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When you see how the media portrays entrepreneurship, entrepreneurship is about idea generation, startups, and raising equity capital quickly, with the founders in control. And then, a few years later, he sells the business at a ridiculous price of 10 or 15 times projected earnings (not EBIT) and goes on to spectacular success.
Although this may be the case, the chances of doing so are good, as you would normally buy a Powerball ticket and hope to win the big jackpot. For every entrepreneurship that turns out to be like that, there are thousands, even tens of thousands. But make no mistake. Many entrepreneurs do well for themselves and make a rich living with many “pedestrian” businesses.
Those businesses include small businesses that make cabinets, paint houses, provide dental services, sell clothing, serve hamburgers, serve real estate, or thousands of other small businesses that we all want and need every day. These small business success stories abound.
There is something about going into business with a proven interest. We all know that most people want pizza. So it ultimately comes down to the quality, service and variety that customers or clients value. And all of these are areas where small businesses can excel and beat larger enterprises.
And why is entrepreneurship presented as needing a startup? It’s not that there’s anything wrong with starting up and doing things the way you want – but buying an existing business can be cheaper and easier, especially if it needs work. Another option is to buy a franchise and get a proven business formula in cash.
What about raising equity capital from investors? Most new and existing businesses have only a few owners. My philosophy has always been to fight that challenge and do it all with my money and debt. I can’t understand why someone would want to start a business and immediately give up control to investors. They rarely understand the market or business strategy as well as the founders, but they want to put their stamp on it (ie tell the founder what to do). Furthermore, VC and private equity investors have a limit on how long they want to keep this investment, which means they may have to sell the company in the future. Maybe the founder doesn’t want to sell? Also, my experience is that businesses with less capital are better run businesses. Necessity is the mother of invention!
A lot of success as a business owner comes down to a true commitment to putting in the work needed to succeed. The pop culture view of entrepreneurial success is largely based on the ideals of the business. It’s just a “beginning”. It’s a start. It doesn’t end there. This is why it annoys me when someone tells me they want to “start a startup”. I ask if you want to start a real business instead. If so, get ready to work harder than ever because it requires such dedication and obsession.
As a business professor, I teach this stuff to help people see that they have more options than they initially realize. And then, I want to give them a realistic view of what it might take for them to achieve some level of success over time. Entrepreneurship is open to everyone, it can be a vehicle to solve a problem that helps many people, and it gives the owner (s) and employees the opportunity to create a wonderful quality of life. And while reality rarely matches public perception, there are plenty of options to tap into and succeed over time.
Mark Zweig is the founder of two Fayetteville-based 500/5000 companies. He is also an entrepreneur at the Sam M. Walton College of Business at the University of Arkansas and author of the award-winning book, “Confessions of an entrepreneurHe said. The opinions expressed are those of the author.
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