New kid on the business block

The common factor in many, if not most, of the legends of American business is entrepreneurship. This involves someone in the private sector creating an idea for a new business and investing capital to support its foundation.

While they can invest their personal funds, often they can find family or friends known as “angel investors” to contribute money, take out bank loans, or obtain venture capital through a firm that supports upstart businesses.

Government agencies such as the Small Business Administration can also provide financial assistance for startups. The history of capitalism features numerous examples of now-millionaire or billionaire businessmen beginning from humble backgrounds as entrepreneurs.

The modern PC probably would not exist had young undergraduate student Bill Gates not invested his livelihood into Microsoft and his DOS operating system — and where would the worldwide Virgin Group empire be today without entrepreneurial genius Richard Branson?

While Gates may have led to the invention of the modern PC, would we have Apple’s i-Technology without the innovations of Steve Jobs and Steve Wozniak? The premise of the free market economy is that individuals are able to invest as much as they desire into private businesses.

While controversy exists as to whether this system places too much wealth into the hands of a select group of business tycoons, there is no question that it has enabled the U.S. economy to flourish into the world’s most prominent.

To start your own business, you must be willing to accept the possibility of failure and the financial and the personal opportunity costs associated with such an endeavor.

Business data from the U.S. Bureau of Labor Statistics indicates that approximately 34 percent of upstart enterprises become bankrupt after two years of operation.

You must also have an idea differentiating yourself from competitors or develop another competitive advantage which will draw customers and revenue.

Entrepreneurship experts from Harvard Business School suggest that to truly make your endeavor a success you must take the initiative to invest your time and money against the potential of failure, and avoid letting other commitments such as school or work get in the way. Almost all entrepreneurs encounter resistance from competitors and outside forces and must learn to persevere in the face of opposition to succeed.

Written by Elizabethtown College Students In Free
Enterprise, a nonprofit organization that teaches others the principles of free
market economics. Students, faculty and staff are strongly encouraged to visit
the SIFE blog at etownsife.blogspot.com. Contact sife@etown.edu with any
questions. Originally published in the Etownian on April 24, 2008.