Tell me how come?

Re: [spiers] Tell me how come?

> Anyway, I am curious why people start businesses, rather than why not.
> I'm sure there are all the obvious reasons (hate job, need money). Am I
> the only wacky one that derives the above kind of satisfaction from the
> activity? Since you are in a polling mood, perhaps you could find this
> out, as well.
>
> Regards, Paul

Hi, John,

Sorry I did not respond earlier to your request for reasons on why people
don't start businesses. As someone who has been a small business trainer,
and is a certified (NxLevel) business plan instructor, I felt the issue was
so big, and my outlook perhaps a bit jaded, that I opted not to play. But,
since you are still interested in hearing from the other 792 of us, I will
submit a few thoughts.

First of all, I completely do NOT understand why everyone does not start a
business. I am glad they don't... leaves more opportunity for me. However,
since I don't understand why they don't, I may not be the best person to
suggest the reasons why not. I have been a 'serial' entrepreneur (not
'cereal' entrepreneur like William Kellogg;-) since grade school in the
60's, when I trapped pocket gophers which were damaging alfalfa fields in
southern Idaho. The local irrigation district paid 25 cents per tail as a
bounty to reduce their numbers, as the loss of water to their burrowing
tunnels was very costly. I made a few dollars a week with a trap line before
and after school, and had more discretionary income than a lot of farm kids
(and we were mostly farm kids in southern Idaho schools back then). Over the
years, when I was guilted into day jobs by parents who valued security (and
died poor) or a spouse and family obligations, I still always looked for
small business opportunities on the side, e.g. starting a real estate guide,
selling at craft shows, organizing BBQs, or running a weekend mobile country
DJ business.

Since I am a classic entrepreneurial personality I really do not understand
why, John. One of the great mysteries of life for me is that most people
claim to want the independent lifestyle of the entrepreneur, but so few
jump.

But to try and answer the question, I guess first I would say that while
anyone CAN start a business, natural entrepreneurs are people who see
opportunity, and do not fit into the slow pace of improvement found in a
"job". We feel constrained by the limits set by the dweebs most often
promoted into supervision and management. Natural entrepreneurs leave
employment for self-employment because the phrase "It's hard to soar with
eagles when you are surrounded by turkeys" is their subconscious mantra. We
see opportunities to do things better and faster and with more effectiveness
and using fewer (or re-applied) resources, while the most popular word in a
typical supervisor's vocabulary is NO! To someone who lives under the curse
of a brain that seeks constant improvement, always better ways to do things,
the reality of management for the sake of control is horrifying. (While my
negative profile of a typical management person is not necessarily true, it
often FEELS true, to a natural entrepreneur.)

I guess the corollary then, is that people who don't start businesses often
work well in the typical organizational system, or at least more comfortably
than they would if they started a business.

Peter Drucker, perhaps the most recognized management guru of all time, had
a wonderful discussion in one of his books on management vs. leadership. The
role of management, he said (if memory serves me) is to create order. The
goal of leadership is to create positive change. Both are necessary, but
also are in natural conflict. True entrepreneurs are often great leaders,
and mediocre to seriously bad managers. However, American business,
according to Drucker, is seriously overmanaged and under-led. Hence the
typical organizational environment does not fit, at least in the long term,
for someone with a leadership compulsion. Also, Drucker discusses the
difference between efficiency and effectiveness. Efficiency, the backbone of
management and corporations, is to "do things right" or by the book.
Effectiveness, often a rare commodity -- and rarer as size of the business
grows -- is to "do the right things". These two concepts are also in
potential conflict, but again, the entrepreneur is the rebel who sees an
opportunity and wants to do the right thing, but not be slowed down by doing
things "right" (a term often mis-used by people in management to become
"doing things the way we've always done them" or to just "avoid doing
something wrong", instead of DOING something right.) The 'effective leader'
and the 'efficient manager' are two VERY different personalities, and the
world of organizations - which is dominated by the second type -- leaves
little room for the first personality to grow. Those individuals often leave
(except among the very best companies) and start businesses of their own.
Usually happier whether successful or not, they most commonly reach success
via a training period of failures as they learn the nuances and complexities
of business, and that a business is simply a system of integrated
sub-systems. The successful business creator is a system designer.

