December 21, 2014

The Power of Optimism: 91 Percent of Entrepreneurs Confident

Power of optimism entrepreneurs

Startup entrepreneurs have to be optimistic in order to overcome the challenges of starting a business. So in a way, it really isn’t a surprise that the majority of entrepreneurs surveyed are optimistic about the year ahead.

That confidence seems to come from within entrepreneurs – not necessarily from conditions around them.

The survey, released recently, says a whopping 91% of entrepreneurs are confident that their businesses will be more profitable in the next 12 months. Of those, 49% are “very confident.”  The survey was conducted on behalf of the Ewing Marion Kauffman Foundation by LegalZoom, based on numbers from the the fourth quarter of 2013. 

Yet, interestingly, a majority don’t believe the economy will actually improve during the next year.  In the survey 47% think the economy will improve.  Yet 32% think the economy will remain the same and 21% think it will deteriorate.  That right there tells you something about the psyches of entrepreneurs.

Many entrepreneurs have an unstinting faith in themselves and their ability to start and grow a business, regardless of the conditions around them.  Yes, they may be pragmatic and recognize that the economy and market conditions might not be ideal.  

But when are conditions ever “ideal?” 

Some household name businesses were launched and built during slow economic times — Microsoft, Revlon, FedEx just to name a few.  Even during slower economic times, customers still buy.  The economy goes through cycles.  There will always be times of slower growth and times of faster growth. 

If you are waiting for conditions to be just perfect, you may wait forever.  While one entrepreneur is making plans for when things will be “just right,” another is out seizing the day and grabbing that opportunity.  The economy isn’t ever going to be just right.  Instead of waiting for the economy to “get better,” be a leader and be part of making it better by seizing and building opportunities.  Successful commerce drives the economy.

And that’s what the entrepreneurs in this survey seem to know instinctively.   It’s about the power of optimism and belief in their businesses.

A total of 1,375 entrepreneurs responded in the survey, from startup entrepreneurs who formed their business entities in the previous six months.  The Kauffman Foundation is known for its support of startups.  LegalZoom provides incorporation filing services. The company had been planning to file an IPO, but withdrew that in early 2014 and instead announced plans to sell a large stake to Permira, a European private equity firm.

Image: Kauffman LegalZoom Startup Confidence Index

12 Comments ▼

Anita Campbell - CEO


Anita Campbell Anita Campbell is the Founder and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses, and also serves as CEO of TweakYourBiz.com.

12 Reactions

  1. This article is really misleading. Results come from a survey to which only young entrepreneur did participate with their company younger than 6 months. What would you expect from these people? Have a lower turnover for 2014 while their company only has some months existence? Would you expect new entrepreneur to be pessimistic while they’ve just started their business? This study does not include the results from entrepreneurs running their business for already some time. It is not “91 % of entrepreneurs” that are optimistic but “91% of NEW entrepreneurs” and this makes a difference.

  2. Thank you, Yves, for your comment. Not sure why you think “this article is really misleading.”

    (1) The article mentioned in the first sentence that it relates to startup entrepreneurs. To my mind, startup = new. We’re not talking about established entrepreneurs.

    (2) The article makes it clear it’s based on a survey and the results relate to those surveyed.

    (3) The article also reveals the universe from which those surveyed were taken.

    (4) People may take a while (years) after going into business before incorporating, so I’m not sure “new” is all that accurate either.

    Perhaps what you REALLY intended to say was that the title didn’t reveal all the details. While I’ll agree that the title doesn’t say “new” entrepreneurs, please understand that titles never reveal everything. Note the title doesn’t say “all” entrepreneurs, either. Now that would have been misleading. Titles would be a mile long if we tried to fit everything into the title.

    So we do the best we can, and we even have editors go over the titles. :)

    – Anita

  3. Thanks for your kind answer.
    A start-up generally needs some years to get into a running business, it is common to have a start-up hosted 3 years until it reaches maturity.
    Start-up certainly refers to something new but not necessarily to something brand new with only some months existence. I would be interested in the comparison of survey results for entrepreneurs with start-ups older than 2 years (i.e. that are about to get mature and autonomous), I’m not sure they would share the same optimism. The 5 first years are generally the most critical for an organisation.
    Details regarding the surveyed organisations are provided in the last paragraph only while I would have expected it clearly stated at the beginning of the article. Going through the article I had no way to detect that it was concerning only very new start-ups and thought results applied to all start-ups. I was surprised and pleased to see a so widely shared optimism since it is certainly an important factor for an efficient organisation development. This misunderstanding was enforced by the title and staid until I reached the end of the article.
    I however appreciate the effort regarding the provision of links to source information, this is great.
    I am glad that you take the required time to collect and share information and understand that there may be competitive requirements that limit the possible options.
    Thanks for this discussion and clarification.
    Kind regards,
    Yves

    • Hi Yves, you are correct that entrepreneurs who have been in business longer would have a different sense of optimism. For example, the NFIB has been conducting an optimism index of small businesses for about 30 years. We frequently report on that optimism index here, also. That’s not a startup index — it covers established small businesses. Here’s the latest coverage we did of it:
      http://smallbiztrends.com/2014/01/small-businesses-optimism-index-survey.html

      As you can see, that article gives a very different view. It also covers a Hiscox survey of yet a different universe of small businesses (mainly those in the professional services industries).

      As for being misleading, I do want to point out that we assume people will read the entire article. It’s not a long article — the entire thing is only 410 words. There was definitely no intention to mislead.

      • I fully agree and understand that there was no intention to mislead.
        The link provided in your last comment is really great. It’s interesting to see the dispersion of the results between countries. thanks for letting me know about it :-)

  4. They should be or they should not be in a business to begin with. As a business owner, your opponent is yourself. Sometimes, your success will depend on your outlook. Being confident brings you in front of your competition right away.

    • Confidence really is key. May not be the only key factor, but it’s so HUGELY important and can make the difference between you making it or not, and pushing hard(er) or not.

  5. I love the quote here “if you’re waiting for conditions to be just perfect, you may wait forever.” That reminds me of the common suggestiion: “don’t wait for all the lights to be green before you leave the driveway.”

    I’ve always believed that what drives startups is specifics, not general environment. The startups make it or not based on founders’ effort, product-market mix, market need, and execution. It’s micro economics, not macro.

    • Laura, that’s a good saying.

      And I would add, so much in a startup business depends on an entrepreneur’s ability to start with a positive outlook, and work through the issues facing the business with a positive frame of mind. Embrace every problem and issue as a puzzle to be overcome somehow.

      Positive thinking isn’t everything, but it certainly helps.

      – Anita

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