When we think of entrepreneurs, we tend to think of them in one of two camps.  The first is that there are lots of great, entrepreneurial opportunities out there waiting to be stumbled upon by the right person at the right time.  The second suggests that entrepreneurs make their own destiny and create those opportunities instead.

A recent study from researchers at the University of Texas at Dallas suggests a third possibility that draws comparison with an apple seed that has potential to grow into something great, but that potential is far from guaranteed.

Planting the seeds

“We are proposing that an entrepreneurial opportunity exists objectively, but that does not guarantee that if you identify it and try to exploit it, you’ll turn the opportunity into profits. You have to do it right, and often you have to put in the creative effort to make your product innovative. We also caution that, contrary to the creation approach, if the opportunity does not exist, no matter how creative you are, you won’t be able to make a profit,” the authors say.

So what does this mean?  Well there are implications for policy makers, and I’ve previously covered the INSEAD/Wipro reports looking at the innovative support architectures in place in various countries, all of which help to plant those seeds.  In addition to building such an infrastructure however, the authors advocate greater guidance and support on how to setup a business, and indeed how to respond should it fail.

“Policymakers should understand that when these youngsters venture into opportunities that don’t really exist, they are doomed to fail,” they say. “Failure rates can be high given their lack of business experience.”

The authors also believe there are implications for the education industry, as the process outlined in their study is one of envisioning a new future, devising your idea to change things, having the belief that it will work, and then implementing that idea.  It marks a break from traditional methods of teaching entrepreneurship.

“At the end, whether entrepreneurs made a profit or lost money, they can look back and draw conclusions,” they say. “If they made a profit, the opportunity was really there. If they lost money, it does not imply that the opportunity did not exist. It may mean that they didn’t do a good job.”

It’s tempting to fall into the trap of promoting entrepreneurship as an alternative to unemployment, but research has shown that this often leads to reduced incomes rather than rapid growth.  The authors suggest that appropriate education and training for entrepreneurs can be an effective way of alleviating that risk.