Statistically, a person is much more likely to start a business if one or
both parents are entrepreneurs. If both parents worked day jobs till they
died, the children are much less likely to branch outside the safety and
security of a regular paycheck. Much of the reason is what is discussed
around the dinner table. If your parents were talking at meals about the
nuances (marketing, taxes, hiring, firing) of a logging business, or a
baking business, or an export company, this is what programmed your young
minds. If the discussions were resumes, bad managers, best companies to work
for, attending college to get a good job, then the programming was
different. Brian Tracy, a motivational speaker, says on one of his audio
programs that the reason we have fifth and sixth generation welfare families
in this country is because the thoughts of the kids are directed from birth,
on how to milk the government and qualify for food stamps, NOT how to be
productive. It takes work to break the cycle, due to the relative
information void on alternative choices. In the 1800s, most of the populace
were small business owners (or their spouse and kids), whether farmer,
shipper, shop keeper, or whatever. The industrial revolution of the early
two-thirds of the 20th century was when we lost the table talk about
entrepreneurship, and led to the big lie of corporate social responsibility
taking care of you for the rest of your life, if you give them 40 years of
sweat. But those carrots and promises, which mostly did not materialize,
destroyed the entrepreneurial lineage normally passed from generation to
generation. The dot com boom has re-awakened entrepreneurship among younger
people, but as we saw in 2000, the loss of mentors in the parental
generation led to a financially devastating learning curve. Dot coms are
coming back now, older, wiser, and built on more sound entrepreneurial and
management principles.

One of my observations is that a large percent of successful entrepreneurs
(not counting those who grew up in a family business, learned the trade, and
continued the business) are information junkies. They read, take classes,
etc almost compulsively. Their ability to assimilate, aggregate, synthesize,
and apply information to whatever endeavor, including entrepreneurial, that
they wish to take on, is one of their key strengths, and a major factor in
their success. I am amazed when people tell me they would LOVE to start a
business, but have absolutely no idea what kind of business to start. An
individual with this problem is probably entrepreneurially terminal and
spends more time in front of the boob tube than books. Someone who truly
wants to start a business will have hundreds of ideas (or at least a handful
of good ones) and multiple variations on each idea. (The REAL problem is
choosing WHICH idea to run with!) At the very least the future entrepreneur
will own significant knowledge and feel powerful commitment to one industry
which they love. Get a few natural entrepreneurs together, and the number of
ideas (mostly good ideas) that come out of a one hour session are limited
only by how fast a person can speak. Until a person starts focusing on
opportunities and problems, and compulsively visualizes ways to solve the
problem or meet the opportunity, that person cannot have a potentially
profitable business idea and probably cannot be a serious or successful
entrepreneur.

Here are a few thoughts based mostly on observation (again, because I do not
understand the un-entrepreneur) on why people do not start a business.

A) Parental programming. Most people have non-entrepreneurial parents, and
because of the state and rate of small business failures, even having a
business owner parent does not necessarily translate to an interest in
self-employment for their kids. Most parents, who are well-meaning and often
(even largely) incompetent about helping their offspring with career
choices, want each kid to be financially secure, and their solution is
suggest the child go to work and get a job, learn a trade, and move up the
ladder (with or without a college education first.) Most of us are guilted
into life choice programming, some good some bad, as a result of parental
instruction and mantras. The biggest psychological battle I ever faced was
getting PAST the 20 years of programming my parents gave me about getting a
job to create security. Failures, unhappiness, and sheer will allowed me to
become who I really am as a conscious choice - an incurable entrepreneur.

