Starting a business can be daunting for low-income entrepreneurs, who often fear failure, a widely recognized concern. However, as they progress, they may also become apprehensive about success, which can entail unforeseen costs and challenges. Surprisingly, this fear of growth has received little attention in research.

A recent study by an expert from the Keough School of Global Affairs delves into this overlooked aspect and provides five practical suggestions to assist entrepreneurs in overcoming this fear and breaking free from poverty.

Facing fears

“This study is one of the first to deepen our understanding of the fears that poor entrepreneurs commonly face, in particular the unexpected and counterintuitive fear of success,” the researchers say.

“We believe it’s crucial to address these fears, or they can become a behavioral roadblock that prevents individuals from navigating the uncertainties of creating a new business. We have identified several key priorities that policymakers and support organizations can focus on in order to work more effectively with them.”

The authors investigated the concerns of disadvantaged entrepreneurs through six focus groups involving participants from the Urban Poverty and Business Initiative program. Over 90% of the participants were people of color, and 68% were women. Among them, about 4% were formerly incarcerated individuals, 2% were refugees, and 1% were women residing in shelters. All participants hailed from underprivileged backgrounds.

Disadvantaged entrepreneurs encounter unique challenges, such as lower literacy levels, a scarcity mindset, significant non-business obligations, and limited access to financial resources—obstacles less prevalent among middle- and higher-income business professionals.

A common issue

Fear is a common experience among low-income entrepreneurs, whether at the outset of a new venture or as their businesses evolve and confront fresh challenges. While less explored, the fear of success can have detrimental effects, leading to procrastination, self-sabotage, and a reluctance to make crucial decisions conducive to business growth.

In response to these findings, the researchers have outlined five recommendations to mitigate these fears:

1. Introducing entrepreneurial role models to showcase diverse pathways to success and the various outcomes achievable in a thriving enterprise.
2. Incorporating entrepreneurship education early on, emphasizing hands-on learning experiences that make success more tangible and extend beyond mere profitability.
3. Providing mentorship opportunities, where seasoned entrepreneurs assist business founders in comprehending and navigating the trade-offs between different levels and types of success.
4. Integrating venture creation into workforce development programs, traditionally focused on preparing individuals for employment under others, to offer entrepreneurship as a viable career option.
5. Designing more adaptable and comprehensive microfinance initiatives that link investments to incremental progress towards defined success objectives and milestones.

“We hope that educators, policymakers and the various stakeholders who work with poor entrepreneurs will apply these recommendations,” the authors conclude, “and, in so doing, help them overcome their fears and embrace entrepreneurship as a viable pathway out of poverty.”