Page 12 - Business Plans that Work A Guide for Small Business

Entrepreneurs Create the Future • 3

This first chapter provides a background of the state of entrepreneur-
ship in the United States, which firms beat the failure rule and why. The
chapter continues with an overview of attributes of successful people.
Next the chapter illustrates when ideas are opportunities. Our simple but
robust framework for opportunity assessment is the Timmons Model.

Entrepreneurship in America

To understand what works and what doesn’t work, it is useful to briefly
examine entrepreneurs. We can think of entrepreneurs as falling into
different categories based upon the stage of development of their busi-
ness. Nascent entrepreneurs are those individuals in prelaunch mode.
They have yet to pay themselves or any employees a salary. New busi-
ness owners are entrepreneurs who have paid salaries and their business
is less than four years old—a critical phase in entrepreneurship. Once
the business has survived and reached positive cash flow, usually by the
fourth year at the latest, the business is closing in on becoming a durable
enterprise, and the entrepreneur’s task moves toward building upon the
foundation already laid.

Nascent Entrepreneurs

Nascent entrepreneurs are those individuals who report that they are tak-
5
ing steps toward launching a business but have yet to pay themselves
or anybody else within the organization a salary or wages. In 2008, 5.9
percent of the adult population (or 1 in 17 adults) were in the process of
launching a business. Men are more likely to be nascent entrepreneurs
then women (1.3 men for every woman) but the rate of women becoming
entrepreneurs has been accelerating in the last 20 years. Entrepreneurs
are all ages, but most commonly fall between 18 and 44. They tend to be
college educated, but there are many who don’t even finish high school.
As we can see from the demographics, entrepreneurship isn’t confined
to highly educated men; it is an encompassing phenomenon within the
United States. Granted, there are periods in life when it is more likely
that a person will pursue entrepreneurship (mid-thirties), but exceptions

5 Steps might include seeking funding, a location, and supplies, or writing a business
plan, among other steps.