship.” It derives from the French
verb entreprendre, meaning “to undertake.” Thus, “entrepreneur” means “one who undertakes” (a new
enterprise). Wikipedia introduces Entrepreneur as a loanword from the French language that
refers to a person who undertakes and operates a new venture, and assumes some
accountability for the inherent risks. Being in business or being an entrepreneur is about taking
risks and confronting challenges.

Entrepreneurs build companies that are specifically crafted to exploit a particular opportunity.
This gives them an advantage over older companies that were designed in response to
challenges of the past and must change to adapt to today’s requirements. Entrepreneurs can
build new companies. They can also rejuvenate existing companies via buyouts and
turnarounds. They can also build new companies inside existing companies, which can be called
corporate entrepreneurship.

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“Entrepreneurial” accessed at < http://en.wikipedia.org/wiki/Entrepreneurial> on 01-11-2010
Entrepreneurship | 11/15/2010
“Entrepreneurs are the economic DNA which we need to build competitiveness and innovation

in Europe.” says Enterprise and Industry Commissioner Gunter Verheugen. “Entrepreneurship

can be exciting and rewarding, but it also involves risks and hard work. It is the challenge for

Member States and the Commission to ensure that entrepreneurship is encouraged by providing

a supportive environment for those choosing to take the risks.”.

Now the motivation for Entrepreneurship may vary from person to person but broadly seeing
Entrepreneurship is flavored by two types of factors “Internal” or “active” and “external” or
“reactive” .While trying to frame a picture here let me quote a few lines from a anonymous
blogger the source is unverified

“I definitely have highs and lows. Often, I’m at the high of a new idea–one that I think can be
REALLY promising. This feels good. Really, really good. Mmmm. It’s so happy and life is worth
living. But then, swinging to the lows, which are filled with disheartening moments of despair
where I think to myself: it’s not worth it, everyone’s doing something, there’s no way to
compete, even babies have their own pet projects, *kills self in self-hating moment*”
- Anonymous Blogger

As given at “why 99%........” accessed at “http://jessicamah.com/blog/?p=641” on 1st nov 2010

Entrepreneurship is about people, their choices and actions, and the environment and
conditions they are in. Reactive reasons are those things that are objectionable about working
for others. They are the negatives that push you out. Active reasons are those things that are
attractive about having your own business. They are the positives that pull you out.

Some Reactive reasons are as follows:

1. “Fame and Recognition”: Well everyone loves the limelight, everyone want their 15
minutes of fame. Getting attention is not necessary for entrepreneurs as studies have
showed most entrepreneurs are fairly conservative people but the reverse is also true
the people do scout for limelight by going solo and standing out in the crowd. Ken
Olsen, founder of Digital Equipment Corp. (DEC) and a multi-millionaire, for many years
lived in the same home he bought shortly after starting DEC. A Fortune article suggested
that "Olsen's unostentatious style has kept him from becoming a business celebrity."
The struggle to bring a new company into existence is a great lesson in humility.

2. “Personal financial gain” - For some people this is very important, for others less so.
Gains can come more quickly and can be much greater than when working for someone

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 else; this is not a negligible consideration. For most people becoming an entrepreneur is

Entrepreneurship | 11/15/2010
the only way available to make a lot of money.
3. “Inequity between contribution and reward”- People who are by nature high achievers
tend not to get along well in large organizations. They want rewards based upon
accomplishment, not on seniority, conforming to the culture or political clout. The person
who just made a major contribution does not want to be told, "Be patient-your turn will
come”
4. “Participation in all aspects of a business” -- Nothing is more exciting than to be broadly
involved in the operation of a business. The entrepreneur helps conceive the product or
service, helps design it, goes out and gets orders, makes sure the factory runs well, helps
the customer put it into operation, and finally sees the effect that all of this has on the
profits of the firm.
5. Joy of winning -- Entrepreneurs is the ultimate achievers. They like to win. Starting a company is
a good way to satisfy the achievement instinct. Starting a new company, working for a new
company, being involved in any way with a new company is just plain fun. It is satisfying and
exciting. We spend more hours at our job than at anything else we do. Why shouldn't we enjoy it?

