The Essence of Enterprise Report 2016
6 Chapter 1: Celebrating the success of entrepreneurs
With a global presence in 72 countries and territories, HSBC understands entrepreneurs as they build businesses and create prosperity worldwide. Working together, HSBC Private Bank and Commercial Bank help to support the human ambition of individuals and families whose enterprise forms the backbone of global economic growth.
14 Chapter 2: The entrepreneur in context
22 Chapter 3: Learning from family business
30 Chapter 4: The future face of entrepreneurship
While their commercial ventures are recognised and valued, the spotlight is rarely given to the individuals behind these businesses. Much is known about the economic conditions necessary for entrepreneurship to thrive. However, much less is known about the personal and professional journey involved in building a business and becoming an entrepreneur.
This report aims to highlight the personal achievements of entrepreneurs and to understand from their perspective the influences that have allowed them to thrive, the obstacles they have faced and their strategies for success.
To achieve this goal we surveyed 2,834 entrepreneurs, defined as major shareholders in privately-held institutions. They included sole traders, owner managers, shareholders and executives in family businesses, equity partners in partnership firms, and strategic investors. We included businesses that were still privately held, as well as those that had been sold, listed or acquired by a private equity firm.
The average wealth of those who took part in the research was USD4.6 million and the average business turnover was USD6.5 million. However, the research aimed to follow the entrepreneurial journey, from those just starting out to those with many business achievements behind them.
We found that the journey of entrepreneurs is as diverse as the businesses they run. The personal motivations of entrepreneurs, as well as the social, cultural and generational contexts in which they develop their ventures, can have a significant influence on the type of business owner that they become. Yet there are also many factors that unite entrepreneurs the world over.
At HSBC we have the flexibility to support the unique human and corporate ambitions of entrepreneurs as they chart the next phase of growth and development for their businesses, as well as wider society.
We would like to express our gratitude to all those who have taken part in this year's study to provide this invaluable insight into the essence of enterprise.
Nicholas J J Levitt
Head of Global Solutions Group, HSBC Private Bank
countries & territories
average wealth of those who
took part in the research
The Essence of Enterprise report 2016 3
Personal motivation is the major factor driving the success of entrepreneurs.
What inspires them to create their enterprises is an indicator of their approach to business and likelihood of future success. Broadly, the population of entrepreneurs divides into four groups: Game Changers, Pathfinders, Trailblazers and Lifestylers.
Pathfinders are the largest group accounting for 40% of the global population
of entrepreneurs. They tend to be steady builders of businesses. Game Changers account for just 18% of the population, but they are most likely to be serial entrepreneurs and to grow larger enterprises.
Across all profiles, 64% of entrepreneurs believe it is their duty to have a positive social and economic impact on society and 74% gave to good causes in the preceding year. Moreover, one third of business owners contribute to society
by taking an unpaid role in the community or donating time or expertise to social causes.
Culture also has a significant impact on how individuals approach the challenges
of entrepreneurship. Business ownership in the United States, the United Kingdom, Germany and France is more typically high-frequency, with entrepreneurs starting, growing and then selling their businesses. Success is often measured in terms of the personal fortunes made in the process.
In Mainland China, Hong Kong, Singapore and across the Middle East, success is more likely to be judged in terms of the size of the enterprise built by the entrepreneur. These business owners adopt a collaborative approach to entrepreneurship with a focus on leveraging multiple sources of advice.
Contributions to good causes over the last year
% Approximately one third of business owners contribute to their community by
taking an unpaid civic role or donating time or expertise to social causes
Almost half of wealthy entrepreneurs come from a family that owned a business. These second-generation business owners have been set on the fast track to success thanks to their adoption of practical guidance and support in business building from their family. Over half of them had their first ventures funded by their families.
However, traditions of family enterprise have developed differently in Mainland China, Hong Kong and Singapore, and the Middle East compared to the United States, the United Kingdom, Germany and France. Across Asia and the Middle East, one in three second-generation entrepreneurs have joined the family business, compared to just 15% of those in the United States and Western Europe. Across all countries, though, this second-generation of entrepreneurs are looking to prove themselves independently either within the family business or through their own enterprise.
