Are you self-confident and eager to get things done quickly? Do you have a tendency to operate on your gut instinct? Do you act to make things happen rather than wait for things to happen to you? If you see yourself in these descriptions, you may be born to be an entrepreneur.
According to “The Entrepreneur Next Door,” a report sponsored by the Ewing Marion Kauffman Foundation, entrepreneurship is as prevalent in American Society as is marriage or the birth of a baby. “About 6.2 in every 100 U.S. adults 18 years and older are engaged in trying to start new firms,” finds the Panel Study of Entrepreneurial Dynamics (PSED). That’s 10.1 million adults attempting to create new businesses at any given time.
But what makes some of those entrepreneurs fail and others succeed? Are those who can sustain a business enterprise simply more skilled—do they have superior knowledge of finance, marketing, and accounting? Or are there innate traits, as some have suggested, that determine whether you’ll be a successful entrepreneur? Are certain people born to start businesses and others doomed to failure if they don’t carry the gene—be it for risk-taking or focus or creativity—that is required?
“We think of it as a combination,” says Professor Tim Faley, managing director of the Zell & Lurie Institute for Entrepreneurial Studies at the Ross School of Business, the University of Michigan. “There is a set of skills that includes the ability to identify opportunities, formulate a business plan, align resources, and execute on all of it.”
Management researchers Donald Kuratko and Richard Hodgetts (2001) believe that entrepreneurial traits include aggressiveness, initiative, drive, analytical ability, and skill in human relations. Further, they find that, while risk is an element of the entrepreneurship process, the entrepreneur is usually operating on a moderate or calculated risk, not taking a wild chance—although it may appear so to outsiders.
Yet another entrepreneurial trait is tolerance for ambiguity. Faley refers to a study by well-known entrepreneurship researcher Elizabeth Gatewood. “Gatewood wanted to know what the difference was between corporate executives and entrepreneurs and found that both groups have very similar character traits,” remarks Faley. “The main difference between them is their tolerance for ambiguity.” Entrepreneurs had a high tolerance for ambiguity, but whether that trait is innate or conditioned is unknown.
And what about women, in particular? Faley says there are a lot of women who show an interest in entrepreneurship at the Ross School. “From the men in the program we tend to see a lot of ‘going for the fences,’ they tend to think big, while the women entrepreneurs tend to lean toward businesses of smaller scope that are of lower risk—it’s a paradigm shift versus filling a niche,” he says. But does that mean that, in general, women aren’t risk-takers, or don’t have what it takes to start high-growth businesses?
A book written last year by Elizabeth Gatewood and four other academics, titled Clearing the Hurdles: Women Building High-Growth Businesses, takes a hard look at many assumptions people have about women entrepreneurs, finds the underlying truths, and offers women strategies for overcoming obstacles. The book combines research on women entrepreneurs conducted by all five professors and shows that by the 1990s, women entrepreneurs were on par with men in terms of business education, corporate experience, and technical expertise. Rather than a lack of hard skills or innate tendencies, it was persistent stereotypes about women’s financial skills and management savvy that led to roadblocks: for instance, their inability to secure funding to grow their businesses at a fast pace.
“Our research indicates that women invest in their enterprises at a lower rate than men do, not because they do not believe in their ventures, but because they simply do not have the same level of financial resources available,” say Gatewood et al. One explanation is that while women have made incredible progress in the world of business, they still lag in wages, earning about 73% of what their male counterparts earn for comparable responsibility. This is just one reason why they may be behind when it comes to building the cash reserves necessary to start a company and to show potential investors that they are serious about their commitment to the concept.
Clearing the Hurdles confirms the findings of The Diana Project, a study sponsored by the Kauffman Center for Entrepreneurial Leadership, the U.S. Small Business Administration, and the National Women’s Business Council in 2001. Looking at a group of women entrepreneurs who participated in a series of Springboard forums held in 2000 (the Springboard forums were launched by a consortium of women’s organizations intent on accelerating investment in women-led businesses), the Diana Project found that, “The growth aspirations, human and social capital, industry choice and financing strategies of many women are consistent with general practices of entrepreneurs seeking equity to grow their ventures…. Yet the disparity between men and women entrepreneurs and their proportional access to and receipt of equity funding continues to exist.”
The tide is turning, however. While it’s a fact that women generally have fewer funds to seed their own ventures, they do not lack focus or commitment, they do not lack staying power or tolerance for risk. And those who do start businesses do very well. The Center for Women’s Business Research found that between 1997 and 2004, the estimated growth rate in the number of women-owned firms was nearly twice that of all firms, and estimated revenues kept pace with all firms. “Business ownership is one of the most effective means of improving women’s economic well-being,” concludes Clearing the Hurdles.
Yes, women have some more catching up to do, but they’re well on their way. Asked to speak at the Women, Money, and Power conference held at Harvard business School in 2002, Joline Godfrey, founder and CEO of Independent Means, Inc. (a company that provides financial education to children and parents), said she believes the next generation of female entrepreneurs will be remarkable. “They’re hungry, they’re fearless. I remember recently being with a group of girls and thinking, ‘Oh my God. I’ve got to cash out really soon because this is my competition.’”
“Women are still definitely an untapped resource,” says Faley. “We need all the innovators we can get.” So, if you’ve got God-given chutzpah and the business knowledge to back it up, don’t hesitate! You were born to be an entrepreneur!