Besides this Fulfilment of a dream -Most things begin with dreams and a lot of entrepreneurs
began their journeys with the building of dreams. These dreams became the fuel that lit their
paths toward success. When you have a goal in mind and you keep your mind hard at it, you
will not lose your way. You will be focused on attaining this one goal and you will do all you can
to get to it.
Seeing an idea flourish into something spectacular - Entrepreneurs are idea builders. Unlike
most people who only go with the flow, they have innovative minds that are able to
conceptualize winning ideas. When an idea is born, it takes one risky movement that sets its
pace. Entrepreneurs are motivated by the thought of seeing these dreams become realities.
Feeding one’s passion - Not all people are the same. Not all people want the same things and
this is what sets everyone apart from one another. Who you are as a person and as a worker
will be dictated by your passions in life. If you are working to feed your passion, if you are doing
something that you love, then you will never go weary. Many people remain in stagnant
situations because they are doing things that do not mean anything to them. Successful
entrepreneurs take magnificent leaps forward because they are invigorated by their passion for
success and their commitment to their goals.
Building better lives - If there were one thing that truly sets an entrepreneur apart from normal
business owners, it would be the dream to build better lives for people. They do not get into
business only for their personal gain, instead they work hard because they know that their
efforts will ultimately provide comfort to those whom they could reach and it could, even a
little, bring something good for many people.
Entrepreneurs are a different breed of businessmen and they are different not just in the leaps
of success that they were able to achieve but this difference is mostly signified by the attitude.

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Their motivations brought them to where they are now and these motivations could be yours
Entrepreneurship | 11/15/2010
as well.

According to a comprehensive study of entrepreneurship published earlier this year by Scott A.

Shane, a professor at Case Western Reserve University, and most people start businesses in
order to avoid working for others. “ The real reason that most people start businesses, however,
has nothing to do with wanting to make money, to become famous, to better their own
communities, to seek adventure, or even to improve the world. Most people start businesses
simply because they just don’t like working for someone else.” Prof.Shane in “The Illusions of
Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By”

Brief history:

The entrepreneur is a factor in microeconomics, and the study of entrepreneurship reaches

back to the work of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries,
but was largely ignored theoretically until the late 19th and early 20th centuries and empirically
until a profound resurgence in business and economics in the last 40 years.

In the 20th century, the understanding of entrepreneurship owes much to the work of
economist Joseph Schumpeter , Arjay Nieva, Shannen Yap, Royce Salva, and Donna Alegado in
the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich
von Hayek. In Schumpeter, an entrepreneur is a person who is willing and able to convert a new
idea or invention into a successful innovation. Entrepreneurship employs what Schumpeter
called "the gale of creative destruction" to replace in whole or in part inferior innovations
across markets and industries, simultaneously creating new products including new business. In
this way, creative destruction is largely responsible for the dynamism of industries and long-
run economic growth. The supposition that entrepreneurship leads to economic growth is an
interpretation of the residual in endogenous growth theory and as such is hotly debated in
academic economics. An alternate, description posited by Israel Kirzner suggests that the
majority of innovations may be much more incremental improvements such as the replacement
of paper with plastic in the construction of a drinking straw.

For Frank H. Knight (1921) and Peter Drucker (1970) entrepreneurship is about taking risk. The

behaviour of the entrepreneur reflects a kind of person willing to put his or her career and
financial security on the line and take risks in the name of an idea, spending much time as well
as capital on an uncertain venture. Knight classified three types of uncertainty.

 Risk, which is measurable statistically (such as the probability of drawing a red colour
ball from a jar containing 5 red balls and 5 white balls).

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  Ambiguity, which is hard to measure statistically (such as the probability of drawing a

Entrepreneurship | 11/15/2010
red ball from a jar containing 5 red balls but with an unknown number of white balls).

 True Uncertainty or Knightian Uncertainty, which is impossible to estimate or predict

statistically (such as the probability of drawing a red ball from a jar whose number of red
balls is unknown as well as the number of other colours balls).

The acts of entrepreneurship are often associated with true uncertainty, particularly when it
involves bringing something really novel to the world, whose market never exists. However,
even if a market already exists, there is no guarantee that a market exists for a particular new
player in the cola category.

Motivation of a person internally is heavily judged by some characteristics some of theirs

Typical characteristics that make up an entrepreneur today are?

 Entrepreneurs have passion for what they do in life.

 Entrepreneurs express a great amount of enthusiasm in their line of work.

 Entrepreneurs are goal-oriented in their quest to reach their desired outcomes.

 Entrepreneurs have a creative imagination when it comes to their ideas in business.

 Entrepreneurs have a positive attitude when it comes to building their business and

business relationships.

 Entrepreneurs are very quick decision-makers in their business endeavours and ideas.

These are some of the amazing characteristics of an entrepreneur.