B) Educational programming: K through 12 is not about risk of any kind, much
less entrepreneurship. Besides the devastating effect on human creativity we
get from attending our conformity-driven US educational system, our total
exposure to starting a business during formative years between toddler and
the right to vote, is limited to a) walking into a store and asking for club
donations, b) one or two elective classes, or c) a day of "shadowing" an
employee at a local business. Career counseling in K-12 is about
interviewing, attending a job fair, filling out a resume, etc so you can
find someone who will pay you wages while you learn a job. Not sure of the
exact figures, but I've read that for most K-12 teachers in the US ... their
only full-time job has been teaching. Just a note here... I am not saying
today's teachers are not effective at educating. I am not bashing teachers,
I am bashing the system. I think teachers do a better job of cramming more
irrelevant information down the craniums of confused and apathetic young
people than ever before in the history of US education. But it's like the
argument of efficiency over effectiveness. Are we doing things right (the
way we've always done them?) or are we doing the right things? Many years
ago, when my kids were still in K-12, I was involved in donating time at the
state and local level to a new, national program called "School to Work",
designed to better prepare students for the "real" world. One problem was
that a kid had to choose by their sophomore year what "track" or box they
had to be put into -- this decision guided all their electives and much
required coursework over their last three years of high school. (Better get
it right!) Administrators and teachers involved in the program had little
appreciation or understanding (or ability to provide enough information) for
kids to make a clear choice. (Never mind that most people really don't know
what they want till they approach 30, and that 20 years after someone gets a
college degree, 3/4 are working in a field not directly related to their
degree). However, one part of the School2Work program I liked was a
sub-program called "School Based Enterprises." We heard and read stories
about schools that were doing things including: organizing wood furniture
sales from the wood shop class, running food franchises in the cafeteria and
child care cooperatives after school, etc. I think many of the stories may
have been legit. However, I went to a presentation from a school near where
I live that claimed to be running 12 small school-based enterprises ranging
from log furniture to screen-printed t-shirts. Near the end of the
presentation, the lead teacher on the project proudly stated, that if there
were any "profits" made from an enterprise, that the students were never
allowed to keep them, the funds went back into the program. She was adamant
that kids would not be receiving PROFITS! (She pronounced the word as if it
was evil, or dirty, and wanted everyone to be sure no student was pocketing
money from their efforts while learning about entrepreneurship!) I bailed on
my participation. I had already seen the resistance to change in my local
school district. While there are many incentives for self-employment,
financial benefit is certainly one, and a critical one that CANNOT be
removed from the mix, if entrepreneurship is to be supported, nurtured,
explained, and ingrained. But when the blind and ignorant (rhetorically
speaking) are leading the confused, not much good can come of the
interaction.

C) Professional Entrepreneurial Development. The "first stop shop" for
potential entrepreneurs thinking of starting a business, is from a US Small
Business Administration (SBA) supported program called "Small Business
Development Centers", located on college campuses in most states. While
these offer MANY great resources, and access to retired entrepreneurs
(SCORE) as mentors, you can be a "business counselor" by... drum roll...
having a good interview and getting the JOB! While many of these business
counselors are former business owners or managers, most are not, and some
have never even worked in the for-profit sector. Entrepreneurship may be the
only field in the US where you do not need any experience as one to be a
consultant in the field, at least according to the government practices
paying lip service to entrepreneurial development. Added to the problem, is
that most economic development organizations are driven by practices such as
recruiting businesses from out of the area, to create jobs locally, in a
zero sum game (one community wins, all the others lose, by the exact same
amount) -- they prefer outside recruitment over nurturing home-grown
entrepreneurship by people with a vested interest in the community. It 's
what I call "testosterone" economic development (I'm gonna go out and bag me
a company!) and leads to "yo-yo" economies, as the bigger companies come in,
take the lucrative financial incentives to plop down a few jobs, then move
on to the next incentive-laden location, when the goody is gone from the
first "deal."

The other problem entrepreneurial development efforts face, is that they
base economic development on supply, instead of markets. If they are in a
forested area, where all the sawmills are now gone, they study their
tremendous woody "resource" and do a study on what businesses could be
started with those trees. If they are in a clay mining area, they study what
can be made from the clay. If they are in a scenic area, they study what
recreational and tourist businesses could be formed. Basically, the mantra
is, if you have a big supply of crap, there must be an economic use for it.
And there is, of course, and if it were an entrepreneur doing the looking,
something positive might happen. But what cannot work is "supply based
economics". If there is one thing I have learned in three decades working
with entrepreneurs, is that NOBODY likes to start a business using someone
else's idea. Economic development professionals and programs do what is
easy, not what is effective. In terms of economic development (or successful
businesses), the ONLY underlying economic development resource is an
entrepreneur with a passion, not a supply of used tires, dead trees, or cow
manure. Agencies should quit making recruitment their primary focus, and
spend more time getting out of the way of entrepreneurs.

