Entrepreneurship is an important part of Santa Clara University's Strategic Plan. Campus programs are creating an entrepreneurial mindset in our students, faculty, alumni, and in the broader community. The University wants to support aspiring entrepreneurs who will start businesses, social enterprises, and other organizations that serve humanity.
It is important that we understand why people become entrepreneurs so that we can design supportive educational programs and advise others, particularly policy-makers, on how to help entrepreneurs. In a recent research paper, researchers in the U.K. reviewed more than 50 academic papers on entrepreneurship and identified seven reasons that people become entrepreneurs:
Reason 1: Achievement, Challenge, & Learning
This reason is quite familiar to those of us in Silicon Valley. The challenge of solving a problem using technology has motivated thousands of entrepreneurs here and abroad, and created some of the largest and most successful companies in history. To me, this motivation applies to anyone with a strong need for self-expression and a desire to create. I know chefs, graphic artists, musicians, clothing designers, vintners, and builders who have become entrepreneurs so they have a way to express their creativity, apply their skills, and solve challenging problems.
Reason 2: Independence & Autonomy
Independence and autonomy are profound and compelling human desires. Entrepreneurs set their own goals, pick their own partners, and face the consequences of their decisions. When I asked Phil Holland, the founder of the My Own Business Institute, about the benefits of his entrepreneurial journey, he responded: "The number one benefit (no close second): Living in a democratic, free-enterprise society, which gave me the freedom to follow my dream in my own business."
Reason 3: Income Security and Financial Success
I think this is really two motivations. Some entrepreneurs are motivated by the desire to create the next "unicorn" – a privately-held company with a valuation of over $1 billion (see examples). Far more common is the entrepreneur who is seeking financial security. They might be excluded from traditional employment because of limited education, poor language skills, illegal discrimination, or previous incarceration. For them, one of the best options for achieving financial security is starting a business and creating their own opportunity.
Reason 4: Recognition and Status
Depending on the community and culture, entrepreneurs can be either celebrated or vilified. Entrepreneurs who create enormous wealth for themselves and their communities are not automatically recognized as citizens we would like our children to emulate. Much depends on how they made their money and what they do with it.
Reason 5: Family
In many parts of the world, the family business is the only way to maintain financial and social stability. The well-being of the family is a powerful motivator for young entrepreneurs looking for a vocation.
Reason 6: Dissatisfaction with Current Work Arrangements
Remember the song “Take this Job and Shove It” by (ironically) Johnny Paycheck? A bad boss, poor pay, job discrimination, forced retirement, and no opportunity for advancement are strong motivators for potential entrepreneurs. So is being fired. Research has shown that layoffs associated with the Great Recession resulted in a rapid and significant increase in business start-ups and entrepreneurial activity.
Reason 7: Community and Social Motivation
Many entrepreneurs are motivated by a desire to give back to the community or solve an ongoing social problem. Social entrepreneurs and their efforts to solve the problems of disadvantaged communities are the focus of SCU's Miller Center. The mission of organizations like Inner City Advisors is to create jobs in communities that need them the most.
Of course, the reasons described above are a simplification of the motivations of actual entrepreneurs. Nevertheless, this information can help SCU develop programs to support aspiring entrepreneurs as they begin their exciting journey.
[This article was originally posted on Santa Clara's thought leader blog Illuminate on Jan. 27, 2016.]