Entrepreneurship for the rich or poor?
When you look at the most successful entrepreneurs around the world and dig deeper, most of them come from very humble beginnings. Some may have called them "poor" before, yet yesterday's "poor" are often tomorrow's "rich"! Is there a correlation in this or is this just a random coincidence? We have asked ourselves the same question and here's what we think...
Before we delve into this, let us first revisit the meaning of an entrepreneur. Investopedia defines this as "an individual who, rather than working as an employee, runs a small business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale. The entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes".
So why is it that the poorer individuals are more likely to become entrepreneurs? We believe that the key to understanding this is hinted at in the very definition we quoted above. Yes, you guessed it right! It is about risk and rewards! Let's break this down then.
Everyone knows that entrepreneurship's journey is often lonely and full of perils. Being at times unemployed, frustrated, many sleepless nights and lots of stress to make ends meet, no free time, full responsibility for the people you employ, being in charge of everything that the business does - finances, admin work, HR stuff, marketing, strategy, safety and security, etc etc... the list goes on.. and these are just some of the constant worries on the entrepreneurs' minds. Why oh why then would anyone want this? Are they acting irrationally? Absolutely not! It is the rewards, or shall we say the expected rewards, that keep them going! Rewards of self-realisation, wealth, confidence, assurance, comfort, security, peace of mind, success, fulfilled dreams! Those are just some of the rewards that successful entrepreneurs attain over their lifetimes! Why then would anyone NOT desire this? Are they acting irrationally for not wanting this? Absolutely not! It is the risks that keep them away from the path of entrepreneurship. We hear you say... well, it's a vicious circle! But we also know that it's not, as otherwise there will be no entrepreneurs in the world! Exactly! True entrepreneurs are those individuals who break this vicious circle, they find ways to rationally become irrational! But how does this happen?
Well, it's simple really! For those individuals who truly break this vicious circle and become true entrepreneurs, the rewards should be greater than the risks. And this is where it all makes sense. What kind of rewards can you give to an already rich individual who seemingly has a lot in his lifetime to make up for, to quote just a few of those risks mentioned above, the sleepless nights, stress, frustration and no free time that come with being an entrepreneur? Would it be rational to give away an apple (so to speak), work extremely hard for years and go through tons of stress for many months, just for a chance to get that apple or two back? Who would do that? Would you? Probably not. However, now put yourself into the poorer man's shoes. What sort of rewards would you need when you don't have much to lose in the first place? Would you be willing to give away a bite of an apple in exchange for a full apple or two? Would you do it then? Probably yes. Incidentally, the very risk of losing a bite of the apple for nothing is much higher for the poor than losing a full apple is for the rich. This, in turn, gives an even higher level of motivation for the poor to make the investment worthwhile and turn it into a success story!
You see, it follows that risks and rewards entail two completely different meanings to the rich and poor! But then the question is: once they become successful business people, what keeps those poor entrepreneurs going? According to the above logic, once someone becomes successful, she or he then also becomes prone to viewing the risk/reward relationship like the rich. This is certainly true with some entrepreneurs who then lose the momentum (and often their market shares too!); however, it is the fear of returning to 'those old poor days', it is the memory of those humble beginnings and their massive sacrifices along the way that keeps them moving forward, that keeps them being successful!
But we digress... is entrepreneurship then for the rich or poor? It is most certainly for both! It just happens so (for reasons discussed above) that the poorer are better motivated to think outside the box, take in more risks and grab the opportunities that others don't see. But does this mean that the rich are at a disadvantage as far as being an entrepreneur is concerned? Not at all! Indeed, quite ironically, rich may well have more opportunities than their poorer counterparts to begin with, yet they often don't see them the same way the 'poorer individuals' do. But that's a discussion for another time...
What are your thoughts on this topic? Do you know many successful entrepreneurs who used to be 'poor' before they ventured out on their own? Or perhaps they were always rich? If so, what do you think sets them apart from the others? Share your thoughts.
