Many of us would like to live the American dream: have an idea and make money with it. In a way, merchants can do that by setting up their own business. A report from the Small Business Administration points out that people who are their own bosses have a higher job satisfaction rate than those who work for someone else.
In fact, the number of nascent entrepreneurs has increased significantly from 1999 to 2005, with about 1.4 million people more venturing into a new business. Factors that seem to determine who is more likely to start a new enterprise include:
- Age (25 to 44 years old)
- Gender (men are the most likely to start an enterprise)
- Ethnic Background
However, these factors do not determine the success of the business. Psychology Today published an interesting article about what influences one to quit their job and strike on their own. Several studies also show that small businesses are becoming more inclusive, with more minorities setting up their own ventures.
Many are deterred by the cost of setting up a business, as well as by the uncertainty of the outcome. Several small businesses close within the first year of operation, according to data by the Small Business Administration. Also, small business owners barely get by with their earnings, or still make less than those who have waged jobs.
Assuming the risk of failure comes with the territory of small business ownership, and it takes a certain type of personality to accept this and other risks. This study published by the University of Central Arkansas’ Small Business Advancement National centre examines the psychological qualities of entrepreneurs. Researchers used a DISC test (Dominance, Influence, Steadiness, Conscientiousness) to evaluate several small business owners, and got the following results:
- Those who started a small business exhibit dominance traits, and have “a desire for independence.” However,
- “No specific personality trait emerges as a determining factor that explains why people start a business.”
A different study published by the United States Association for Small Business and Entrepreneurship offers these characteristics as strongly related to the propensity of entering a new market:
- Higher ambition
- Strong locus of control (the amount of control that individuals think they can have)
So what is the motivation behind starting a business? The Psychology Today article cites an example of a person who was fed up with his office’s policies, harassment, and backstabbing. Some people also are less than thrilled about having a boss. From personal experience, I can say that having a bad boss can make not only your job, but your life miserable. It can get to the point where you keep toying with different excuses to not show up to work every time you wake up in the morning.
The UCA study also cites these reasons for starting a business:
- Wanting independence
- Previous experience
- No other economic alternative
- Family history
- Job satisfaction
- Finding the right opportunity
It seems like there is a complex relation between personality traits and the influence of internal and external factors in the creation of a small business. Given the amount of factors that come into play in the creation of an enterprise, research has yet to identify the key “ingredients” that make up the archetypal entrepreneur.
Business Insider Emails & Alerts
Site highlights each day to your inbox.