Success is often measured in terms of the personal fortunes individuals make in the process
In the East, one in
three second generation entrepreneurs have joined the family business
Indeed, the future of business ownership is changing as Generation Y entrepreneurs re-write the philosophy for success. Where the older generation prioritised self-reliance, the younger generation believes their success lies in their ability to leverage their network and to collaborate effectively.
Young entrepreneurs too are also more focused on how they can benefit the broader community. Seventy-nine percent of them have been involved
in charitable giving in the last 12 months and many have already established a trust or foundation to manage their giving, or undertake social investment.
The business turnover of the entrepreneurs under 35 in this research are five times larger than those run by their peers over 55
Generation Y entrepreneurs
re-write the philosophy for success
12 months and many have already
established a trust or foundation to manage their giving, or undertaken social investment
The Essence of Enterprise report 2016 5
CHAPTER 1: Celebrating the success of entrepreneurs
Among the business owners who participated in this study, there were four distinct profiles of entrepreneur. Each profile is grounded in personal motivation and each has a distinct path to success:
With an estimated 400 million entrepreneurs in the world today, one in every 19 people on the planet is currently engaged in activity to create or expand a business venture.
Collectively, these individuals create jobs and power economic growth. Yet privately, behind every business there is a personal story of hard work, dedication, passion and innovation.
Not all succeed. In fact, research suggests that as many as one in three entrepreneurial ventures fail entirely and the vast majority do not generate the returns that were originally expected. So the question, "what makes an entrepreneur successful?" is an important one.
This report examines this question in detail. Taking as its starting point the one factor that is common to all entrepreneurs - that of business ownership - the report identifies how personal motivation, background, experience and culture combine in some individuals to create their capacity to build bigger businesses.
The report also looks at how these factors vary across Hong Kong, Singapore, Mainland China, the United Arab Emirates, Saudi Arabia, the United Kingdom, France, Germany and the United States and how they vary in younger and older entrepreneurs. After all, the definition
of success is not static and nor are the factors that create its formula.
All of the 2,834 entrepreneurs who took part in this research have invested time, energy and money into private enterprise. Their average net worth was USD4.6 million and half of this total was the result of income or capital from their own businesses, or investments made into other entrepreneurial ventures.
Considering the paths they have taken to prosperity, there is undoubtedly some truth to saying that entrepreneurs make their own luck.
In fact, the research highlights that it is the unique, personal motivations of business owners that have the greatest influence on their corporate success. The factors that inspire each individual to start their entrepreneurial journey affect the kind of business owner they
become and the economic value they create.
Pathfinders are the most common of the four entrepreneurial profiles, accounting for roughly two-fifths of all business owners. These are individuals who choose a life of private business ownership out of a desire to have personal autonomy over their professional success. They want to be their own boss and believe entrepreneurship offers the best opportunity for them to increase their personal wealth.
Trailblazers are passionate about what they do and see entrepreneurship as a way to improve themselves. They are motivated less by a need to control their personal circumstances and more by the opportunities that business ownership affords to them.
Game Changers are inspired by the idea of making a difference. They want to have an impact not just in business, through bringing new products and services to the world, but also in the wider community.
As the name suggests, these entrepreneurs often go into business for lifestyle reasons. In particular, they want to ensure the needs of their families are met. Work-life balance is important, but more important still is the ability to provide security for their families.
Aside from these four main profiles is a fifth profile: those whose entrepreneurial adventure began unintentionally. This group accounts for approximately one in twelve of all business owners and they are the individuals who fall into business ownership as a result of other events in their lives.
While they may not have been originally motivated by an urge for entrepreneurship, those in this group also often achieve significant success. It seems that once their lives have taken a business-owning turn, the desire to survive and strive is ignited.
The Essence of Enterprise report 2016 7
Architects of success
The close association between entrepreneurship and economic growth means that wealth creation is often used as a measure of success for entrepreneurs.
