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Log In / Register | Aug 14, 2018

Professor: The Truth about Entrepreneurship in America

Scott Shane, professor of entrepreneurial studies and economics at the Weatherhead School of Management, Case Western Reserve University, says that his research shows that entrepreneurship is doing better than one might think in America. “The Internal Revenue Service data on the fraction of Americans’ income that comes from different sources—the fraction that comes from American entrepreneurial activity, running a business of some kind—is up threefold since the early 1980s,” he states.

On average, people are going to make about the same amount of money working their own business as they would have working for someone else, but their job satisfaction is 2 1/2 to 3 times as high, he notes.

But business owners, says Professor Shane, are still making the same mistakes that they have been making forever: They think their business idea is unique, but it’s not, or they think the profit margins will be better than they turn out to be. Shane recommends testing out their idea ahead of time rather than committing to the first idea that comes to mind when there may be a better one down the line for them.

He continues that entrepreneurs often start out thinking that they’re going to make more than they actually will. They don’t legally set up their business the right way. They don’t keep adequate records. They don’t hire well. They don’t treat customers effectively. They don't get invoices out on time.

Those are things that the budding entrepreneur could easily learn ahead of time, but many don't.

It's not enough to be good at the thing the business is doing, such as painting well, Shane points out. The would-be entrepreneur must also be good at running a business.

Hear what the professor has to say in this interview. It starts at 3 minutes 38 seconds into the audio and ends at 23 minutes and 9 seconds.

Is Entrepreneurship Dead? The Truth About Startups in America is the professor's latest book, published May 8, 2018.

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