There is another entrepreneurial myth that needs busting. It is this one:
“Entrepreneurs are good at starting things, but cannot manage them once they begin to grow.”
I have been arguing that the problem is that we don’t consistently teach entrepreneurs how to manage growth. My experience has been that once we do, their success improves considerably. Most have never run a growing, successful business before. They just need the knowledge and tools. I have done this type of training with both our students and entrepreneurs in the community ever since I got back into teaching.
Now their is some empirical evidence that entrepreneurs ain’t so shabby when it comes to managing larger, successful businesses.
New research from Babson College by Prof. Joel Shulman finds that publicly traded stocks led by entrepreneurs, consistently outperform non-entrepreneurs by a wide margin. Stocks of entrepreneur-led companies significantly outperform non entrepreneurs.
Shulman suggests that because entrepreneurs try to keep costs low while vigorously growing the business — you just got to love that Bootstrapping spirit — entrepreneurial companies are well positioned to perform better than ever in a sluggish, recovering economy.
Shulman’s recent update on stocks for calendar 2009, show:
- Stocks of entrepreneur-led companies significantly outperform non entrepreneurs (YTD through 12/1/09, 650+ global entrepreneurs are up 93%).
- Stocks of “bureaucrat” companies underperform non-bureaucrats and entrepreneurs by a wide margin (these are stocks that individuals would sell or sell short).
- Stocks of Entrepreneur-led companies continue to outperform non-entrepreneurs even after adjusting by market cap size, sector, geography, or time period.
Jeff, your position is probably correct but I am bit sure it is the best option for the economy. Entrepreneurs are good at what they do. Adam Smith explained the gains from specialization. What we really need is to teach entrepreneurs when to turn over the management of their firms to the professional managers. Then they can use their skills to create another company.
Great Post.
I always find blog like this really interesting. It gives you a insight into a entrepreneurs life.
I think it is correct that entrepreneurs excel at working with very little to accomplish a lot. In my business dabbling, I have always looked for ways to operate on a very thin budget making the most out of the resources that area easy to get to and use.
I saw this idea from a marketer that seemed like the perfect entrepreneurial business plan of action.
The ideas consisted of using a diagram of stairs. Each step had a need or goal and a result. That result elevates you to the next step where there is another goal.
I will have to read up on your bootstrapping posts because I am willing to bet it is along those same lines.
I really like your blog and I look forward to reading more and learning.
Thank you.