In financial terms, the profile that has the greatest success is the Game Changer. On average they run businesses with an annual turnover of USD10.9 million and also have a higher than average personal wealth of USD5.2 million.
However, these are individuals who are geared to creating impact and, therefore Game Changers are also the least likely profile to define achievement purely in financial terms.
For them simply bringing a new product to the market or having social impact in the wider community is as much a mark of their credentials as personal financial gain.
In business, Game Changers have an average of five active enterprises to their credit. They are likely to have identified their interest in entrepreneurship early on, often while still studying or shortly after embarking on a professional career.
When seeking capital for their first enterprise, this group casts the net widely. They not only rely on personal and family wealth, but seek support from external investors including banks, other entrepreneurs and peer-to-peer networks.
With capital in place, the priorities for Game Changers are
Singapore has the largest concentration of Pathfinders (46%) followed by the United
States (43%), the United Arab Emirates (42%) and Germany (42%)
By contrast, Pathfinders put much more emphasis on financial security when writing their formula
for success. Yet, they typically have the lowest level of personal wealth of the four profiles at USD4.0 million.
They are also often running smaller businesses with an average turnover of USD4.9 million. For these individuals, the question of what holds them back seems particularly pertinent.
The answer lies in their autonomous approach to business-building. Growth is important to Pathfinders, but they rely on themselves to make it happen.
They believe that hard work and risk-taking are important elements of entrepreneurial achievement. Yet, as they have often self-funded their ventures in the start-up phase, their own experience has been one of managing and controlling their individual exposure.
They are more likely to remain caught up in a start-up mind-set, feeling the need to prove the concept and simply survive. They cite their lack of time as a major barrier and, as a result, have fewer ventures behind them.
It is not that they lack confidence in their ability to achieve their turnover goals, but rather they recognise that there are risks in letting their businesses fly.
straightforward: prove the concept, grow the business and then exit. Eighty-one percent state that they are actively growing their ventures and 45% expect to exit their businesses in the future.
Figure 1: How different entrepreneurs define success
At the point of selling a business, many Game Changers are
already planning their next investment. It is for this reason that Game Changers are evident in a wider range of industries than other entrepreneurial profiles. From tourism to healthcare, IT to agriculture, Game Changers are dynamic business builders across many sectors.
Lifestylers Game Changers Unintentional Entrepreneurs
0 15 30
0 15 30
0 15 30
0 15 30
0 15 30
0 15 30
Achieving a positive
Building a well-known
with a passion
impact in the
stability for the family
% of respondents
The Essence of Enterprise report 2016 9
"Start small and build up
- and don't forget your family along the way."
UNITED KINGDOM LIFESTYLER, FEMALE, AGE 66
While at one level Pathfinders may seem less successful in financial terms, accounting for 40% of all entrepreneurs, these are the same grafters whose personal risk-taking and effort is the backbone of
WORK HARD AND MANAGE YOUR RISKS
economic growth and stability.
Between these extremes, Trailblazers are marked out by their flair and energy. They are more likely to be involved in retail or media and believe that passion and innovation are vital qualities in the formula for success. However, their businesses are anything but whimsical.
Like Game Changers, Trailblazers typically run larger enterprises. Their average business revenues reach USD7.4 million and they employ 107 employees. Given the scale that they have achieved, it is hardly surprising that their business priorities too are oriented around growth and consolidation.
INNOVATE WITH PASSION
To better myself
To follow a passion
Their natural optimism and passion for business means they generally see fewer barriers to progressing their ventures than other profiles, and just over one in three of them is planning to exit their business
in the future.
To help their enterprises thrive in the long term, they seek to combine their own skills and expertise with collaborative input from fellow entrepreneurs and advisers.
Last but not least, Lifestylers are the kind of entrepreneur most likely to continue their business with little change. Often late bloomers, they are less likely to turn to external sources of advice for support. Instead, they look to family first and regard their ability to deliver financial security for their loved ones as the principal measure of their entrepreneurial achievement.
