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Entrepreneurial Risk
by Maxwell Wessel and Neil Khare | 2:17 PM September 19, 2011
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Building businesses and creating jobs in America during the twentieth century was like taking a test
with an answer key. We had it all strong capital markets, rich natural resources, unparalleled higher
education, and geographic separation from two devastating wars. It was our not-so-secret formula for
success. The problem with that formula is that its gone.
Todays America will need to find a different formula for competitiveness and job creation. Its our
belief that the best path to sustainable competitive advantage will come from lowering the risk to
entrepreneurship and encouraging its pursuit not from reducing corporate tax rates and providing
subsidies to the firms that already survived. We simply cant legislate in a way that turns large, lowgrowth, earnings-driven businesses into job creators tomorrows job creators will be found in the
startups of today.
The only path to sustainable job creation in the States is to facilitate the formation of new, highpotential startups.
Entrepreneurs still have many reasons to build businesses here. The United States has a massive
consumer population and many of the worlds most specialized industrial clusters, but those
advantages are diminishing. To offset job losses, we must do better.
Policymakers have historically used subsidies in the form of deductions, grants, and loans as
their tool of choice to encourage business creation. Although well-intentioned, these programs often
have the unintended consequences of benefiting the wrong businesses, favoring sub-optimal
technology, and creating market distortion.
More importantly, these sorts of market subsidies only increase the value of a firm that survives. They
do not decrease the cost to the entrepreneur if his venture fails. Its a bit like piling money at the end of
an unstable tunnel; enticing to a few, but many people simply wont enter for fear of collapse.
This collapsing-tunnel problem is particularly important today, as the Great Recession breeds a
generation of risk-averse Americans. Because about 85% of startups fail within four years, increasing
the potential returns to entrepreneurship to these risk-averse individuals seems like the wrong
incentive.
So what does the solution look like? There are many variations, but they all focus on three basic
goals:
1. Reduce the upfront costs of starting a high-potential business.
Starting high-potential businesses is expensive. Incorporation, patent, and licensing fees are just the
beginning. Businesses seeking to scale need space, permits, access to capital, and more.
Instead of manipulating the tax code to encourage startups once they are profitable, we should do
everything we can to remove these early costs in the system. Try envisioning a system where nonprofits or government entities guided high-potential entrepreneurs through these legal, accounting,
and licensing hurdles for high-potential businesses that meet certain qualifications, thereby minimizing
those costs. It would greatly reduce the cost and risk of early failure.
2. Provide resources along the way.
Succeeding as an early-stage entrepreneur is still very much about who you know. While its easy to
get meetings with VCs, clients, and advisors if an entrepreneur has a degree from Harvard, MIT, or
Stanford, there are great ideas everywhere. We should enable anyone with a good idea to secure
these opportunities.
Right now incubators such as Y Combinator and TechStars are performing this task for the best
existing entrepreneurs. But imagine the impact non-profit or government facilities available to
everyone could have by providing access to business plans, pro-forma templates, industry reports,
and good, old-fashioned mentorship. Starting a complex business could seem accessible.
3. Lower the cost of failure.
Programs such as Steve Cases Startup America are attempting to complete this task by making
entrepreneurship a profession. The belief is, if programs like this can reduce the negative
connotations associated with entrepreneurship, it might be easier for unsuccessful founders to
transition to the private sector.
But increasing public awareness of entrepreneurial skills isnt all we can do. We should also be
instituting programs in the public and private sectors that encourage individuals to start businesses. If
entrepreneurs meet certain milestones, but their business still fails, they should be guaranteed
placement in firms in need of entrepreneurial leadership.
Picture something like a rotational program for innovation. Entrepreneurs in the Clean Energy sector
would make invaluable assets to the Department of Energy. Entrepreneurs building businesses in
telecommunications could predict the next wave of disruption for the FCC. And Microsoft may have
avoided disruption from Android and iOS if it had been bringing on entrepreneurs from the mobile
space.
We need to find a way to get our best and brightest to consider entrepreneurship as a viable career
option. It needs to be de-risked to the point that everyone can see it as a step along a path not a
leap of faith.
Would a program like this be expensive? Sure. Would it be effective? Definitely. Would it be far
cheaper than our current policies addressing this issue? Absolutely. In the best-case scenario, it
would create jobs by facilitating the growth of large new businesses. In the worst-case scenario, a
program like this could get talented people into government and could revitalize stodgy, slow-growth
firms.
There is one thing thats certain: we cant simply pile on more money at the end of the long, unstable,
tunnel of entrepreneurship. What we need to be doing is making the tunnel structurally sound.
