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Greif Center survey spotlights Entrepreneurs' joys, lessons, challengesFounding a Business 'Difficult' but Experience of a LifetimeAugust 20, 2007 • by News at Marshall
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- Almost two-thirds of respondents (62 percent) said starting a business "has been difficult." But almost all the respondents (94 percent) agreed that their "entrepreneurial journey has been enjoyable."
- Though the average respondent had seven years of experience in an industry before starting their business in that field, nearly a third (32 percent) had no experience whatsoever.
- The two factors most likely to correlate with success and strong company growth were previous work experience in the same industry and successful previous startups.
- Almost half (49 percent) neither conducted a formal feasibility study nor wrote a business plan before starting their company.
- Friends and family were overwhelmingly the top source of both financial (80 percent) and non-financial support (73 percent) in the first two years of these companies.
- Few received financial support from the U.S. Small Business Administration (7 percent) or other government agencies (6 percent), despite numerous programs to encourage company creation. Angels and venture capitalists played an equally modest role in funding most startups in the first two years.
- Though almost two-thirds of the companies (64 percent) have fewer than 20 employees, most (71 percent) have created jobs over the past two years.
- Of the companies willing to divulge revenue figures (about half of those surveyed), five in six (86 percent) reported revenue growth over the past two years. More than a third (36 percent) saw their sales double.
Starting your own company is difficult but the journey is worth it, say most Southern California entrepreneurs in a first-ever survey by the Lloyd Greif Center for Entrepreneurial Studies at the USC Marshall School of Business.
"Starting your own company can be extremely challenging, but for so many of the people we surveyed, it's also one of the great experiences of their lives, because they control their own destinies," said Greif Center Director Tom O'Malia, holder of the Orfalea Director's Chair in Entrepreneurship. "Not only would they do it again, many of them already have. More than half were on at least their second start-up. And they repeatedly talked about the importance and the joy of doing what you love, to make all the sacrifice and hard work worth it."
All students in the Greif Center's introductory classes must find and interview an entrepreneur whom they don't know and who is running a growth-oriented business. Those interviews teach students how to overcome fears of "cold calls," and frequently lead to important new relationships with the entrepreneurs, many of whom become mentors, business associates, even partners and investors, said O'Malia.
For the first time this year, students also completed a short survey of each entrepreneur they interviewed. Greif Center professor Helena Yli-Renko collated and analyzed the results of 211 such surveys. O'Malia said the center plans to make the surveys an annual examination of the experiences of business creators in Southern California, one of the world's most intensely entrepreneurial regions. Though Southern California has only 23 Fortune 500 companies headquartered here, the heavily populated region is home to an estimated 400,000 small and mid-sized businesses and one of the world's most vibrant economies.
"This survey provides a snapshot of the typical Southern California entrepreneur, as well as some important lessons learned from their experiences," said Nandini Rajagopalan, the Greif Center's research director. "As we conduct more of these surveys in coming years, we expect to build a compelling portrait of the changes and challenges facing entrepreneurs in a dynamic, globalized Southern California economy."
Among the survey highlights:
The surveys also yielded several consistent lessons learned by the entrepreneurs during their journey. Perseverance and passion are vital to success, but so is the ability to work hard, plan, learn, take risks, and carefully manage cash flow. The importance of doing what you love, the survey suggests, can make all the difference.
For access to the survey results, please go to: www.marshall.usc/greif/research/entrepreneur-survey-report-2007.htm
About the USC Marshall School of Business
Consistently ranked among the nation's premier schools, USC Marshall is internationally recognized for its emphasis on entrepreneurship and innovation, social responsibility and path-breaking research. Located in the heart of Los Angeles, one of the world's leading business centers and the U.S. gateway to the Pacific Rim, Marshall offers its 5,700-plus undergraduate and graduate students a unique world view and impressive global experiential opportunities. With an alumni community spanning 90 countries, USC Marshall students join a worldwide community of thought leaders who are redefining the way business works.