TAKE OTHERS WITH YOU
To offer a new product or service
To build a name for myself
To have a positive economic and community impact
To become more influential
"Don't give up: if it is
passion that has brought
you to this point, you will succeed."
UNITED ARAB EMIRATES TRAILBLAZER, FEMALE, AGE 26
YOU ARE ACCOUNTABLE TO FAMILY FIRST
The Essence of Enterprise report 2016 11
Engagement in society
While in business these four entrepreneurial tribes show markedly different responses to challenge and opportunity, they share a common sense of social responsibility. In total, 74% made contributions to good causes in the last year and 64% indicate their belief that
business owners have a duty to have a positive economic and social impact.
What is also particularly notable is the extent to which entrepreneurs are engaged in pro-bono activities in
When it comes to philanthropy, however,
Game Changers stand out once again for their desire to have an impact. Game Changers are significantly more likely than other entrepreneurial profiles to give to good causes and approximately a quarter have
a trust or foundation that they use for grant-making.
Indeed, Game Changers are less likely to make one-off donations or even regular donations to a single philanthropic cause. For them,
tackling social problems is not about transferring money or responsibility to others. Instead, they believe that having a positive impact in the
have made contributions to good
causes over the last year
the community, such as doing an unpaid civic role. Approximately one third of entrepreneurs are engaged in wider society in this way. A similar number also volunteer their time and expertise to support charities or other social projects.
This kind of involvement in the community varies little by profile, highlighting the sense of responsibility shared by many entrepreneurs to give back to those who supported them on their road to success.
community should be a direct and personal experience.
In fact, 51% of Game Changers say that they have a clear strategy that informs their philanthropy. This compares to just 37% of Lifestylers and 42% of Pathfinders.
That is not to say that these other profiles choose not to involve themselves in charitable activity. They are, in fact, active givers. Lifestylers in particular are likely to make spontaneous contributions in one-off or regular amounts and they are often active fundraisers.
Figure 3: Philanthropy among different entrepreneurs
Trailblazers Pathfinders Lifestylers Game Changers
Overall, these results highlight that entrepreneurship
is as much a state of mind as it is an economic activity. Entrepreneurs may share the common factor of business
"There is a clear strategy that informs my giving"
Types of philanthropic activities in the past year
ownership, but their motivations for entering the world of
independent enterprise vary significantly.
25 25 25
0 10 20 30 40 50 60
Making social impact investments
Leaving money through estate planning
Grant making through private trust
While many choose to become their own boss, others are more inspired by the change they wish to achieve, the passion they want to pursue or a desire to do the best for their family.
These priorities are all equally valid, but they have a profound impact on the way entrepreneurs approach the challenge
The Essence of Enterprise report 2016
% of respondents
of business growth, collaboration and even engagement with |society at large. Most importantly, they also determine the frameworks against which entrepreneurs measure their own success.
CHAPTER 2: The entrepreneur in context
This interplay between personal motivation and business strategy highlights that even the definition of success depends significantly on an individual's values and beliefs. Alongside these personal drivers, wider culture further impacts on the way entrepreneurs define their entrepreneurial achievement.
Crucially, when it comes to the economic activity of entrepreneurs, one question dominates: "When value is created, who benefits - self or society?"
The research suggests that those in Mainland China, Hong Kong and Singapore answer this question differently from those in
the United States, the United Kingdom, Germany and France. The Middle East nestles between these two dominant cultures, but in attitude there are strong similarities to entrepreneurs in Asia reflecting historical ties of trade and commerce.
Indeed, while each country has its own heritage of business ownership, the cultural norms in Western Europe and the United States, and Asia and the Middle East exert a powerful influence on the types of business ownership that emerge.
Around the world, entrepreneurialism is also nurtured differently, meaning that the activities and actions that individual entrepreneurs prioritise in the process of building businesses change as we move across continents.
To understand the success of entrepreneurs, it is therefore essential to measure that success within the correct context.