Entrepreneurship
Introduction
Entrepreneurship as a career option can be an exciting opportunity to be explored. This career
path can take many directions and goes far beyond the sole idea of owning a small business
and being your own boss.
Entrepreneurs identify needs, develop a vision, take action, and turn dreams into reality. They
create products, companies, or even industries. They change individuals' lives or an entire
society. Some work for themselves and others do entrepreneurial work within traditional
companies. Some entrepreneurs' focus on money and others focus on leading social change.
There are more resources and tools than ever before for entrepreneurs to gain the knowledge
needed, exploring this interesting career option. On college campuses across the country there
is an increased interest in entrepreneurial careers. We hope the resources and information
below will be of assistance. Make an appointment with a UB Career Services Counselor to
discuss the wide variety of entrepreneurial career options!
Profile of an Entrepreneur
Common Skills, Traits, Qualities
Total Commitment
Perseverance
Strong Self-Confidence
Flexibility/Adaptability/Ability to Change
Creativity/Innovation
Opportunity Focused
Ability to Sell
Competitive Spirit
Resourcefulness
Management Skills
Accounting Skills
Marketing Skills
Negotiation Skills
Motivations of Entrepreneurs
Accumulating Wealth
Paths to Entrepreneurship
Start Your Own Business
Be a Self-Employed Professional
Become a 'one person' firm (such as a subcontractor, consultant, business analyst, inventor,
independent agent or broker, builder, developer, craftsperson, artisan).
Be a Corporate Entrepreneur at a Traditional Firm
Such as new product development, research, change agent, innovator.
Be a Social Entrepreneur at a Traditional Firm
This is an employee of a firm who operates in a socially entrepreneurial manner, identifying
opportunities for and/ or initiating socially responsible activity in addition to helping the
organization reach its business goals.
Be a Social Entrepreneur
Social entrepreneurs focus on creating social capital and further social and environmental
goals locally, nationally, or internationally (applying capitalistic strategies to achieve
philanthropic goals).
Sample Career Titles of Entrepreneurs
Self-Employed Owner/Operator
Start-Up Manager
Product Manager
Marketing Specialist
Insurance Sales
Entrepreneurship
Development
Home/Entrepreneurship Development
Even though such women are not educated, they have great entrepreneurship potential
because they have the right motivation. Such people need to be aided by assistance
packages where training can be given on entrepreneurship. This will instill confidence
and teach them the skills they need in order to provide for their family.
4. Identify the local market and search for people who have
potential in it
Entrepreneurship development programs should first identify the local market and aid
potential entrepreneurs who know a lot about it. These people need to be able analyze
and then design unique ideas based off the needs of their surroundings.
By concentrating on select local entrepreneurs, the effects of the program can be easily
and quickly seen within the community. Later on, programs can help improve their
knowledge in their sector. In fact, it is creativity and the thirst for innovation that truly
matters rather than the markets size. In later programs, the introduction of new products
and product features can be added. This will add value and increase the size of the
market
when development banks are involved earlier in the process of training, an entrepreneur
will easily understand credit processes and the also praises the banks business plan.
10.
A successful entrepreneurship development program
requires government policies
Entrepreneurship helps the economy of a country grow and creates new jobs.
Government policies usually have a substantial impact on the number of entrepreneurs in
a country.
While there are many governments that say they do support entrepreneurial businesses,
they usually do not have many specific policies and programs that effectively support
entrepreneurial development.
Creating an effective entrepreneurship development program may not be easy but then again, it
is not impossible either. By carefully following the ten points above, you are well on your way to
creating an entrepreneurship development program that not only benefits your company in the
short run but in the long run as well.
Case Studies
This EU funded initiative involved the development of 30 new case studies, one from each of
the 27 EU member countries, and one each from Liechtenstein, Norway and Russia. All of
these 30 contemporary entrepreneurial case studies are available on this website for teaching
purposes. Furthermore, they are available in the five most spoken languages in the EU;
English, German, French, Italian and Spanish. Additional case studies already in existence are
also available. As the resource centre grows, so too will the number of cases available from
the case study library.
This library of case studies aids third level teachers who wish to use a more practice-based
action-orientated approach to teaching, which also overcomes time and resource constraints
that inhibit lecturers from producing their own case study material for instruction purposes.
These European entrepreneurial case studies are freely available to entrepreneurship
educators across Europe. This library resource ensures that third level educators can engage
students in entrepreneurial thinking and business problem solving that are reflective of the
environment in which students live and work.