Hybrid entrepreneurs stand a lesser chance of success
If you try to start your own business at the same time as applying for a job, you are far less likely to succeed in your business. This is the result of a new study from SDU
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.
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.
– 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.
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.
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 failureAlthough 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
Kim Klyver is a professor at the Department of Entrepreneurship and Relationship Management. In his research, he is preoccupied with entrepreneurship, small businesses and growth processes, and he focuses in particular on themes such as networks, culture and institutions. He is also an adjunct professor at the University of Adelaide.