The recent spate of good news from American business only underscores the extent to which the US is experiencing a jobless economic recovery. At a time when the major US political parties agree on little to nothing, there is bipartisan consensus that the American unemployment crisis can – and should – be solved by the so-called “job creators”. Given the central role assigned to them in spurring our national economic recovery, it is worth examining certain myths and facts about entrepreneurs and entrepreneurship in the early 21st century.

Myth 1: In order to be a successful entrepreneur it is essential to have a new idea or a novel way of doing things.

Fact: Certainly the most famous entrepreneurs of our time have created entirely new product categories or “disrupted” existing markets. But for every successful Steve Jobs or Mark Zuckerberg, there are thousands of successful business owners who buy fast-food franchises, start real estate brokerages, sell insurance, open restaurants, perform roof-repair, clean houses, stamp metal or open a dry-cleaner.

And for every Apple and Facebook which reaches the financial stratosphere, there are thousands of technology businesses which fail. “New” and “novel,” romanticised as the entrepreneurial ideal, can also mean untested, unproven, improbable, and lacking in utility. Most successful, new, entrepreneurial ventures take place in the “old economy” and in mature industries where demand is well-established and certain rather than supposed or assumed.

Myth 2: To launch a successful entrepreneurial business requires major capital investment.

Fact: While starting a business generally requires some capital, keep the capital required to a minimum. In general, live off the land. Don't buy what you can rent. Don't rent what you can borrow. Don't borrow what you can get for free. Don't take for free what someone will pay you to take.

Myth 3: Entrepreneurship is only for risk-takers.

Fact: Starting a new venture is not about thrill-seeking. On the contrary, it is about actively identifying risk and mitigating it. In fact, being risk-aversive even provides a competitive edge, in that you'll be especially attuned to the dangers, pitfalls, challenges and pressures that face any young business.

On the other hand, it is hard to imagine an effective entrepreneur who cannot cope with uncertainty. The successful entrepreneur exploits ambiguity, finds opportunity in disorder, is comfortable with chaos, sees profit in dislocation and welcomes change as the harbinger of success.

Myth 4: Those with elite formal education have an advantage.

Fact: Not as entrepreneurs. No sector of the economy is more purely meritocratic. The only measure of success – is success. Not where you went to college, who you know, how much money your parents had or what caste you a member of. The market rewards invention and creation that improves the lives of businesses or consumers. It doesn't care whether the desirable new product or service came from a third generation university graduate or a first generation grade school drop-out.

Odd as it may seem, those with elite formal education (or other badges of privilege) may actually be somewhat disadvantaged over their less well-schooled rivals. Entrepreneurship can be hard, gritty, unglamorous, discouraging, impoverishing and, at times, hopeless and embarrassing. Those with other decent alternative options in the main-stream economy may lack the fortitude to persevere when times get tough, as they invariably do.

Having good career alternatives can deprive the entrepreneur of the fighting spirit, that “win-or-die-trying” mettle that is often required to overcome steep odds, constant rejection and the loneliness of toiling in obscurity. In any event, more critical to the successful entrepreneur than academic awards, or even analytical acuity, are self-confidence, perseverance, non-negotiable commitment, passion, work-ethic, charisma, vision, persuasiveness, leadership and effectiveness – personal attributes that are difficult to either learn or teach.

Myth 5: Prior experience is critical to entrepreneurial success.

Fact: While ignorance is not bliss, too many people postpone their entrepreneurial aspirations in the belief that they are just “not ready” or “don't know enough”. You will never be fully ready for what awaits you. And trying to have all the answers before you start is a recipe for never starting. And if you fail, the hard-won experience of being an entrepreneur will make you wiser and more valuable to your next employer.

Myth 6: The chances of entrepreneurial success are slim.

Fact: Their rational fear of failure often trumps the rational logic of success. The would-be entrepreneur needs to appreciate the difference between real versus imagined impediments. Emotions aside, failure may not, in fact, be the statistically more likely outcome. And, again, let's suppose you do fail.

Beware not to overrate – or underrate – the consequences of failure. What you learned from your first failure may be the crucial ingredient for your next success (Steve Jobs believed that it was his ouster from Apple which set the stage for his later, much-heralded return). Believe it or not, prior failure may be the essential component of future success.

(The authors are co-founders and principals of MIRO Capital Partners and adjunct faculty members at the Wharton School of the University of Pennsylvania, where they co-teach a course on entrepreneurship in the MBA programme.)

(This article was published on February 12, 2012)
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