What is driving Australians to start up businesses?
Are you sitting at work, stewing over a long-held start-up idea while silently cursing your boss for his or her incompetence?
If the answer is 'yes' you have much in common with many budding entrepreneurs, according to a study conducted by StartupSmart.
Our recent ‘Have you got what it takes to be an entrepreneur?’ quiz (you can still give it a whirl here if you want to test your business-owning mettle) unearthed some interesting insights into the next generation of Australian business builders.
Of the 520 people who took part in the poll, 90% agreed or strongly agreed that owning their own business was a long-held ambition.
A further 91% agreed or strongly agreed that they needed to be challenged to avoid becoming restless, with a further 75% believing they could do a better job than their bosses.
Quitting your boss
According to Julia Bickerstaff, founder the Business Bakery consultancy, the idea that you can do it better than your boss is a growing driver of start-ups in Australia.
“It’s getting easier and easier to start something up and a lot of people can do something online on the side and experiment,” she says.
“I think there’s a great dissatisfaction in the ranks of big business in Australia. There’s not a lot of respect for the likes of Telstra and Vodafone any more. A lot of the people employed by big businesses don’t feel any loyalty to them as they would’ve done 20 years ago.
“Back then, people would want to keep their nose clean to keep their jobs but now that the GFC has passed they know that they can step out of the workforce for a year, try something and come back again if it doesn’t work out.
“Often the reality of a business hits after you’ve started. You realise that perhaps your boss wasn’t doing such a bad job when you are suddenly at the helm.
“Having a day off a week to do something creative sounds like a great idea when you’re an employee, but it’s harder to implement that when you have to run your own business.
“I think there’s a fashionable element to being an entrepreneur too. It used to be a dirty word in Australia but it’s seen as exciting now. People can read someone’s story about starting up and realise that they can do it too.”
Ken Bennett, business academic and managing consultant at advisory firm Export One, says the motivation for many people to go it alone is “basic psychology”.
“We all think we can do it better than anyone else, it’s just human nature,” he says.
“People want freedom, to be independent and have a good quality of life, but entrepreneurs often spend more time on their businesses than they’d ever spend on their jobs.
“I often find that people that focus on a limited area can do that one thing better. But a business is a multi-component entity – having the biggest, fastest product doesn’t mean anything if the market doesn’t want it.”
Although there is a strong desire among StartupSmart readers to start up, there are glaring weak spots in their skills.
Only a quarter say they have significant marketing skills and less than a third were confident in their ability to create and launch a website.
And just 18% said they strongly agreed that they had enough savings to sustain a fledgling businesses.
Bennet says: “In a lot of tech firms, the entrepreneur isn't actually able to talk to other people and that’s the biggest impediment to their business.
“You need to know that the selling point of a microwave, say, isn’t cooking - it’s convenience. You need a holistic understanding of your business.
“If there’s a gap in the market and you’re the best out there, you have to educate the market, which is very expensive for a start-up. That’s why large companies let others pave the way and then move in on the tail without paying out the money.
“The other thing is that you need to watch your cashflow. You need savings for your operating costs from day one.
“A lot of start-ups run out of puff. Do you think that you will be up and running in three months and have enough money to cover this? Wrong. Double it.
“A lot of people work second jobs, essentially for nothing, to keep that cashflow running.
“Days off, holidays, weekends – those are the kinds of non-cash investments you will need to make.”
Finding the right partner
On the issue of savings Bickerstaff says: “It’s a major problem if you have nothing to live off. It’s a big risk to take.
“I’d play devil’s advocate though and say that if funding was too easy to get hold of, people would start-up everywhere and fail and be worse off.
“There needs to be that tension because there isn’t any pressure to do it properly if you’re getting hand-outs.”
Bickerstaff points out that there is another option other than to stick to a hated job or take the risk of starting a business by yourself.
“Some people are good at business but they don’t have an idea, while some people with ideas don’t like the business side. These people need to be married up,” she says.
“Many people who don’t know much about marketing or other skills are tenacious in investing in themselves and their business.
“Training yourself doesn’t need to involve a huge amount of dollars. It needn’t be a barrier.
“Take a look at start-ups that are doing well and aim to work at one of them as a general manager. The best partnerships are between someone who is obsessed by the business and someone who knows how to actually run the thing.”
Here are some selected results from StartupSmart's ‘Have you got what it takes to be an entrepreneur?’ quiz.