Is Entrepreneurship the Best Way to Escape Poverty?
Three tips to growing and maintaining a small business
Becoming an entrepreneur is the idealistic endeavor of the great American dream. With the rush of our capitalistic society and the never ending grind of the 9-5 work life, starting your own business may seem like a leap worth taking. But will becoming an entrepreneur push you up into the one percent or keep you grounded in poverty?
The Sobering Statistics
The answer is, it’s complicated. While it can mean a lifetime of success for many such as prominent businessmen like Bill Gates, Warren Buffet, or Mark Zuckerberg, it can mean a lifetime of financial stress and instability for the thousands of those in between. The truth is, 20 percent of new companies fail within a year and only 50 percent survive through their fifth year, according to data collected by Crowdspring. With the statistics stacked against the modern businessman, it’s hard to understand why anyone would take the risk.
Stories of humble lower class families climbing their way to the top sneak onto our newsfeeds every now and again, but these cases are the exception to the rule. The price of failure is far greater for those already living below the poverty line, and it would take a great deal of educational and economic reform to even out the playing field. If we look at the families of Gates, Buffet and Zuckerberg, we’ll find prominent attorneys, congressmen and dentists. These are hardly occupations held by the lower class because of the education and money needed to get there—resources the lower class simply does not have.
It’s easier to move up a rung on the ladder when you have the financial security of family or friends to fall back on. Aspiring entrepreneurs of the lower class will find themselves sinking deeper into poverty at the expense of a failed business. This is not to say that starting and maintaining a business is impossible, but it’s the reality that the American dream is not as attainable as it may seem.
Tips to Maintaining a Small Business
1. Get started with as much of your own money as possible
Many small business owners look for loans to cover their business start up costs. The common misconception is that once the business is up and running, they will be able to pay off the loans in no time. Since may new businesses take several months or even years to turn a profit, stacking up loans and interest rates is not a sustainable financial plan.
2. Create a solid business plan
Starting a new business takes a great deal of planning to ensure success. If you don’t know where to start, begin by outlining your business plan. What is your business idea? Who are your competitors? Is there a need for your service? How is your business unique? By answering these questions, you will have a better idea of how your business can grow.
3. Never stop learning
No matter how successful your business becomes, keeping up with industry trends and software is an important step to staying relevant.
What do you think about entrepreneurship as a way to escape poverty? Let us know down in the comments.
This article originally published on GREY Journal.