Why do people become entrepreneurs?

Brothers Fernando and Santiago Aguerre exhibited entrepreneurial tendencies at an early age. At 8 and 9 years old respectively, they sold strawberries and radishes from a vacant lot near their parents’ home in Plata del Mar on the Atlantic coast of Argentina. At 11 and 12, they provided a surfboard repair service from their garage. As teenagers, Fer and Santi, as they call each other, opened Argentina’s first surf shop, which led to their most ambitious entrepreneurial venture of all.

The flat-footed brothers found that traipsing across hot sand in flip-flops was uncomfortable, so in 1984 they sank their $4,000 savings into manufacturing their own line of beach sandals. Now offering sandals and footwear for women, men, and children, as well as clothing for men, Reef sandals have become the world’s hottest beach footwear, with a presence in nearly every surf shop in the United States.

The Economic Impact of Small Business

Most U.S. Businesses Are Small:

  • 80% (approximately 23.8 million) of the nearly

  • 29.7 million businesses have no employees (businesses run by individuals or small groups of partners, such as married couples).

  • 89% (approximately 5.2 million) of the nearly 5.8 million businesses with employees have fewer than 20 employees.

  • 99.6% (approximately 5.7 million) of all businesses have 0–99 employees—

  • 98% have 0–20 workers.

  • Approximately 5.8 million businesses have fewer than 500 employees.

  • Only about 19,000 businesses in the United States have more than 500 employees.

  • Companies with fewer than 50 employees pay more than 20% of America’s payroll.

  • Companies with fewer than 500 employees pay more than 41% of America’s payroll.

  • 32.5 million people (1 employee in 4) work for businesses with fewer than 50 employees.

  • These businesses also pay tens of millions of owners, not included in employment statistics.

Source: “Firm Size Data: 2014,” https://www.sba.gov, accessed February 1, 2018.

Young Entrepreneur Living the Dream

Jack Bonneau is the quintessential entrepreneur. In the three years he has been in business, he has expanded his product line, opened multiple locations, established strategic partnerships, and secured sponsorship from several national brands. His business has garnered publicity from The New York Times, The Denver Post, The Today Show, Good Morning America, and numerous other media. He has shared his business success on several stages, speaking at TechStars and the Aspen Ideas Festival, and recently delivered the closing keynote speech at a national STEM conference. He even landed a gig on Shark Tank.

Jack Bonneau is smart, charismatic, an excellent spokesperson, and persistent in his mission. And he is only 11 years old—which also makes him very adorable.

Jack’s business was born from a need that most kids have: a desire for toys. He asked his dad, Steve Bonneau, for a LEGO Star Wars Death Star. The problem was that it cost $400. Jack’s dad said he could have it but only if he paid for it himself. This led Jack to do what a lot of kids do to earn some extra cash. He opened a lemonade stand. But he quickly learned that this would never help him realize his dream, so, with the advice and help of his father, he decided to open a lemonade stand at a local farmers market. “There were lots of people who wanted to buy great lemonade from an eight-year-old,” says Jack. In no time, Jack had earned enough to buy his LEGO Death Star. “I had sales of around $2,000, and my total profit was $900,” Jack said.

Jack realized that he was on to something. Adults love to buy things from cute kids. What if he could make even more money by opening more locations? Jack developed an expansion plan to open three new “Jack Stands” the following spring. Realizing that he would need more working capital, he secured a $5,000 loan from Young America's Bank, a bank in Denver that specializes in loans to children. Jack made $25,000 in 2015.

The following year, Jack wanted to expand operations, so he secured a second loan for $12,000. He opened stands in several more locations, including shopping malls during the holiday season, selling apple cider and hot chocolate instead of lemonade. He also added additional shop space and recruited other young entrepreneurial kids to sell their products in his space, changing the name to Jack’s Stands and Marketplace. One of his first partnerships was Sweet Bee Sisters, a lip balm and lotion company founded by Lily, Chloe, and Sophie Warren. He also worked with 18 other young entrepreneurs who sell a range of products from organic dog treats to scarves and headbands.

Jack’s strategy worked, and the business brought in more than $100,000 last year. This year, he became the spokesperson for Santa Cruz Organic Lemonade, and he’s now looking at expanding into other cities such as Detroit and New Orleans.

Even though Jack is only 11 years old, he has already mastered financial literacy, customer service, marketing and sales, social skills, and other sound business practices—all the qualities of a successful entrepreneur.

Are You Ready For Entrepreneurship?

The United States is blessed with a wealth of entrepreneurs such as the Aguerres who want to start a small business. According to research by the Small Business Administration, two-thirds of college students intend to be entrepreneurs at some point in their careers, aspiring to become the next Bill Gates or Jeff Bezos, founder of Amazon.com.

The desire to be one’s own boss cuts across all age, gender, and ethnic lines. Results of a recent U.S. Census Bureau survey of business owners show that minority groups and women are becoming business owners at a much higher rate than the national average.

Why has entrepreneurship remained such a strong part of the foundation of the U.S. business system for so many years? Because today’s global economy rewards innovative, flexible companies that can respond quickly to changes in the business environment. Such companies are started by entrepreneurs, people with vision, drive, and creativity, who are willing to take the risk of starting and managing a business to make a profit.

Here are some questions would-be entrepreneurs should ask themselves:

  • What is new and novel about your idea? Are you solving a problem or unmet need?

  • Are there similar products/services out there? If so, what makes yours better?

  • Who is your target market? How many people would use your product or service?

  • Have you talked with potential customers to get their feedback? Would they buy your product/service?

  • What about production costs? How much do you think the market will pay?

  • How defensible is the concept? Is there good intellectual property?

  • Is this innovation strategic to my business?

  • Is the innovation easy to communicate?

  • How might this product evolve over time? Would it be possible to expand it into a product line? Can it be updated/enhanced in future versions?

  • Where would someone buy this product/service?

  • How will the product/service be marketed? What are the costs to sell and market it?

  • What are the challenges involved in developing this product/service?

Statistics for Minority-Owned Businesses

  • The number of Hispanic-owned businesses almost tripled between 1997 (1.2 million) and 2012 (3.3 million).

  • The percentage of U.S. businesses with 1 to 50 employees owned by African Americans increased by 50% between 1996 and 2015.

  • Almost a million firms with employees are minority owned: 53% are Asian American owned, 11% are African American owned, and almost a third are Hispanic owned.

  • 19% of all companies with employees are owned by women.

Entrepreneurs are innovators who take the risk of starting and managing a business to make a profit. Most want to develop a company that will grow into a major corporation. People become entrepreneurs for four main reasons: the opportunity for profit, independence, personal satisfaction, and lifestyle.

If you would like to learn more about how to build a minimum viable business with as little out-of-pocket cost as possible, check out our other topics on Entrepreneur Startup Help. We offer great advice and tips that you can use to build your business and marketing funnel.

#Entrepreneurship #Motivation #Startups

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Entrepreneurship Today by Rice University is licensed under a Creative Commons Attribution 4.0 International License, except where otherwise noted.

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