Entrepreneurialism

Lest y'all think that I believe that we have to work for the man or starve, I want to share some tidbits of a very interesting article I recently read.

In the January 18, 2010 New Yorker, Malcolm Gladwell writes about iconic US entrepreneurs (Ted Turner, Sam Walton, etc.) and the practice of entrepreneurism, more generally. He focuses most of the article on John Paulson, a crafty hedge-fund manager who made gazillions off the 2008-09 housing bubble collapse. I don't really care about Paulson and his bijillions, but Gladwell's discussion about striking out on one's own interested me. Basically, Gladwell concludes that good entrepreneurs are cautious, do their homework, remained dedicated to the project, and are kinda sly. Sounds like skills I honed in grad school, no?

So, should we graduate and start our own businesses?

Well. Maybe.

Here's a very compelling reason to start my own publishing house, open a coffeeshop, or sell my homemade cards: “the one undisputed finding in all the research on entrepreneurship [is]: people who work for themselves are far happier than the rest of us” (Gladwell 2010: 29).

I can sign up for that. The few people I know who own their own business certainly seem happy. Although freelancing and 3rd party contracting isn't quite the same as working for one's self, I can say from my editing and tutoring adventures that it is nice being your own (sorta) boss.

But can I really make it?

Gladwell's article was so timely for me because he provides a cheatsheet of do's and don'ts for the budding business owner. He is pulling from economist Scott Shane's book: “The Illusions of Entrepreneurship” [leadfoot adds book to reading list]. “Yes, [Shane] says, many entrepreneurs take plenty of risks—but those are generally the failed entrepreneurs, not the success stories. The failure violates all kinds of established principles of new-business formation. New-business success is clearly correlated with the size of initial capitalization. But failed entrepreneurs tend to be wildly undercapitalized. The data show that organizing as a corporation is best. But failed entrepreneurs tend to organize as sole proprietorships. Writing a business plan is a must; failed entrepreneurs rarely take that step. Taking over an existing business is always the best bet; failed entrepreneurs prefer to start from scratch. Ninety per cent of the fastest-growing companies in the country sell to other businesses [!!!!!!!!]; failed entrepreneurs usually try selling to consumers, and, rather than serving customers that other business have missed, they chase the same people as their competitors do. The list goes on: they underemphasize marketing; they don't understand the importance of financial controls; they try to compete on price. Shane concedes that some of these risks are unavoidable: would-be entrepreneurs take them because they have no choice. But a good many of these risks reflect a lack of preparation or foresight.” (2010: 28).

Whew. Lot to digest.

The take home message I got from Gladwell was that if I want to be Leadfoot, Inc, my grad school skills will come in handy, but that, it'd really help if I were independently wealthy. Or finally found my sugar daddy. Or both.

But this isn't to say that entrepreneurship is open only to those who don't need to bother. Rather, I guess the take home message is be cautious and careful and do your homework before you open up your dream dance studio.

Here's my completely-based-in-unreality suggestions:

Do your homework. Like for real. My favorite (read: only) coffeeshop at my fieldsite was owned by a couple who had never been there before they moved to open their business. To their credit, they had done some homework—looking at the census to see what the area's median income was, how close my fieldsite was to other metropolises, how many other coffeeshops exist in the area. What they hadn't found in their pre-move research was that the community is extremely close-knit and generally wary of outsiders. Especially outsiders with tattoos and a taste for continental punk music. They were also bamboozled by their commercial landlord's glossy website. Yeah, the coffeeshop looks great on screen. It even looks great in person. It is, however, surrounded by a number of condemned or nearly-condemned buildings and the entire neighborhood is read as sketchy by the consumers the coffeeshop was targeting. I was really really sad when they closed 20 months after they started it.

Make friends with people who do what you want to do. [I don't think of this as the same as networking or informational interviews, per the Bible, but it's close.] It seems like my artist friends who make art fulltime get by because they hang with other artfolks. Not only do the other artfolk mentor the recent arrivals (charge this much over cost because galleries take 40% of the sale, etc), but artfolk introduce each other to interested buyers and vouch for each other's art: “oh yes, her collages are really cutting edge. Trust me, I'm an artist. You should buy three.”

Keep your day job (even if it's grad school) and freelance or 3rd party contract. Yes, yes, these activities reproduce the neoliberal project. All I got to say is that one person is not going to bring about the socialist revolution we all want. Thanks to No Child Left Behind legislation, while doing fieldwork, I tutored a sixth grader for $20/hour. No taxes. I was considered a “third party” contractor and was supposed to report my own income. Uh, right. I also leaned heavily on friends and had them sell my editing skills to their friends. I liked these jobs because I basically set my own hours and I was doing stuff I enjoy (I'd take teaching a 6th grader how to read over whiny undergrads any day) at rates far above what Meijer's photolab was offering me.

Get the pieces set up way before you start. This blog? Totally self serving. “Oh yes, yes JobInterviewer, I can communicate with the public. Please see my blog”. Want to be a freelance translator? Do like the undergrads and start developing your portfolio now. Want to start your own consulting company? Intern or work somewhere where contacts made at the internship will benefit you later.

Like I said, these suggestions are based on nothing but conjecture. But the Gladwell piece should kick you off into the right direction if you are considering going it on your own.