When you dreamed of starting a business was there a problem you were trying to solve or was your future business startup a franchise or other existing model? According to the Kauffman Foundation, the largest foundation in the world dedicated to supporting entrepreneurial growth, almost half of all business startups are founded by “user entrepreneurs.” What is a user entrepreneur and what why is that important?
Maybe carpentry is your thing. After work, you enjoy working off some stress by heading to the garage and building something but for the longest time you’ve wondered why nobody has made a certain tool? It seems so simple, really, but nobody has invented the tool you need that would make some part of your hobby even easier.
You, being the inventive craftsman that you are, set out to invent that tool and after some trial and error, it works. Not only do you use it yourself, you mass produce it and make a company out of it. You are a user entrepreneur because you started a company from a need in your own life and now sell it commercially.
According to a study done by the Kauffman Foundation, 46% of innovative startups that have stayed in business for five years or more were started by user entrepreneurs like you although they only make up 10.7% of all U.S. startups.
Why is that good for you?
First, user entrepreneurs receive more venture capital and angel investment funds. Nearly 6% of these startups report receiving outside funding during their first six years of operations. Next, user entrepreneurs have a larger amount of human capital. Since they were able to design the product and run the business, their potential for success is greater than other entrepreneurs. Finally, user entrepreneurs have a great likelihood of being founded by women and minorities, a demographic that is largely underrepresented in the small business space.
Is That You?
Are you a user entrepreneur? Is there a product that would solve a problem you have that you wish were on the market? If there is, and you have dreams of owning your own business, consider designing the product and marketing it to others. If your product solves a problem in your own life, it’s likely that others could use it too.
This study found that user entrepreneurs possess skills and talents that give them the variety of talents needed to start and grow a business. Is that you?