Today I ran across an article by Malcolm Gladwell in the January 18, 2010 New Yorker magazine. The title is "The Sure Thing: How Entrepreneurs Really Succeed." Whether or not you are a fan of Gladwell's work, he definitely has a way with words. He has a real knack for digging up interesting facts and weaving them into compelling stories. The main point of the article was that -- despite the popular myth -- successful entrepreneurs are NOT risk takers. Instead, they constantly strive to take the least risk possible.
While this is not a particularly novel point, I found Gladwell's description of the findings of economist Scott Shane to be VERY intriguing. In his book The Illusions of Entrepreneurship, Shane enumerates the many mistakes failed entrepreneurs make.
- While many entrepreneurs take risks, it's generally the failed entrepreneurs who do so.
- And while new-business success is correlated with the size of the enterprise's initial capitalization, failed businesses are often significantly undercapitalized.
- Studies show that organizing a new business as a corporation is best, but failed entrepreneurs most often organize their businesses as sole proprietorships.
- While taking over an existing business is usually the best path to success, failed entrepreneurs most often start their businesses from scratch.
- And while 90 percent of the country's fastest-growing businesses sell to other businesses, failed entrepreneurs most often sell to consumers.
The list goes on and on.
The point is that if you are starting your own new business, it would be in your interest to consider what other successful entrepreneurs have done to start and build their successful businesses. And it would definitely be in your interest to also consider what failed entrepreneurs have done to start and build their failed businesses. There are important lessons to be learned on both sides of the equation.
