Starting a business is something that many people think about at one time or another during their lives. Whether its a housewife, a unemployed college graduate or just someone employed in an average nine-to-five job. Not everyone is an entrepreneur and owning a business is not something every person dreams of. Entrepreneurs have been defined as "opportunistic decision makers who identify and capitalize on opportunities through approaches that emphasize innovation, profitable venture identification, effectiveness and non-programmed or ambiguous situations" - Olson, 1996
Motivations for wanting to become an entrepreneur can vary greatly. Common motivators can include:
Money (supplementing income or a strong drive to achieve financial success)
The desire for independence
The opportunity to exploit a gap in the market.
In this essay I am going to evaluate these motivations and try to reach an understanding as to why entrepreneurs decide to set up their own businesses. What motivates them to shy away from a regular office job and enter into the world of self-employment.
Body
"Entrepreneurs are motivated more by success than wealth. They all want to be their own boss, but more than that they want to be the boss of a successful growing firm."
- Dewhurst and Burns, 1996
Successful entrepreneurs are rarely motivated solely by money. Of course, there are clear financial advantages to setting up your own business and being your own boss. Unlike with a regular office job, you are not under employment with anyone else so your salary is not capped. There is possibilities of earning more than in a day to day job. However, these advantages are normally seen as an added bonus to doing what you enjoy and what you are passionate about. Successful entrepreneurs achieve wealth because they believe in what they are doing and inject personal core values into how they build a business: Wealth is their reward, not their goal.
An example of a successful entrepreneur pursuing their passion and succeeding at something they loved is Sir Richard Branson, the founder of Virgin Group. He started out with a magazine called Student at the young age of 16. [1] He then moved on to a mail-order business focusing on audio-records. In 1972 he opened up a chain of record stores, Virgin Records. Branson's brand grew rapidly over the next two decades and recently he was listed as the 4th richest citizen of the UK according to Forbes list of billionaires 2011.[2] Branson is quoted as saying:
" If you don't enjoy it, don't do it. You must love what you do."[3]
On the other hand there is also a case to be made for those entrepreneurs who focus only on the financial aspect of their business idea and whether it will make them rich. These entrepreneurs are driven by money and are not necessarily passionate about their idea. Good example of a successful entrepreneur driven by money is Donald Trump. Trump inherited his father's firm in 1971 and renamed it the Trump Organization which has now become a multi-billion dollar company specializing in real estate.
"An opportunity is a favourable set of circumstances that creates the need for a new product, service or business."
- Barringer & Ireland, 2008
Many entrepreneurs who decide to develop their own idea and start up their own business are motivated by opportunities to exploit a gap in the market. Entrepreneurs are known to take risks and sometimes they pay off and sometimes they fail before they even get off the ground. Developing a brand new product or service is the highest risk strategy and has the highest failure potential. Coming up with a brand new business idea is much more difficult than building upon an already developed idea. However, sometimes the potential profit or level of success out-weighs the risks. A new business based on a unique idea has no direct competition and it affords itself time to grow and develop and has considerable power over what it may charge for its product/service. An example of an entrepreneur looking to fill a gap in the market is Apple co-founder Steve Jobs. He was the man behind innovative creations such as the Apple Mac, iPod, iPhone and more recently the iPad. At the time of the Mac, there weren't any computers that were affordable for everyday users. In 2010, the tablet PC was suffering from a lack of direction and purpose, the late Jobs recognised this and developed the idea of the iPad which up until now has sold over 84 million.[5]
Entrepreneurs can pursue opportunities in any industry, in any market whenever they want or whenever they spot a potential gap in the market. Some entrepreneurs base their success on the founding of a completely new industry, such as Robert Swanson in biotechnology. Swanson along with Herbert Boyer founded Genentech, a biotechnology giant, in 1976 which is considered to be the beginning of the biotechnology industry. On the other hand, there are entrepreneurs who build upon old industries already in place, creating successful companies such as Sam Walton in retailing. Walton founded the American multinational retailer corporation Walmart in 1962. It is now the world's third largest public corporation, according to the Fortune Global 500 list in 2012. [4]
"The link between my experience as an entrepreneur and that of a politician is all in one word: freedom."
- Silvio Berlusconi
One of the key traits that differentiates an entrepreneur from a person working in a traditional job is an affinity for working independently. In a "9 to 5" job you are limited in your actions. Traditional employer provides a structure which you must abide by and most people find this comforting as guidelines are useful. However an entrepreneur may feel as though they are suffocating in this type of environment. An entrepreneur in charge of their own business and of themselves are able to work independently and think freely. They are not told what to do, they are not scolded for mistakes and they cannot be fired. This level of independence is a huge motivational factor for entrepreneurs starting their own company. Large organizations where you must answer to a manager or a higher authority figure are often stifling to an entrepreneurial personality. Entrepreneurs desire independence and have a sense of initiative that make them want to use their own skills and traits to the greatest extent possible.
However there are some benefits that an entrepreneur sacrifices for their level of independence. Starting your own business means you must be willing to sacrifice the security of a regular paycheck. The paid benefits of a regular job such as medical and dental are also given up. The security of having a regular paycheck and paid benefits are two of the main reasons why not everyone decides to attempt their own business start-up. Entrepreneurs, however, face the risks head-on and are willing to sacrifice these benefits in order to achieve their independent goals.
Many entrepreneurs like Jeff Bezos, the founder of Amazon, end up escaping the large organizations grasp and developing their idea independently. Bezos left the regular office job to pursue his quest to develop the major online retailer. In 1994, Bezos left the confines of his well paying job to travel across the country to pursue his Amazon idea.
Conclusion
There are many reasons why an entrepreneur would choose to set up their own business rather than to apply for a regular job where you are always answering to someone. Whether it be for the freedom, the independence from the confined enclosures of a working environment, whether it be to close in on a certain idea and fill a certain void that may exist within a particular industry or whether it is simple due to the prospect of a higher profit. Most millionaires and billionaires in the world started off small with their own business and worked their way up to become some of the wealthiest people in the world. However, we can also see that starting a company for the wrong reasons can be detrimental to your businesses success. Focusing on the financial aspect alone is rarely successful and most entrepreneurs will tell you that money is the reward, not the goal.
