If you are contemplating the launch of your own venture, you have many important decisions to make. Chief among them, in all likelihood, is whether you're ready to found. In his book The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup, Harvard Business School Professor Noam Wasserman examines crucial decisions founders face during the startup journey. He notes that making the choice to found without considering professional capabilities and personal circumstances could lead entrepreneurs to found too early, or too late, and find themselves in untenable circumstances (or full of regret about a path not taken). In a world where some well-known entrepreneurs such as Bill Gates and Michael Dell started their founding journeys at young ages, Wasserman's findings, based on a dataset of 9,900 founders, and other Kauffman Foundation research, highlight several features of the entrepreneurial journey that might surprise you.
Building human capital, in the form of your own skills, experience and industry knowledge, can equip you to deal with founding challenges. In Wasserman's study, these included experiences with building and leading teams, and anticipating the effects of organizational growth. The process of building human capital through work experience, Wasserman argues, also can contribute to the building of social capital -- i.e., the relationships that can be useful in the execution of a new business. In the Kauffman-funded survey "The Anatomy of an Entrepreneur," 96 percent of founders deemed prior work experience as an important success factor (of those, 58 percent considered it very important). In terms of social capital, 73 percent of those surveyed identified professional networks as important to their success, and 70 percent considered their university education important. More than 75 percent had worked as employees at other companies for more than six years before founding their own.
So why not wait a while before founding? Waiting can set you on a path where you are more likely to be "handcuffed" to your employer or to being employed, notes Wasserman. You might enjoy your nice job title and salary. Over time, your personal circumstances may limit your willingness to accept the personal and financial risks associated with founding, e.g., family and children, or a mortgage. The result: lower willingness and/or ability to accept risk. Indeed, most respondents in the Anatomy survey, when asked about barriers others might face in founding companies, commonly cited lack of willingness or ability to take risks as a major factor (98 percent). Ninety-three percent viewed the time and effort involved to be an important barrier.
The good news? The Anatomy survey found that nearly 70 percent of respondents were married when they founded their companies, and almost 60 percent had at least one child. Wasserman pushes potential founders to plan ahead to avoid the golden handcuffs by adopting a low "personal burn rate" and saving a cash cushion. But every mindful and informed entrepreneur-to-be should evaluate how their professional and personal circumstances could contribute to their likelihood of success as an entrepreneur. Where gaps exist, find ways to fill them through opportunities to learn more, add founding team members of complementary skills, or seek ways to diminish the risks that could have a negative effect on you, your family or your business.