An entrepreneur chooses not to sit back and take what life deals him; he attacks life head on,
takes charge of his own life, and has a persistent determination to create his own path in life. In
a book called “Think and Grow Rich” by Napoleon Hill, Mr. Hill said that “an educated person is
not necessarily a person with any specialized knowledge, but an educated person is one who
has so developed the higher faculties of their mind that they can acquire anything they want
without violating the rights of others.” Do you know what the higher faculties of your mind are?
The higher faculties of your mind are perception, reason, memory, will, intuition and
imagination. Many wealthy entrepreneurs today understand these higher faculties; you are
going to be introduced to a couple of these higher faculties in the following steps.

After applying the steps below, you will have a good understanding of the entrepreneur
personality test. The entrepreneur personality test is a test for you to discover the mindset you
have now, compared to the new entrepreneurial mindset that you will be creating. Also, your
new entrepreneurial mindset will help you to understand the importance of a network of

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business opportunities. It is important for you to start networking with other like-minded
Entrepreneurship | 11/15/2010
individuals to help assist you in accomplishing your business goals.

According to a study by Eurobarometer survey although 45% of Europeans

Would like to be their own boss, Americans, at 61%, are keener to try entrepreneurship. A
regular income is the main motivation

for those Europeans who prefer employee status, 30% of respondents citing this reason in our
survey as opposed to only 16% of Americans. Job stability is also considered important by 24%
in the EU25 compared with only 10% in the USA Fear of failure also preoccupies Europeans.
Half of the Europeans we asked (see box) agreed that you should not set up a business if it is
likely to fail, compared with only one-third of Americans. However the figures vary widely
between Member States. Europeans also tend to be more worried by the possibility of
bankruptcy (45%) or of losing their property (35%) if their businesses fail, Americans show far
less fear for these dangers (36% and 21% respectively).

As mentioned on

<http://europa.eu.int/comm/enterprise/enterprise_policy/survey/eurobarometer83.htm >

… And the Rewards

Nevertheless the survey found that one-third of EU citizens would still consider setting up a
business in the next 5 years; 40% in the new Member States (NMS). Evidently for some the

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potential rewards outweigh these risks, and the survey illustrates that the most crucial rewards

Entrepreneurship | 11/15/2010
are not necessarily financial. 77% of Europeans who stated a preference for entrepreneurship
cited greater independence and self-fulfilment as an important motivation. This contrasts with
only 23% who cited increased earning power. Of course, entrepreneurship is not always a
choice. Whereas 71% of Americans that had started a business did so because they saw an
opportunity, and 13% out of necessity, in the EU15 56% were motivated by an opportunity, and
in the new Member States this figure falls to 48%. The differences within Europe are not only
east-west. Whilst northern Europe has similar levels of “opportunity entrepreneurs” to the US,
entrepreneurs in the south often lacked alternatives.

Just do it

How easy is it for the potential entrepreneur to achieve his or her dream (or necessity)? Only
2% of the Europeans we asked were actually in the process setting up and enterprise, compared
to 8% in the US. The Eurobarometer survey shows that the order of importance of perceived
obstacles to setting up a business is fairly similar in Europe and the USA; however their
magnitude is more marked in Europe.

Information about the Eurobarometer on Entrepreneurship:

Over 21,000 people were interviewed by telephone in April 2004. These included 18,500 EU
citizens, 1,000 Americans and 1500 EEA/EFTA citizens. The results of the survey are broken
down by country, but also by socio-demographic characteristics. The Entrepreneurship
Eurobarometer has been in production for 4 years, and its results therefore now permit some
analysis of dynamic trends. In the enlargement year the report has been extended to cover 29
countries for the first time. Flash Eurobarometer on Entrepreneurship, 2004

http://europa.eu.int/comm/enterprise/enterprise_policy/survey/eurobarometer83.htm

Entrepreneurship Action Plan

http://europa.eu.int/comm/enterprise/entrepreneurship/action_plan.htm

European Charter for Small Enterprises

http://europa.eu.int/comm/enterprise/enterprise_policy/charter/charter2005.htm

Another study mentioned:

Respondent were asked, who owned their own business, what motivated them to start it. We
invited them to choose from eight options and their top choices are:

1. 59% is my own boss

2. 50% Desire to pursue a business idea

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3. 50% financial ambition
Entrepreneurship | 11/15/2010
44% said they took advantage of an opportunity that emerged in the marketplace. Over a third,
36% said that they were frustrated with how big companies operate. 15% of these business
owners said that their previous employer did not provide them with adequate opportunity.
Only 1% of respondents inherited a family business.

The view from the UK is slightly different. 51% of business owners said that they were
frustrated with how big companies operate. This is reflected in 70% of UK business owners
saying that to be their own boss was a motivator for them to start their own business.

