Have you ever wondered if you have what it takes to be an entrepreneur? One of the most common ways to answer this question is to examine a cross-section of successful entrepreneurs and see how many characteristics you share with them. While this exercise isn’t necessarily the best way to address the question (as I’ll dig into later), it can reveal some important factors that may contribute to your success or failure.
So, what is the “average” entrepreneur like?
Do you assume that the average entrepreneur is a college dropout? The results may surprise you. According to a survey by the Kauffman Foundation, 95.1 percent of founders surveyed had earned a bachelor’s degree or higher and 47 percent had more advanced degrees.
This isn’t the only indication of higher education, either; roughly 75 percent of respondents claimed to have ranked in the top 30 percent of their high school classes, with 52 percent claiming to be in the top 10 percent. In their college environments, 67 percent of respondents claimed to be in the top 30 percent, while 37 percent claimed to be in the top 10 percent.
Age, race and gender
The stereotypical image of an entrepreneur is male and the data illustrate that, unfortunately, this is the case. Only 40 percent of new entrepreneurs in the United States are women, though this is the highest percentage since 1996. Across the globe, rates of female entrepreneurship are growing; female entrepreneurship grew, on average, 10 percent across 51 different economies, compared to a growth rate of 5 percent for males. Though men currently are more likely to be entrepreneurs than women, that gap is closing.
As for race, white entrepreneurs are more common than minority entrepreneurs. Black-owned firms represent only 7 percent of all U.S. businesses. Hispanic-owned firms represent 10.6 percent and Asian-owned firms, 4.3 percent. The lack of previous family business ownership, poor access to credit and lower levels of education all play a role here — though this gap, too, is shrinking steadily.
Then there’s age: It’s common to think of the “average” entrepreneur as someone in his or her early- to mid-20s, but research and anecdotal evidence illustrate that this isn’t necessarily the case. According to a First Round survey, only about 20 percent of founders polled were in their 20s, with just 3 percent falling between ages 21 and 25.
About half were in their 30s, and 32 percent were over 40. We can also look at anecdotal evidence showing that someone can be successful at almost any age; Ariana Huffington, for example, didn’t start the Huffington Post until she was 55.
If you come from a family with access to wealth, you’re more likely to become a successful entrepreneur. Therefore, the average entrepreneur has a well-heeled family background, or at least an entrepreneurial one.
There are a few reasons why this is the case. One clear reason is that people born to wealthy families typically have more money to funnel into risky ventures, which immediately gives them a higher chance of success — as well as a lower risk aversion, since the consequences of failure are significantly reduced. They may also have access to a family business, or family business contacts who can help them get started.
The birth order of siblings may also matter. A study from the universities of Reading and Birmingham in the U.K. found that the youngest sibling of a given family group was more likely to become an entrepreneur than any other sibling. The survey, which contacted more than 17,000 people who’d been born in 1970, found that among those born to non-entrepreneurial parents, last-born siblings were 65 percent more likely to go into business than first-born siblings.
Among children born to already-entrepreneurial parents, last-born siblings were still 50 percent more likely to go into business.
Are all entrepreneurs either billionaires or barely scraping by? According to a study from American Express OPEN, the average entrepreneur pays himself or herself an annual salary of $68,000. Depending on where you live and what your profession is, that might look like a comfortable living; or it might underwhelm you.
The same study found that about 15 percent of small-business owners surveyed had to work a second job in addition to their business to make ends meet.
The danger with averages
According to the data, the average entrepreneur is white, male, well-educated, in his 30s with older siblings and from a wealthy family background. He also earns a decent self-paid salary. Does that mean you can’t be an entrepreneur if you don’t fit that mold?
Of course not. These studies show that entrepreneurs come in all shapes and sizes, from all manner of backgrounds. It’s dangerous to play a game of averages when you study entrepreneurship, because entrepreneurs, by nature, are outliers. If you believe in your idea and have the passion to see it through, you’ll have a much higher chance of success than someone who “fits the mold” but isn’t willing to put in the time or effort.
Besides, the diversity of entrepreneurs is increasing, and the gaps that prevented certain people from becoming entrepreneurs in the past are — thankfully — starting to close.
For more content like this, be sure to check out my podcast, The Entrepreneur Cast!