The entrepreneurs of the '90s. Who they are how they create successful start-ups.
Everything's changed -- money sources; competitive strategies; how technology gets used and how partners get called on; who the founders are and how they manage, do research, and think about growth. In short, the new new-business model isn't what you're used to
Starting a business has always been a Bungee jump. Call it thrilling, terrifying, addictive perhaps. But never safe. Ideas fail to hold. Markets are missed. Not everyone bounces back. Still, time was when even the least resilient business could count on one safety net. It was called a growing economy. In the mid-1980s expanding markets might have indulged the sins of inexperience and given even a half-baked start-up another try. Not so, today. Hard times have made starting a business an entirely new endeavor with no margin for error. One that demands more precision and more perseverance from a new breed of founders. They are the survivalists of the '90s, launching their ventures in a punishing environment -- amidst capital shortages, crowded markets, and a stubborn recession. Conditions may not improve too soon, with long-term forecasts promising modest economic growth of only 1% or 2% a year. And although the hostile climate is sidelining many (start-up rates are down nationally), founder fever continues to run high among a diverse group of would-be entrepreneurs. More experienced, more deliberate, more sobered by the times, these new converts grow daily in number. Who are they?
Founders Are More Diverse
More Women
More Minorities
More Corporate Refugees
Count among the entrepreneurial ranks in the '90s nearly as many women as men, and founders who are likely to be older, better educated, and equipped with more skills and accumulated capital than the generation before them. People like sales manager Julie Logue and her husband, Kitson -- a veterinarian and an M.B.A. -- who cashed in a 401(k), sold the Mercedes, and poured their savings into staking out a small niche selling dietary dog treats from South Bend, Ind. Or Susan Michaels, the popular host of a television talk show in Seattle, who sank several years' savings from her six-figure salary into a retail shop for women. Or Ed Bettinardi, age 55, who left a position as vice-president after 30 years with Manville Corp. to start Innoventions, in Littleton, Colo., with his partner.
More Women. At 33, Susan Michaels could already hear the clock ticking. "There are lots of old farts in television, but how many are female?" she reasoned. "I knew sooner or later, I was not going to have a job in broadcasting." Looking pretty and pert made for a less-than-secure living. Besides, after 13 years, it was getting old. So was moving from market to market. "I was never one of those people who wanted to be their own boss," she recalls. "I just got tired." With a year left on her contract, the Seattle talk-show host resolved to start her own business renting formal wear to women in nearby Bellevue. As a local celebrity and regular at charity balls, she'd have a head start.
There are thousands like her. One of the fastest-growing entrepreneurial factions, women now own almost one out of every three sole proprietorships in the country. They are starting businesses at more than twice the rate men are, reports the Small Business Administration (SBA). On average, like Michaels, these women garner 10 to 12 years of experience before opening their doors. And they do it, in many cases, for almost reactionary reasons: to escape the glass ceiling, gain the flexibility to raise a family, or win access to opportunities closed off to them in a corporate world.
More Minorities. While white men remain the dominant flavor today, look for an already mixed menu of entrepreneurs to become even more varied. The '80s ushered in profound changes in the assortment of people starting businesses. Between 1982 and 1987 (the most recent Bureau of the Census figures available), minorities started businesses at twice the rate white men did. The number of minority-owned companies jumped 64%. Asians nearly doubled the number of companies they own. Hispanics increased their business ownership by 80%. Blacks, too, showed signs of increasing business ownership.
More Corporate Refugees. Early anecdotal evidence suggests that growing numbers of those turning to entrepreneurship are corporate refugees, pushed rather than pulled into their new ventures by joblessness and career immobility. More than half a million jobs have been lost since July 1990, more of them white collar than in any other recession in history. As many as one out of every three jobs lost in the last two years has been eliminated permanently.
As a result, finding a new job, in some industries, is now no less arduous than launching a business. Outplacement firms counseling discharged executives report a dramatic rise in the number who opt to go it alone. A study published by the National Federation for Independent Business in 1990 revealed that one in four entrepreneurs were unemployed before starting a business. There's no telling how many others may have been insecurely employed before striking out on their own. The entrepreneurs of yesteryear may have been driven to start a business, come hell or high water. In the 1990s it's the hell and high water that will be driving many into business.
Take Kitson Logue. When the $200-million pet-food company where he worked went through a second buyout, it may have posed no immediate threat to his marketing job, but it promised to wreak havoc on his personal life. "These buyouts and mergers turn your life upside down. It looked as if every year and a half we'd have to pick up and move to another city. I wanted to get control of my life," he explains. At age 33, he solved the problem by starting Stewart Pet Products with his wife, Julie.