Financial ambition from the UK respondents was only cited by 24% of owners as a motivation to
start their business. In the UK the desire to get away from the large company environment is
mentioned by many on our panel as a major driver for them to go ahead and actually started
their own business 70%.

Why start your own business? (Total figures)

59% be my own boss

50% Desire to pursue a business idea

50% financial ambition

44% Frustrated with how big companies operate

35% Took advantage of an opportunity that emerged in the marketplace

15% Lack of opportunity in previous employer

10% Other

9% Invited to run someone else's business

1% inherited a family business

In the USA the order is:

1. 59% be my own boss

2. 53% financial ambition

3. 38% Frustration with how big companies operate

The one thing that is clear and common, up to this point, is that the desire to ‘be my own boss'
is the most cited reason selected by these business owners for starting their own business.
There is a clear driver amongst these entrepreneurs; namely to be independent and in charge
of their own destiny.

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 Entrepreneurship | 11/15/2010
Until we look at Australia where:

1. 62% financial ambition

2. 52% be my own boss

3. 49% Desire to pursue a business idea

Other reasons people gave as to why they started their own business include being made
redundant and the desire "to make things, to improve the world". A number of business leaders
cited a desire to live their own lifestyle, having space for ‘thinking time' and to run their lives
and businesses using their own ethical values which they felt their employer didn't share. It
would appear that where there is a mismatch between the values, goals and ambitions of these
entrepreneurial spirits and their employers they find themselves motivated to go-it-alone and
start their own organizations. Later in this report, we will see that the panel believes that
aligning the company's culture and values with new staff and leaders is vital in retaining talent
in their companies. They demonstrate the importance of this themselves in the reasons they
give for leaving their employers to start their own firms. They were the talented people that
their employers could not retain.

When we look at these motivations to start your own business on a demographic basis there is
very little difference in the drivers chosen by our respondents. The Baby-boomers (aged 42 to
60) and the Silver-surfers (aged over 60) both prioritize first the desire to be their own boss,
followed by the desire to pursue a business idea and then that of financial ambition.
Generation-x (aged 25-41) prioritizes financial ambition slightly ahead of the desire to be their
own boss then they prioritize the pursuance of a business idea.

The Baby-boomers are the most frustrated with how business operates with 15% citing this as a
reason why they started their own business. To some extent this is not surprising as they have
likely been in business longer and had greater experience of how the big companies operate.
They have had the time to become frustrated. Interestingly 11% of Generation-x also cites this
reason.

It found that four-in-ten (38%) respondents said the biggest influence in becoming an
entrepreneur is passion. As an influence, passion. I tell aspiring entrepreneurs the importance
of this all of the time. It is too hard and too much work being an entrepreneur to look for
anything else as your main motivation.

Passion was followed distantly by natural entrepreneurial inclination (20%) and being "born
into it" (18%). Business owners are most passionate about building their customer base (34%).
Turning a profit (27%) and closing the deal (15%) were of less importance. This is also consistent

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with much of the research on entrepreneurial motivation. It isn’t all about getting rich! Jeff -
Entrepreneurship | 11/15/2010
Interesting article. Without passion (drive, excitement and enthusiasm) ones chances for
succeeding diminish. I was somewhat surprised about the profit number. With high profits you
have a greater chance of giving back to the community and to those who are in need.

What mo…. As at <http://forum.belmont.edu/cornwall/archives/007232.html> accessed on 2nd

nov 2010.

Conclusion: Monetary gains have very little role in deciding if a person will become a
entrepreneur or not .The person may look at conditions around himself so as to think about
continuing heavily on his skills, personality, energy, and contacts. You need to know that
entrepreneurs are happier with their jobs than people who work for others. A lot happier.
Research shows that you would have to pay an entrepreneur 2 ½ times as much for that person to
have the same job satisfaction as an employee that he or she has as an entrepreneur.
Entrepreneurship is a way of life that offers unlimited possibilities to those who truly believe in it
and live by it. But at the same time, entrepreneurship is a way of life that can totally alter the
course of your life if misunderstood. Entrepreneurship is not something you can fake your way
through; you are either doing it right or not doing it right simple. There are no ways around it.

So before you plunge into entrepreneurship consider these factors which can motivate you:

1. Define your niche

2. Understand the barriers to entry

3. Know and understand your customer

4. Understand Market and Industry trends

5. Develop a passion for your skill.

6. Keep the goal in mind.

7. Develop creativity and positive attitude

8. Try decision making starting with small decisions.

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