5 Entrepreneurship Myths Debunked

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The information found on Kauffman Indicators of Entrepreneurship’s site: https://indicators.kauffman.org/ is quite interesting and intriguing.  It contradicts several widely-held ideas about entrepreneurship that many non-entrepreneurs hold.

Here are 5 common entrepreneurship myths that have been debunked by Ewing Marion Kauffman Foundation:

1. New Business Survival Rate

The Myth: Small businesses mostly fail in their first year of operations.

The Reality:  More than 75% of new businesses survive past their first anniversary. This rate has been surpassed since 1996. Even in the height of the last recession in 2007 to 2008, most new businesses survived.

Source: Kauffman Indicators of Entrepreneurship Survey 2017. Published January 2019

2. Startups as Employers

The Myth: Startups don’t employ workers other than the sole owner

The Reality: While the number of hires is reported as declining in recent years, in their first year, startups employ at least 4 workers. The US Small Business Administration’s Office of Advocacy in its 2018 Small Business Profile indicated that small businesses employ 47.5% of US workers.

Source: Kauffman Indicators of Entrepreneurship Survey 2017. Published January 2019

3. Who Starts Small Businesses

The Myth: The unemployed start most small business because they cannot find a job.

The Reality: Historically, over 70% of new businesses are started by opportunists, not by what Kauffman classifies as “necessity entrepreneurs.”

Source: Kauffman Indicators of Entrepreneurship Survey 2017. Published January 2019

4. The Age of Startup Entrepreneurs

The Myth: Startups are for young people.

The Reality: Those under 34 are the least active as startup entrepreneurs. The other age groups are more active. Note the following table reports the average monthly rate of startups per 100,000 people by age group.

Source: Kauffman Indicators of Entrepreneurship Survey 2017. Published January 2019

5. Entrepreneurs and Education

The Myth: Entrepreneurs hold at least an MBA.

The Realty: Entrepreneurs’ level of education is varied. College graduates are the lowest source of entrepreneurs.

Source: Kauffman Indicators of Entrepreneurship Survey 2017. Published January 2019

While the study by Ewing Marion Kauffman Foundation does not detail the ongoing success nor the type of business started, it confirms my long-held belief entrepreneurs are the type of people that pull themselves up by the bootstraps and get things done.