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The Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By

When we have needed to understand the empirical evidence and realities of a certain aspect of franchising, Blue MauMau has sought out Scott Shane.

In his latest book, The Illusions of Entrepreneurship, Shane declares, "The information in this book will help you to get the facts right and disabuse you of many of the myths about entrepreneurship." And after reading his book, I am convinced he is right.

As a publisher, I hear stories like franchise investors walking into a sandwich shop and deciding on the spot, "I'm going to own one of these." They are in pursuit of a dream. Consultants and journals publish such myths to help build heroic entrepreneur stories and dreams. It sells magazines while pleasing franchisor advertisors.

Shane, Professor of Entrepreneurial Studies at Case Western Reserve University, shares with us that most entrepreneurs do not engage in due diligence and writing business plans. And unfortunately, their bad information and over-optimism will lead them to make poor investment decisions. Shane makes a simple argument: Entrepreneurs should focus on industry segments that have higher profit and higher potential. He shares how to identify them.

The Illusions of Entrepreneurship is written in an easy to read and direct style. Besides charts and supporting evidence to explain why a particular myth isn't valid, all busted myths are summarized at the end of each chapter.

If you are interested in making informed investment decisions based on better evidence and less conjecture, then Shane's The Illusions of Entrepreneurship is an indispensable handbook to help point you in the right direction to make more profitable decisions.

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6 Comments

Books

Put a copy of Franchise Fraud by Bob Purvin with it and tie a nice ribbon around them.

If only Scott Shane's Book became a Best Seller!

The TRUTH is out there but the constructive fraud of the FDD(UFOC) when offered with the contract of adhesion will still trap many franchisees who will be indentured for years.

Thanks to Scott Shane for bucking the
status quo and putting the truth out there to be read. How can we push this book.

It would be a good idea to purchase this book and send it to John Kerry of the Small Business Committee and ask him why he is willing to use the veterans and the troops to stimulate the economy by setting them up for the preditor franchisors who will want those SBA Patriot Express Loan Guarantees from the SBA.

Mr. Blue MauMau's picture

Members Can Add Amazon Books To Our Community Library and Review

I wanted to remind members that they can add a book to be reviewed on Blue MauMau. Simply click on the lime green "share!" tab on the top right of the screen.

That shows you all the different types of content you can share here - e.g. podcasts, blog entry, news stories, weblinks, etc. Then click on the top entry - "Book Review".

  1. Once on the book review page, the first thing to do is click on Search Amazon  to find the book you want on Amazon.
  2. In the "Search for" field, enter the name of the book title you want to search in Amazon's library
  3. Once you find the book, click on the last link next to the book, "List Book and Write Review on Blue MauMau"
  4. Now write your own book review for the book

Our members and readers will now be able to buy the book through Amazon by clicking on the book photo. (Blue MauMau gets a portion of the sale.) And the franchise community (our readers) can write their own comments under your book review.

Mr. Blue MauMau

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  • See Blue MauMau FAQs for further detail on posting a book review
  • Book Review Library
  • FuwaFuwaUsagi's picture

    hmmm...

    I have mentioned this several times before and I hope some academic somewhere will take up the challenge.  But I would truly like to see a study that determines if business success, as defined by a profitability factor of "x", exists as anything outside of random chance.

    My suspicion is, that once analyzed, that the factors related to success will be shown to have low correlation to any characteristic of the owner of the business and have far more to do with the point in the business cycle the business is started, the type of financing, working capital management, and expense control. 

    FuwaFuwaUsagi

    Don Sniegowski's picture

    Entrepreneurship Quiz

    Here's a fun quiz on entrepreneurship that recaps some of the facts of Shane's book. After having just finished the book, I still missed a few.

     Take This Quiz to See If You Know About Entrepreneurship

    Don Sniegowski's picture

    Myth: Average Entrepreneur Makes More

    Scott Shane shares how low profits are on average for the few start-ups that survive.

    "Not only do most new businesses fail, but the typical start-up that manages to survive over time isn't very profitable. Only one-third of all owner-operated businesses generate more than $10,000 in profits annually."

    "And this lack of profits isn't because the owner-operator is pulling everything out of the business as compensation... Studies show that the average self-employed person earns significantly less than the average person who works for someone else... 35% lower..."

    Shane advocates that the key to avoiding such a typical scenario is to be informed and to choose well - something that Blue MauMau agrees with wholeheartedly.