When starting a business, the desire for independence and recognition of success are bigger motivators for entrepreneurs, when compared to being motivated to start a business out of necessity or due to unemployment.
The newly released 2019 Small Business Support Ecosystem Report, by Catalyst for Growth (C4G), shows that unemployment or having ‘no other choice’ is only ranked fifth as a reason for starting a business. The desire for independence and financial freedom, the need for achievement and success, persistent love for doing something, and taking advantage of an opportunity are all more important motivators for entrepreneurs who have taken part in support programmes in South Africa over the past year.
Click Here: To get in line to receive the report after it’s launch on the 24th of March.
C4G has developed a flagship cloud-based platform
for Programme Managers and M&E teams in business incubators, accelerators, ESD programmes and SMME funding teams, to help with monitoring and evaluating the holistic impact of Business Development Services (BDS), Enterprise and Supplier Development (ESD) programmes, and other small business support initiatives.
Each year we publish an ecosystem-wide report,
in addition to our ongoing reporting, where we share our insights with the public. We also compile programme-specific reports which are only available to the platform users who own those programmes, in which the success rate of their interventions are benchmarked against the results of similar programmes offered by others, or where the results of different BDS or ESD service providers may be compared.
While the earlier mentioned observations are interesting, there are more significant insights to be gained when correlating the motivating factors with indicators for business success and survival. The intention of C4G’s research is after all to offer evidence for practical decisions and policy-making. In doing a cross-tabulated analysis of the data, we can provide insights that can, for instance, help programme managers with the selection of programme participants, based on the likeliness of their success.
In this instance, the question to ask is if the motivation of the entrepreneur can be a predictor of the chance of business success? If so, it could be used as an effective tool for selecting participants into support programmes so that the best possible results are achieved from the investment in the selected entrepreneurs and their businesses.
The C4G data collected in the 2018/19 year reveals that entrepreneurs who followed an opportunity and are motivated to improve themselves through, for instance, achieving financial independence or recognition for business success, perform better and have higher business survival rates than those motivated by other factors. It follows that a programme is likely to have a better impact if the selection criteria include meeting these motivation requirements.
Our data shows that
entrepreneurs who start businesses because of their persistent love for doing something great are more inclined to start another business when their first venture struggles, compared to opportunity-driven entrepreneurs. They are not as persistent as those who are motivated to improve their situations or those pursuing an opportunity.
Another noteworthy trend emerging from the 2019 SBSER Report is that there is a clear correlation between the achieved educational level and the likeliness of starting a business to pursue a business opportunity as the main motivation for the entrepreneur. Higher educated entrepreneurs are more opportunity-driven, with entrepreneurs with post-graduate qualification being the most prone to starting a business to pursue perceived opportunities.
Other studies have in the past found that men are more likely than woman to be involved in opportunity-driven entrepreneurship, but the 2019 SBSER report does not support this observation. We could not identify any significant correlation between gender and the likeliness of opportunity being the motivating factor for the entrepreneur.
The focus by entrepreneurs on intrinsic development is particularly encouraging in the context of South Africa where entrepreneurship may appear to be a forced destiny and an escape from unemployment and poverty. And from a practical, programme management perspective, motivation may be used as an entry criterion to help select programme participants who are more likely to succeed with their businesses.
Read more about our findings in the 2019 SBSER.