Differences Between Small Business Owners and High-Growth Entrepreneurs 1

I’m fascinated by data Steve King of Small Business Labs published a couple of weeks ago in Comparing Small Business Owners and High-Growth Entrepreneurs. This makes perfect sense to me: I would expect the general small business owners — which makes me think of restaurants, car washes, hardware stores, dry cleaners, etc. — to be significantly different, as a group, from high-growth entrepreneurs.

To do this we analyzed small business owner survey data from the Small Business Success Index (SBSI), produced by the University of Maryland and Network Solutions.  We compared this data with the results from a 2009 study of the motivations and backgrounds of high-growth entrepreneurs – An Anatomy of an Entrepreneur.

If you guessed that the high-growth entrepreneurs tend to be more educated, you were right. Here’s what Steve says:

About 95% of high-growth entrepreneurs have graduated from college and 47% have advanced degrees.  Slightly less than half (47%) of small business owners have graduated from college and only around 5% have advanced degrees.

And here’s a disturbing note on women:

Women own roughly 30% of small businesses.  While that’s lower than their share of the overall workforce, it’s significantly higher than the less than 7% of high-growth entrepreneurs who are female.

And I’m not at all surprised to see that motivation is also different:

The top reason for starting a company according to high-growth entrepreneurs was “building wealth.”  This was listed as the 4th reason by small business owners.  Small business owners listed “working for yourself” as the top reason for starting their business.  This came in as the 4th choice by high-growth entrepreneurs.

Finally, I like what Steve says about why this may be much more important than just idle curiosity about different demographics:

The main reason we’re interested in this topic is we believe policy makers are too focused on high-growth companies and entrepreneurs … the millions of U.S. small businesses are also important – especially for groups underrepresented in high-growth firms (women, minorities, those without a college education).

About the Author Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry. Follow Tim on Google+ Read more »

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