Essay: Politics of Entrepreneurship
Commuting to the Virtual Office
Putting Your Training to Good Use
Marketing to the Minority
Getting Pulled into a Partnership
A Shop Owner's Horror
By Margaret Webb Pressler
Take a minute and think about how many people you know who are thinking about starting -- or have started -- a business recently. Chances are you've ticked off at least a couple of names, and that speaks volumes about how our economy is evolving.
Starting a business has always been the American way, both a path to the American Dream and a way of life that suits our culture of independence and speed. But the entrepreneurial spirit in this country is soaring like never before, and it has become an ever more powerful engine of the economy.
A study released last week by the Kauffman Center for Entrepreneurial Leadership in Kansas City, Mo., showed that of 10 industrialized nations, the United States had by far the most people -- one in 12 -- trying to start a business. Last year, that translated into about 900,000 new businesses being created -- and that doesn't count self-employed consultants or other sole proprietorships. That's up from about 700,000 business starts in 1991.
There are many factors helping build this crescendo:
But long-term structural and cultural changes also are pushing more people to pursue independence. Structurally, the gradual ebb of corporate loyalty as companies have reorganized and outsourced work has both pushed employees out the door and created a market for such workers to start their own specialized companies.
And culturally, our nearly constant economic growth since World War II has given people the luxury of looking for work that does more than just put food on the table.
"Deep into the middle class, you have inherent prosperity and you have people saying, 'I want to do what I want to do.' People want to spend more time with their kids, or do something that makes a difference," said Daniel Pink, who is writing a book on the subject, tentatively titled "Free Agent Nation." "So you have people looking for more meaning in their work, coupled with the fact that it's not as risky to go out on your own, and the combination is pretty powerful."
Many people today think of a successful small business and picture the entrepreneur who makes a revolutionary product in the garage, founds a company, builds a business quickly, then sells the business and makes a killing. Certainly in the new, fast-paced world of technology start-ups, many entrepreneurs are pursuing exactly that strategy.
"This whole start-up thing . . . has gotten terribly sexy of late," said Lisa Losito, whose husband, Doug Humphrey, started the local Internet service provider Digex Inc., which he sold in 1997 for $150 million. The couple now runs a high-tech incubator in Maryland, where fledgling businesses can get guidance and services to help them grow. Losito and her husband join a growing list of financiers, executives and consultants seeking to cash in on the technology revolution and the opportunities it presents.
But high-tech firms are actually a tiny percentage of all start-ups, about 2 percent by some estimates. Small businesses still come in all shapes and sizes.
Every year, for example, thousands of people strike out on their own as consultants or lobbyists, seeking the freedom and independence such an arrangement provides. While working for oneself can be financially precarious, it can also be more lucrative than working for someone else, and the trade-off is alluring: risky, yes, but now and then you can work all day in your slippers.
Other people, eager to run their own business but wary of the responsibility, have been turning to franchising in droves. For many people, this setup is a good middle ground -- and training ground -- for entrepreneurship, because the franchiser provides a framework and various kinds of help. Just as many people are becoming franchisees, many small businesses are seeking to grow by franchising their concept.
Whatever the form, the explosive interest in starting a business is having a profound effect on the U.S. economy. The Kauffman study found a direct link between the growth of a country's economy and its acceptance -- and encouragement -- of start-up business, with the United States at the top of the heap. The survey found that 91 percent of Americans viewed starting a business as "a respected occupation," while only 8 percent of Japanese felt that way. Not coincidentally, the researchers say, the Japanese economy is mired in economic contraction.
Pink, the author, said part of this country's support for entrepreneurship comes from our cultural willingness to accept, and even revere, failure. "In Silicon Valley, failure is prized," he said. "If you haven't failed, you haven't tried hard enough."
But Paul Reynolds, a professor of entrepreneurship at Babson College and one of the authors of the Kauffman study, said the key difference between the United States and countries with lesser-developed small-business communities is the teaching and guiding of hopeful entrepreneurs. There are more and more places today where a budding business owner can go for help.
"Clearly a high societal involvement in the education and research infrastructure seems to be an important thing," he said. "Entrepreneurship is kind of like a hypodermic -- it can inject something in the system, but they have to put something in the hypodermic."
In this special edition is a selection of stories about starting your own business: where to go for help, how to raise money and tips for keeping your sanity along the way.
© 1999 The Washington Post Company