When you think “entrepreneur” what image comes to mind? Celebrity IT entrepreneurs such as Steve Jobs, Mark Zuckerberg, or Larry Page seem to be the automatic associations. Yet, focusing just on big names and one sector overlooks the vast majority of self-starters out there who successfully founded their own business. Their importance to the economy is crucial. In the U.S., small firms with fewer than 500 employees represent 99.7 percent of all employer firms, employ half of all private sector employees, hire 43 percent of high tech workers, produce 13 times more patents per employee than large patenting firms, and generated 65 percent of net new jobs over the past 17 years.
The Kauffman Foundation for Entrepreneurship set out to explore in more detail who the owners of these firms are. Their 2009 report “The Anatomy of an Entrepreneur” was based on a survey of 549 company founders across different industries and revealed some interesting facts that challenge many entrepreneurship stereotypes. I found these findings most interesting – and often unexpected:
- The average and median age of company founders when they started their current companies was 40, while Kauffman’s earlier research showed that the average and median age of technology company founders was 39. Teenagers-turned-entrepreneurs programming in their parents’ basements are an exception rather than the rule.
- In a similar vein, most entrepreneurs are married and have children. 69.9 percent of respondents indicated they were married when they launched their first business. 59.7 percent said they had at least one child when they launched their first business, and 43.5 percent had two or more children.
- Given the level of knowledge and experience required to start a business, few entrepreneurs start their professional career with a new venture. In fact, the majority of respondents (75.4 percent) had worked as employees for more than six years before launching their own companies. Almost half (47.9 percent) launched their first companies with more than ten years of work experience.
- An important part of being prepared to become an entrepreneur is education: the respondents were usually well-educated, with only 5 percent reporting having less than a bachelor’s degree.
- 71.5 percent of respondents came from middle-class backgrounds (34.6 percent upper-middle class and 36.9 percent lower-middle class). Less than 1 percent came from extremely rich or extremely poor backgrounds.
- People are not necessarily born entrepreneurs. 52 percent of respondents had some interest in becoming an entrepreneur when they were in college, but 34.7 percent didn’t even think about it, and 13.3 percent had little or no interest. But once they successfully try their hand at entrepreneurship, they want more. The majority in the sample were serial entrepreneurs: the average number of businesses they launched was about 2.3.
- More than half (51.9 percent) of respondents were the first in their families to start a business, showing that entrepreneurship doesn’t always run in the family. If it does, fathers appear as the most influential figures in this regard: 38.8 percent or respondents had a father who had previously started businesses, as opposed to a mother – only 6.9 percent – or siblings, 15.2 percent.
- In contrast with developing countries where unemployment is a key driver of “necessity entrepreneurship” (largely in the informal sector) in the U.S. 80.3 percent of respondents stated that inability to find traditional employment was not at all a factor in starting their own businesses. Only 4.5 percent said this was an important factor. In contrast, 68.1 percent of respondents indicated that capitalizing on a business idea was an important motivation in becoming an entrepreneur.
Anna Nadgrodkiewicz is Senior Program Officer for Global Programs at CIPE