I see a similar "supply vs. market" problem on this list. "I HAVE A PRODUCT"
or "I HAVE AN IDEA FOR A PRODUCT!"... how do I produce it and where do I go
to market it? John brings them right back to reality..." DOES THE MARKET
WANT THIS PRODUCT? WHO WILL BUY IT? AND UNTIL THEY DO BUY IT, YOU DON"T
REALLY HAVE A PROFITABLE PRODUCT OR IDEA!" Right on, John! On this list, is
there a market for the product? In the world of economic development, is
there an entrepreneur who wants to develop that resource?

D) FEAR: As a result of all the misdirected or directly negative
programming, the potential entrepreneur fights an uphill INTERNAL battle,
which is much larger than the actual external efforts needed to start a
business. Just like finally riding a bike without falling over, or the first
love making experience... the experience changes you, and makes it easier to
do it again. You have more confidence. But that fear of the unknown is huge.
The best way to learn to start a business is to do it. You can spend
$100,000 on a college education to get a piece of paper you might never
apply to your life's work... or you can lose $100,000 in three failed
businesses (if that is what it takes) to learn the ropes and finally create
that million dollar business. But this fear of failure holds a lot of us
back. I think many successful entrepreneurs had to change their context
around failure. Just like learning to walk or making love, you are not very
good (except in your own mind) the first time, so you get up and fall down a
lot. But with practice, you finally figure it out enough to operate
successfully, even if you never quit learning or getting better. As Brian
Tracy says, if you want to increase your success rate... increase your
failure rate! Until I was willing to accept that failure might be an
outcome, and be OK with that, I was not willing to take enough risks to
succeed. Now its easy, because I have failed and succeeded many times. The
true entrepreneur learns to take highly calculated risks, not risk for the
sake of risk. My next entrepreneurial goal is moving past lifestyle
businesses to become a significant employer, and if possible, grow enough to
go public. That is my mountain. The idea of 100 employees or more, scares
the bajeebies out of me.

E) TIRE KICKING: Many times I have heard someone say they are starting a
business, "but if I find a good job, I am quitting". This is not
entrepreneurship, this is someone in between jobs. Good grief. Commitment is
tough, and really tough when risking financial resources and trusting others
on their end of the deal. I once contracted to help get a woodworking
cooperative up and running. We opened a retail store, and had 120 consignees
within six months. They all wanted a successful business. After working with
that situation for a year, I noticed that maybe one in ten woodworkers
actually approached it as a business. The other 90% were tire kickers who
just wanted an outlet for their wood creations, and wanted someone else to
do the hard work of marketing/selling/bookkeeping, etc which is a
substantial part of self-employment. The differences between making a chair,
and making a business which sells a chair, include two things: A)
Marketing/sales, B) Money (a system where efforts are traded for cash with
enough excess after costs to make living/profit). Most people just want to
do the technical work. That is a far cry from building a business. An
accountant is not an accounting firm. A person who makes maple bars is not a
bakery business.

F) UNSUPPORTIVE SPOUSES. I once worked with a close friend to develop a
regional sporting good store. He was going to rely on his wife's wages to
put beans on the table, while we built the business. When she heard what he
was going to do, she said "If you are going to work for yourself, then I am
going to do what I want too! I am going to quit my job, and you can support
me" (and their child) from the business income. This created enough personal
and financial projection problems, that he backed out. If your spouse does
not understand the financial curve of a business, and will support you
through it, you cannot (or at least should not) start a business.

F) BAAAA! Frankly, most people are sheep. They want the freedom and
potential financial benefits of self-employment, but they don't want to
change their lifestyle, or quit watching TV six nights a week. Going with
what is familiar, and seeing the backsides of the same people every day
going in the front door of the employer is comforting.

For me, the changes are worth it. While I probably work double the hours I
would ever work for someone else, it does not feel like work. I have hardly
worked a day since I became self-employed full time, although I put in a
horrendous number of hours. The best part is... I can choose my hours. When
my kids were younger, if I wanted to see a school activity in the middle of
the day, I went. If I wanted to go fishing or hunting, I went. One
observation is that for folks who work for wages, the weekends and 5 PM have
significance. For me, every day and every hour has the same potential
choices and riches, and its all pretty much the same. I realize that some of
the folks I like to spend time with are fettered by these time constraints,
but that is just a scheduling issue.

Malcolm

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