Every year, more than 30,000 entrepreneurs establish a company that
contributes to growth, new jobs and innovation in Denmark.
That number could be greater, according to a new study. In fact, a number
of people considering a job change have not made a final decision on
whether they want to be an entrepreneur or an employee.
While previous studies have shed light on why entrepreneurs choose to
establish their own business, these studies have not previously taken into
account that some potential entrepreneurs take the plunge into
entrepreneurship while looking for a new job. Nor do the studies take into
account how they are doing.
A price to pay
This approach is called a hybrid start-up form, and there’s a price to pay,
says the professor behind the study, Kim Klyver from the Department of
Entrepreneurship and Relationship Management at SDU.
In this new study, Kim Klyver, together with international colleagues,
followed a representative sample of Danes who are either considering
turning entrepreneur or who, in addition to entrepreneurship, are also
looking at vacancies. One year later, the researchers returned to the
participants to find out whether they managed to establish their business.
– Our research shows that the hybrid start-up form is detrimental to the
chances of a successful start-up. When people are starting a new business
while looking for a new job, they are 2.5 times less likely to found a
business, compared to those who go all-in to follow through on their ideas.
That’s a quite significant difference, Kim Klyver says.
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– What’s interesting is that it was previously believed that there were
advantages to being a hybrid entrepreneur, because you have a secure income
and a network to draw on. But that proves to be problematic in the actual
start-up process. If people really want to start a business, it pays to go
all-in and stay fully focused and prioritise it, the professor explains.
One in five strives for both
The study also shows that many Danes pursue the entrepreneurial dream while
applying for a new job at the same time. As many as 21 percent choose to
hedge their bets on both; a much larger number than Kim Klyver had
expected.
– This is a surprising number of people, and this explains why many people
have not succeeded in creating their own business. At the end of the day,
it’s because there is something else that succeeds for them when they try
out different options at the same time.
– When people do both, they divide their time and spend perhaps half their
time on applications and the other half on starting a business. Therefore,
it’s a genuine concern that regardless of the outcome, one may end up
either in a semi-good position or with a semi-good start-up. However, I
wouldn’t go so far as to say that it’s always best to stick to one of the
options, Kim Klyver says.
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He also points out that certain groups are more likely to opt for the
hybrid start-up form. While some probably do it out of necessity, for
others it may be an opportunity to try something new in their career. Among
the participants in the survey, it is especially the unemployed, part-time
employees and people with extensive management experience who alternate
between budding entrepreneurial ideas and applications.
From part-time employee to entrepreneur
Jesper Troelsen recognises that investing in one’s entrepreneurial career
while being a part-time employee can be quite challenging.
The method behind the study
-
The survey is a representative sample among Danes who are in the process of considering their careers.
-
The researchers phoned 20,000 random Danes and asked them if they are considering or in the process of starting their own business, looking for a new job or both at the same time.
-
A year later, the researchers returned to those who were either interested in trying their hand at entrepreneurship, or who were considering both, to find out if they managed to found their business.
-
A total of 718 Danes participated in the survey, and the results are published in the Journal of Business Venturing entitled ‘Having your cake and eating it too? A two-stage model of the impact of employment and parallel job search on hybrid nascent entrepreneurship’. Paul Steffen (University of Adelaide) and Carina Lomberg (DTU) are co-authors.
Today, he solely runs his own company, GetClients, which helps companies
with chatbots and Messenger marketing. But when he first took the plunge to
become an entrepreneur, he also had a part-time job on the side.
– I acquired an existing company and had the opportunity to work shorter
hours at my then-workplace so I could run the company after work.
Financially, it was, of course, an advantage that I received a salary every
month, but being unable to focus 100 percent on your start-up also has its
challenges.
– As an entrepreneur, you’re wearing many caps every single day, and it’s
obvious some of the caps fit better than others, says Jesper Troelsen, who
quickly received more inquiries than he was able to handle and therefore
eventually chose to give up his part-time job.
Not succeeding is not a failure
Although the results are significant, Kim Klyver, as already indicated,
does not believe that one should completely abandon the hybrid start-up
form. Instead, he makes an appeal to both potential entrepreneurs and their
surroundings:
– Setting up a business is hard work, even if you’re not looking for a job
at the same time. When people choose to do both, they need to be even more
aware that there’s a price to pay and that you have to prioritise and
ultimately make a choice.
Kim Klyver also says you shouldn’t judge yourself too harshly if your
business doesn’t get off the ground.
– Even if you end up shelving your idea because, for instance, you land an
exciting job instead, many will probably still feel like a failure when
evaluating themselves. We have to do away with that notion, because the
reason is that they have chosen one path over the other, he says and
concludes:
– You often hear that opinion from your circle of friends. Once somebody
has stated they are considering starting his or her own business, but
abandons the idea after six months, many will then think 'well, it didn’t
work out' and 'it bombed'.
– When we judge each other as we do all the time, it’s important not to
judge a given decision on its own. A human’s life consists of loads of
decisions and intentions, and often we tend to judge each and every
intention and decision completely independently of the others rather than
try to understand the entire palette of decisions.
Illustration: Mikkel Larris, SDU