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Quiz: Are You the Entrepreneurial “Type”?

businesswoman1.jpgEver wondered whether or not you are an “entrepreneurial type” of person?

It would seem easy enough to find out: The Internet is rife with quizzes promising to assess your “entrepreneur-ability” in terms of personality, skills, experience, and background.

But watch out! Many such tests are nonsense. They’re based on folk wisdom, and lack any basis in rigorous research.

So here’s a reliable true/false quiz to test whether you are an entrepreneurial “type.” I adapted these questions from a comprehensive new study of entrepreneurship completed earlier this year by Professor Scott A. Shane (on which more later). In this quiz, “entrepreneur” is defined as someone starting a new business of any kind:

1. Entrepreneurs share similar psychological profiles, such as being leaders, risk-takers, or adventurous

2. Most entrepreneurs are under 40 years of age

3. Among entrepreneurs, people with strong networking skills outnumber “lone wolfs”

4. College-educated people are less likely to become entrepreneurs

5. The desire to make money is the most common reason why people become entrepreneurs

6. Working for someone else decreases the chances that a person will become an entrepreneur

7. Immigrants are more likely than non-immigrants to become entrepreneurs

8. Most entrepreneurs work in technology, software, and other high growth sectors rather than in mature industries

Ready for the answers? Easy enough: All the statements are false.

Here are details:

1. People who become entrepreneurs generally share similar psychological profiles such as being leaders, risk-takers, adventurous, or adventurous
False: As a group, entrepreneurs show no consistent or characteristic psychological profiles. For every study concluding that entrepreneurs are adventurous risk-takers, another finds they are timid risk-avoiders.

2. Most entrepreneurs are under 40 years of age
False: More than 60% of business owners and more than 54% of self-employed workers in the U.S. are 45 years old or older.

3. Among entrepreneurs, people with strong networking skills outnumber “lone wolfs”
False: Compared to salaried employees, entrepreneurs have fewer mentors and get less help from other people.

4. College-educated people are less likely to become entrepreneurs
False: College education (though not necessarily graduation) is more common among entrepreneurs.

5. The desire to make money is the most common reason why people become entrepreneurs
False: The most common reason for becoming an entrepreneur is the wish to avoid working for others. In fact, most entrepreneurs earn less than they would in comparable salaried jobs.

6. Working for someone else decreases the chances that a person will become an entrepreneur
False: Experience as a salaried employee increases the probability that someone will become an entrepreneur.

7. Immigrants are more likely than non-immigrants to become entrepreneurs
False: Immigrants are no more likely than their non-immigrant compatriots to start their own businesses.

8. Most entrepreneurs work in technology, software, and other high growth sectors rather than in mature industries
False: Worldwide, the overwhelming majority of entrepreneurs work in mature, mundane industries such as food service and insurance. Relatively few entrepreneurs work in innovative or high-growth sectors.

Here’s the bottom line: If you’re an over-40, married, college-educated white male with ten years experience in a mature industry,illusions_of_entrepreneurship1.jpg you’re the most likely entrepreneurial “type.”

Pretty uninspiring, huh? Well, the reality behind received wisdom often is.

The key to understanding these surprising facts lives in remembering that Professor Shane’s definition of “entrepreneur” includes all self-employed people. It’s a fair definition, but one heavily skewed toward sole proprietorships: one-person, undifferentiated, work-at-home enterprises without employees, started on a shoestring, in mature, low-growth industries (not biotechnology or software), managed by a principal without ambition (or plans) to expand. It is these tiny enterprises—not the Googles of the world—that account for 80% of all new businesses.

The good news is that these facts say nothing about the vast individual differences between people, or your particular aptitude or appetite for entrepreneurship.

Remember, this is all based on plain, boring demographics that happen to add up to a counterintuitive profile of entrepreneurs. I compiled this quiz from an extremely readable book by Professor Shane entitled The Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live By.

Here’s my takeaway: Forget the Web quizzes. Read my Entrepreneurship Primer, sit down with a double espresso, and start planning your own entrepreneurial venture—regardless of your profile.

(This essay first appeared as a guest post at Get Rich Slowly)

You may also enjoy:

The Surprising Truth About Why People Become Entrepreneurs

Entrepreneurship: A Primer

In Praise of Salaried Employment

Making Money: The Right and Wrong Questions to Ask

6 Comments to Quiz: Are You the Entrepreneurial “Type”?

On Nov 13, 2008, Pace commented:

Interesting! I’m curious as to what the traits of successful entrepreneurs are. I wonder if they would be demographically different or if it’s all due to individual variation.

On Nov 13, 2008, by Tim commented:

Great question, Pace. Choice of industry is probably a better predictor of success than demographic factors or personality. If you started a software company between 1982 and 2002, for example, you were 608 times more likely to have your company join the Inc. 500 than if you started a restaurant, according to Shane. Hmmm .. maybe it’s time for a post along these lines.

Good luck with your upcoming visit. Your family will be overjoyed to see you.

On Nov 14, 2008, Anon commented:

Regular reader and love the site, but haven’t I seen this article before?

On Nov 14, 2008, by Tim commented:

@ Anon – Yes, it appeared in a slightly different form at Get Rich Slowly as a guest post on October 26. Thanks for reading (and writing)!

On Nov 17, 2008, Anon commented:

…ahh yes, if I had read more carefully I would have seen that credit at the bottom of the post. (My bad.) It was actually GRS that first introduced me to your site … long ago …. Your blog often gives me a chance to have a reflective moment in the middle of my day. Thanks!

On Feb 23, 2010, gea commented:

I hope that there will be more meanings of evaluating the types of entrepreneurial venture. Because I am looking for more meanings.Thank You Very Much…………………………………………..I read more meaning in your site.

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