Why Start a Business – Home business Carnival #9

Last week, link when announcing this Carnival, I asked the question: why start a business? I’m not the only one.

Finding an answer, however proved to be more challenging! Mike Linksvayer points us to a very relevant set of studies on Entrepreneur Motivations. From the first study (Viralli 1991) of Italian Entrepreneurs, we learn that:

Among multiple reasons that people can choose from, “aspiration to a higher income” is mentioned by less than half of the entrepreneurs
as a motivation for engaging in entrepreneurship (47.1%). In contrast, non-pecuniary factors are considered to be much more important.

In fact the study finds that the top reasons are:

  • desire to be independent (78.9%)
  • better exploit one’s own technical capabilities (53.6%)
  • better exploit one’s own managerial capabilities (36.6%)
  • commercial capabilities (31.3%)
  • family tradition (14.1%)
  • other factors (7.9%)

A later study (Virally 2004):

… reaches very similar findings covering a somewhat broader set of reasons to start a firm. The desire for autonomy and independence again emerges as the main reason to become an entrepreneur, while pecuniary factors such as profit expectations or the intention to exploit a market niche only take an intermediate position.

The full study is available from Entrepreneurship as a non-profit-seeking activity (PDF).

More on the reasons to start a business here (older post, but still relevant) and here. And of course, starting a business also comes with its challenges and risks.
You can read more on the wealth building aspect on Why starting a business is the first step toward achieving wealth, or on the success factor element.

And one more aspect why you would start a business is to take advantage of a market ineficiency as pointed out by Peter in What’s this got to do with the price of tea in China?

And if you are still wondering why you should start a business, read Michelle’s article on Starting your own business and Nancy’s day by day account of her business tribulations, starting at day 1.

Thank you everyone who contributed! If you’d like to host an upcoming edtion, drop me a note.

The 10th edition of the Home Business Carnival will be hosted at simplifythis.com and the theme will be “Operations for your Home Business (Getting paid, Sales generation, or other Operational concerns”. Submit your articles now. I look forward to reading this new edition!

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