Wondering if you have what it takes to be an entrepreneur? Are you considering a career shift to embark on creating your own startup? Elana Fine, Executive Director of the Dingman Center for Entrepreneurship at the University of Maryland’s Robert H. Smith School of Business, recently shared her thoughts in a webinar entitled “Is a Startup Part of Your Second Act?” Fine considered three main questions. Why? What? and, How? We will explore the Why now, and the What and How in subsequent posts.
Why? Motivations for a second act.
Fine discussed a number of possible motivations for wanting to found a startup.
- “I have an itch to scratch”. The entrepreneur develops a passion for a problem they want to solve. Often this passion to solve a particular problem arises out of the would-be entrepreneur’s personal experience and frustration. Paul Kedrowsky of the Kauffman Foundation says “The best entrepreneurs are people who scratch their own itch”.
- “I have a very particular set of skills”. These skills may have been acquired over a long career or through an intensive time of specialization. Fine gave an example of an entrepreneur who had deep experience selling products into club stores like Costco. The entrepreneur was able to capitalize on this knowledge in a new startup.
- “I want to be my own boss”.
- “I have a valuable network that someone can monetize”. Usually a successful startup takes advantage of a network of contacts who can assist in various areas such as product development, market understanding, fundraising, IP protection, helping with contacts in a particular vertical, etc. that can be used to solve a real problem in the marketplace. Often the lead founder(s) in a successful startup has significant domain experience and contacts related to the problem being solved or the solution.
- “I want to be rich”. While entrepreneurship can have significant upside, entrepreneurship is not a “get rich quick” scenario and involves significant risks. One successful entrepreneur commented they spent years becoming an “overnight success”.
- “I love Shark Tank”. You love the creativity and problem solving of the entrepreneurial world and want to be one.
Motivations may vary or be a combination of the above drivers, but successful entrepreneurship is hard work and anyone embarking on the journey must be strongly motivated to enjoy it and succeed.
Before jumping in, Fine encouraged would-be entrepreneurs to consider a number of factors:
- The risk vs. reward trade-off of starting a new venture. Startups generally have higher risks but also higher reward potential. The risks can be controlled and mitigated but the reward potential may be impacted.
- Upfront investment. Consider what you have to invest and may be able to raise to get you started and to the next level.
- Time to launch. Do you have the time to do this?
- Buy-in from family and other stakeholders. Life in the startup world can be very stressful and impact others beyond the founders.
- Backup plan. Do you have ways to hedge your bets so you won’t end up in a desperate situation?
Learn about the What next week. For more information, please contact Norm Snyder at Nsnyder@aronsonllc.com.