10 myths about entrepreneurship, all of which are wrong

September 15, 2017

Prof. Nikolaus Franke gets to the bottom of common entrepreneurship-myths

Nowadays, politicians and the media are fully aware of the significant role that entrepreneurship plays as far as prosperity, innovation and growth are concerned. However, as people's interest in this topic is increasing, numerous myths and misconceptions have taken root in the minds of many.

Prof. Nikolaus Franke, Academic Director of the WU Executive Academy's Professional MBA Entrepreneurship & Innovation and Head of WU Vienna's Institute for Entrepreneurship & Innovation, explores the 10 most widespread myths about entrepreneurship, and explains why all of them are wrong.

A team is putting together their fists
Entrepreneurs are not lone superheroes. Entrepreneurship almost always involves team effort. Photo © CC0 License

Myth 1: An entrepreneur is a lone hero

Wrong. It is great to see that the media frequently report about entrepreneurs such as Richard Branson, Elon Musk, Mark Zuckerberg or Jeff Bezos - individuals who, unlike some other well-known figures, have really made a difference in society. Yet the spotlight is rarely shone on their teams. This can easily give people the wrong impression that entrepreneurs are lone superheroes who decide everything themselves and get things done single-handedly.

In reality, entrepreneurship almost always requires a joint effort. Many different skills are needed when it comes to making a start-up succeed. No single person is likely to have the technological expertise and the business know-how it takes. Hence, it is important to cooperate and share tasks from the start. Successful entrepreneurs are team players. Moreover, they are leaders who inspire their teams with enthusiasm for their company visions.

Myth 2: It is vitally important for an entrepreneur to have a game-changing idea

Wrong. Entrepreneurship is a journey. It often starts with an idea, but almost always this idea changes in the process of interacting with potential clients, partners, suppliers and financial backers. It is no exaggeration to say that the ability to interact with others and the willingness to learn something from these “experiments” make all the difference when it comes to achieving success as an entrepreneur. Successful entrepreneurs are not usually ingenious inventors; rather, they know how and where to find ideas, how to identify opportunities and how to capitalize on them by taking ideas forward and making them a reality.

Myth 3: Entrepreneurs are all hipsters and rock stars with glamorous lifestyles

Wrong. Entrepreneurship is first and foremost hard work. One does not make a vision a reality by working “nine to five”. The average employee would most likely be astonished at how much entrepreneurs really work. The popular misconceptions about the entrepreneurial lifestyle exist for 2 reasons. Firstly, building and fostering relationships by constantly interacting and networking with clients, financial backers, potential partners and other actors of the entrepreneurship community is an important aspect of an entrepreneur's job. Outsiders can easily mistake these activities for fun and partying. Secondly, entrepreneurs are indeed more satisfied with life and more motivated than other groups of society. It is an established fact that experiencing fulfillment through achievement, creating something new and taking decisions independently makes people happy. To paraphrase Camus: We can picture entrepreneurs as individuals who are happy, despite all the hard work and all the challenges facing them.

Myth 4: Entrepreneurs are above all interested in money

Wrong. Generally speaking, entrepreneurs are, of course, aware that the only real way of accumulating great wealth is to achieve business success, and most of them would not mind getting rich. That said, empirical studies have shown time and again that successful entrepreneurs are first and foremost driven by the joy they find in making their ideas a reality. The enormous growth of what is known as social entrepreneurship also shows that it is a fallacy to say entrepreneurs are interested mainly in money. Competitions like the Social Impact Award, or the activities of Ashoka demonstrate in an impressive manner how entrepreneurial drive can help overcome social problems such as poverty, hunger or educational shortcomings.

Myth 5: It is crucially important for an economy that the number of newly founded businesses is as high as possible

Wrong. Numbers alone do not say much. What really matters is that there are start-ups with high growth potential. A single successful start-up in a growth industry such as biotechnology may be more significant in terms of new jobs and economic growth than dozens of new flower shops or pubs. It goes without saying that these businesses, too, are important if there is to be a well-functioning market with healthy competition, but as far as the overall economic development is concerned, they are less significant.

Myth 6: The survival rate of new businesses shows how entrepreneurship-friendly an economy is

Wrong. The survival rate can be high for a wide variety of reasons other than an entrepreneurship-friendly climate. It may, for instance, be due to the fact that many low-risk businesses have been founded. Economically significant high-growth start-ups are innovation-driven - and innovation, by definition, involves risk. Even the best-laid plans and the highest degree of expertise do not offer absolute protection against errors and mistakes.

A start-up is a bet on the future, and one can never perfectly control or predict how markets, competitive conditions and technologies will develop. As disappointing as it may be for entrepreneurs when their projects fail, from a societal point of view it is extremely important that these high-risk innovations get off the ground. In an innovation-oriented economy, it is thus inevitable that some newly founded businesses fail. What matters in this context is that the government and society support entrepreneurs who are unsuccessful through no fault of their own and cushion them from the negative consequences of failure.

Myth 7: Austria does enough to support entrepreneurship; if anything, there is a lack of transparency

Wrong. In Austria, there is above all a lack of broad-based, general support. Support services, such as inspiration, information, networking opportunities and counseling in the run-up to starting a business, are nowhere near the levels that would make good economic and societal sense. It has to be said that in recent years many very sensible initiatives have been launched in Austria to support entrepreneurship, but they usually target later stages of the process when a team has been built and a prototype, a business model and a strategy have been developed. Basically, students at all educational institutions must have access to early-support programs and initiatives such as WU Vienna's En­tre­pren­eur­ship Center.

Myth 8: Governments should take action to support high-growth start-ups in their development

Yes and no. While technology-oriented, innovation-based high-growth start-ups are key drivers of growth and prosperity, it is practically impossible to recognize “unicorns” such as Facebook, WhatsApp or Zalando when they start out. Government support schemes should reflect this reality and be designed to maximize the number of new start-ups with promising prospects in terms of future growth and success.

It is like in sports: If one wants top athletes, one must start by encouraging as many people as possible to play sports—following that, one can identify the biggest talents and take action to support them in their development.

Myth 9: Only those who start a business need entrepreneurship

Wrong. In this day and age, an entrepreneurial mindset and entrepreneurial skills are indispensable in almost any career. They can be regarded as key competencies for the 21. century. In the age of digitalization, where more and more routine tasks get automated, those who lack qualities such as the readiness to take risks, a performance-driven attitude, creativity, flexibility, open-mindedness or the willingness to accept responsibility will find themselves struggling. In order to be able to succeed, one needs to have specific entrepreneurial knowledge and skills, such as a methodological toolkit for identifying and assessing business opportunities early on as well as for developing a strategy, coping with organizational matters, securing funds and capitalizing on the innovation. Hence, it is vital that schools, universities and other education providers teach their students about entrepreneurship.

Myth 10: You cannot learn entrepreneurship; entrepreneurs are born not made

Wrong. Successful entrepreneurs are like olympic champions: If someone has no talent whatsoever, even the best training in the world will not turn him or her into a 100-meter champ. That said, all olympic champions of the past 100 years underwent years of focused training to develop and harness their potential.

When it comes to entrepreneurship, the situation is no different: Prospective entrepreneurs need to bring certain things to the table; otherwise, they cannot succeed. Still they have what it takes and their potential is discovered, nurtured by training and rounded out with knowledge, contacts and experience, their prospects of success will significantly increase, as is impressively demonstrated by the successful graduates of WU Vienna's bachelor's, master's and MBA programs in entrepreneurship.

As mentioned, entrepreneurship almost always involves team effort. International teams are an important part of the Professional MBA Entrepreneurship & Innovation. If you want to learn more, click here.

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