Quiz time. What's the most important characteristic of a majority of successful entrepreneurs? Is it:
High appetite for risk?
These are all necessary of course, but research suggests that there's another factor at play in most entrepreneurs' success stories (most, but not all, it's important to note). It's that they grew up rich--or at least wealthy enough that they don't really have to worry about money.
(What do you think? Do the wealthy truly have such a big advantage, or can any entrepreneur succeed with a good enough idea and great timing? Let me know, and if there's enough interest we'll revisit this question in a future column.)
Writing for Quartz, Aimee Groth looked at research from a number of sources on the relationship between family wealth and entrepreneurial success. She found that "the most common shared trait among entrepreneurs is access to financial capital--family money, an inheritance, or a pedigree and connections that allow for access to financial stability."
In their paper, Smart and Illicit: Who Becomes an Entrepreneur and Do They Earn More, University of California, Berkeley economists Ross Levine and Yona Rubinstein found that entrepreneurs earn significantly more than employees and non-incorporated self-employed. They also found however, that they tended to be "white, male, and come from higher-income families."
Because when you come from money, it's more likely that you can set aside immediate financial concerns and focus on building your business. Even if you're living frugally--which you should be as an early stage entrepreneur anyway--you're less likely to be concerned that you won't have a safety net if things don't work out.
Also, you'll be able to do things like:
• Go without a salary during the early stages of your company;
• Contribute significant amounts of your own savings;
• Draw on a large pool of other wealthy people who might contribute to a friends and family round of investment;
• Draw on a network of other entrepreneurs and mentors for support; and
• Maintain a high degree of confidence that even if things don't work out with your startup, you'll "always" be able to find another opportunity.
As Gross puts it:
For creative professions, starting a new venture is the ultimate privilege.... While it seems that entrepreneurs tend to have an admirable penchant for risk, it's usually that access to money which allows them to take risks. ... When basic needs are met, it's easier to be creative; when you know you have a safety net, you are more willing to take risks.
Of course this doesn't mean that people who don't come from money can't succeed as entrepreneurs. But if you're of normal or less-than-normal means and you build something successful, it means you can be even prouder of your achievements for not having had built-in advantages.