Inc. is my favorite magazine. It’s probably my single favorite source of news. If I was limited to one hour of business/tech/entrepreneurship news per month, I’d probably spend 45 minutes of it reading Inc.
Norm Brodsky authors one of my favorite columns, Street Smarts, in which he fields questions from business owners. Norm is a veteran entrepreneur who has probably forgotten more business than I know. However, I have to take him to task for his latest column. Norm Brodsky on the New Breed of Entrepreneur ventures in to something I do know quite a bit about – web entrepreneurship – and I respectfully disagree with the conclusion that he arrived at.
But there’s another reason I am troubled by all these part-time, Web-based businesses. It’s precisely because they are less difficult, less expensive, and less risky. When you’ve scrounged up every last cent and put it all on the line, success or failure becomes a matter of survival. Your instincts become sharper. You approach problems with a totally different mindset. If, in your part-time Web business, no customers show up for a week or two, you can take your time finding a solution. In a business you depend on for your livelihood, you have to come up with a solution immediately. I realize that there are many Web entrepreneurs who make that kind of total commitment to their companies. But my sense is that they are a minority. A decade ago, nearly every aspiring entrepreneur I met was 100 percent committed.
I hope I’m wrong. If I’m right, it could be very bad news for our economy.
I don’t doubt that a higher percentage of entrepreneurs were more fully committed a decade ago (or any other time in history really). What I think Norm is missing is that the raw number of ventures being attempted has skyrocketed*. So what if now only 10% or 20% of new business owners are “fully committed”? That might be 10% of a number that’s 100x larger, likely leaving a much larger raw number of “fully committed” entrepreneurs…which I think is a net win for our economy.
Even the 80% or 90% who aren’t committed and ultimately fail have been exposed to entrepreneurship, which is also probably a good thing for the economy. Maybe that person who couldn’t cut it on their own becomes a better employee because they understand more about how a business is run, or maybe they are someday in a position (personally, at a corporate job, or in government) to influence how small businesses are run and they use their short experience as a business owner to empathize with entrepreneurs and develop solutions that truly work.
The other thing I think Norm misses is just how much better this method of part-time web entrepreneurship is for the individual. I get quite a few emails from people who are miserable at their job and are looking to start a business. I always try to steer them in to keeping their job while getting their venture up and running.
Why? Well, for some people (a lot of people actually), this is just a phase. Maybe they’re pissed off at their boss or they just went through a nasty breakup. For one reason or another their looking for something new and adventurous, and starting a business sounds like a good idea. Until they start doing it and they realize that they’d rather do other stuff when they’re not at work. Which is fine. They didn’t lose anything more than their time and probably a few thousand dollars. They keep their job and move on with life. But could you imagine if they had quit their job? A few months later when their venture failed they could lose their savings or their house, or be in so much debt that they’ll never dig their way out.
Other times, people are very serious and they just can’t get the venture to work for one reason or another. If the customers don’t come after a few months, they can again pull the plug without their entire life being over. They can take a break for a few months and try again without risking their livelihood.
And if the part-time entrepreneur is successful – they have customers and they’re on the road to profitability – they can quit their full-time job with confidence. They also proved their work ethic by starting a successful company while working a full-time job, something that I think is an amazing feat in and of itself.
I feel like I have a pretty good pulse on the web entrepreneur community. If everyone quit their job and became fully committed to every new venture we’d have a lot of miserable, broke entrepreneurs running crappy businesses. Afraid to pull the plug. Afraid to try something new (or just move on with their lives) because quitting would equate to failure at life. That, to me, would be bad for our economy.
*The most recent data I can find from both the Kauffman Foundation and the SBA is from 2009 and suggests that while entrepreneurship is at record highs, it’s nowhere near the 100X I suggested. BUT that doesn’t factor in everyone who has attempted a website or app on the side, which for our purposes makes the number much much higher. It also omits the past few years, where I would surmise you’d see an even greater rise in new businesses than you did during the start of the recession.