Confessions of an Entrepreneur: The Perceived Barriers to Entrepreneurship

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I always find it interesting to talk to people about entrepreneurship and believe me, I have talked to a lot of people about it.

I would guess that over the past 15-16 years I have probably had more than 1500 students in the classes I teach at the Sam M. Walton College of Business at the University of Arkansas alone, not to mention the countless others who reach out to me to discuss their start up ideas or plans or to ask a question.

One of the classes I teach is “New Venture Development.” Early on in the course of the semester, we get into the barriers to entrepreneurship.

I want my students — I want everyone, really — to understand that they all have the option of creating their own job. But too many of my students come into the class with the belief that starting a business would be nearly impossible for them.

Pop culture and a wide variety of media aren’t helping! 

Here are some of the perceived barriers to entrepreneurship that keep people from starting a business and creating their own jobs:

“I have to invent something or do something new that has never been done before.”

This is such a hurdle, and it is an unnecessary one. The preponderance of business starts-ups do not involve inventing anything new. They instead try do something better than how other providers are doing it. Or they bring something to a particular audience that wasn’t readily available prior to their start up. Or, they simply do something other providers are already doing but they are in a growth market where demand is greater than supply.

Case after case of new start-ups will confirm what I am saying here. The perceived requirement to invent something new keeps a lot of people from starting a business.

“I have to create a technology business because nothing else has real growth potential.”

Again, not true.

There are many businesses that are not remotely technology-based yet are profitable, growing and have tremendous value for their founders/owners to harvest upon exit. Locally we have so many examples — Sam’s Furniture, Slim Chickens, Fayettechill, Riffraff, Superior Auto Group, Brown Boys Roofing, Raush Coleman, Eureka Pizza — I could go on.

These are all entrepreneurial businesses that have grown rapidly but are by no stretch of the imagination technology-based.

Not to say there is anything wrong with starting a tech business. The number of engineers and computer science majors we have taking our classes tells me we will have some additional new tech-based startups in the future. 

“I have to sell my idea to VCs or angel investors.”

This is one of the biggest barriers.

The typical thought process for newcomers to the startup world goes something like this: Step #1. Create a new idea or invent something new. Step #2. Do a business plan (hopefully this is step #2 – sometimes this one is skipped!) Step #3. Go “pitch” the idea to potential investors.

The fact is very few businesses start out with VC money or angel equity investor capital. Most are started with personal savings, credit cards and loans from family or friends. For those who are resourceful and create the right business plan, most of the time selling equity prior to startup is unnecessary.

Bootstrapping tactics can be employed to minimize start-up capital requirements.

“Starting my own business is riskier than taking a job somewhere.”

I have always disagreed with this notion, especially if you start a service or other business that doesn’t take much, if any, start-up capital. It seems to me when you have a job you are self-employed but have only one client or customer. If you lose that customer you are out of business.

But if you have your own business you can lose a client or customer and still have many more. If you had a business with one client or customer the value of that business would be greatly impacted (negatively) by what is called “client concentration risk.”

Plus many times, people lose their jobs even when they are doing a good job. Management may decide to get out of a market or stop doing a function internally and you can lose your job due to no fault of your own.

“I don’t know where to start to create my own business.”

No doubt this can be a legitimate barrier but it certainly doesn’t have to be. There are so many resources available today that someone could take advantage of to help not only figure out what business to go into, but also how to do a plan and finance it.

We have many here right in Northwest Arkansas! And then there are a number of ways to also test the concept to see if the target market responds to it before making a major commitment.

“I am not good at (fill in the blank), and that is a necessary skill to start and run a business.”

No one is good at everything so you aren’t alone. The key lies in putting the right team together. And everyone you bring in does not have to be a full-time employee or even any type of employee, for that matter.

Many businesses today outsource so many functions, from product design to marketing to accounting to I.T. It just takes some thought and effort to explore what your options really are.

And if you do decide to build a team with other working partners or employees, you need to focus on building diversity and adding people with skills and connections you don’t have. That’s what makes it all work. Don’t fall into the trap so many start-up founders do if only finding people like themselves or those who will be good order takers. That is a recipe for future disaster in so many different ways.

“I am not old enough. I am too old.”

The great thing about entrepreneurship is that the door is open to all. There are 10-year-olds starting businesses, and there are 80-year-olds doing it. I’m 62 and already have businesses and a full-time job but I would still consider starting a new venture right now. The key is to pick a business and develop a plan that works for you — one that matches your skills, interests and passions with real needs that exist in the market, and one that you can afford to do.

Everyone has the option of starting a business if they really want to!