Starting with the all-important question of who benefits most from entrepreneurial activity, one marked difference is that value creation is defined not so much by personal fortune in Mainland China, Hong Kong, Singapore and the Middle East, but by the size of the businesses that individuals have managed to create.
The average size of business turnover across these Asian countries and the Middle East was almost USD10 million, compared to just USD5 million in the United States and Western Europe. Thus, successful entrepreneurs in Mainland China, Hong Kong and Singapore, and the Middle East are typically running businesses that are twice the size in revenue terms when compared
to successful entrepreneurs in the United States and Western Europe.
By contrast, in the United States, the United Kingdom, Germany and France, personal wealth is a more important marker of entrepreneurial success.
Looking at the personal wealth of those running larger than average enterprises, this relationship reverses: personal wealth of those in the United States and Western Europe is just over 60% more than those in Asia and the Middle East.
This is not to say that entrepreneurs in Mainland China, Hong Kong and Singapore and the Middle East do not go into business for personal gain. Almost one in five state that they are principally motivated by the desire to make money when choosing to become an entrepreneur compared to one in ten in the United States and Western Europe.
Simply put, culture has a profound impact on how entrepreneurs tackle the task of wealth creation, influencing both personal motivations and business goals.
"Find your passion, create
a plan to get there, and then follow the plan until it fails to satisfy your passion.
Repeat until successful!"
AMERICAN ENTREPRENEUR WORKING IN SINGAPORE, MALE, AGE 42
The Essence of Enterprise report 2016 15
Figure 4: Economic value created by entrepreneurs, by region
Business revenue Personal wealth
Asia & Middle East
In the United States and Western Europe, the most successful entrepreneurs - those running businesses with a turnover in excess of USD5 million - are perhaps best characterised as high-frequency business owners or serial entrepreneurs.
They often have 6 -7 businesses under their belt and
Asia & Middle East
US & Western Europe
0 5 10 15 20 25 30 35
0 5 10 15 20 25 30 35
In France, 21%
became entrepreneurs to follow a passion
In Germany and France, entrepreneurs tend to start their businesses between 29-30, compared to 34-35 in the United States and United Kingdom
almost half are planning to exit their current business at some point in the future. This compares to just 31% of successful entrepreneurs across Mainland China, Hong Kong, Singapore and the Middle East who have an exit goal, even though they are already running businesses that are twice the size on average.
Indeed, there is strong evidence that entrepreneurship is what you might call a mind-set across the United States, the United Kingdom, France and Germany. More than a quarter of all business owners in these countries state that they have always regarded themselves as entrepreneurs. This figure rises to 41% among those running larger enterprises.
More surprising still, 56% of these successful business
Figure 5: Reasons successful entrepreneurs go into business
owners in the United States and Western Europe are likely to have thought of themselves as entrepreneurs before they
To have positive economic
To do the best for my family
To follow a passion
To increase my personal
To be my own boss
Successful entrepreneurs in US and Western Europe
Successful entrepreneurs in Asia and Middle East
had even set up their first venture. This compares to just 21% of successful entrepreneurs across Mainland China, Hong Kong, Singapore and the Middle East.
Linked to the focus on serial entrepreneurship, and with almost half of entrepreneurs in the United States and Western Europe planning to sell their businesses in future, it is not surprising that there is a greater focus
on early-stage business priorities like proving the business concept and ensuring the business becomes sustainable in these countries.
Of note, entrepreneurs in the United States, the United Kingdom, France and Germany also place more emphasis on creating balance between their personal and professional lives. Indeed, one in eight states that this has been their greatest achievement, compared to one in seventeen in Mainland China, Hong Kong, Singapore and the Middle East; although interestingly, this priority is less prevalent among more successful entrepreneurs in the United States and Western Europe.
0 5 10 15 20 25 30
The Essence of Enterprise report 2016
% of successful entrepreneurs 17
Building business empires
In Mainland China, Hong Kong, Singapore and the Middle East, by contrast, entrepreneurs often believe that innovation must be teamed with persistence and determination in order
to build entrepreneurial value.
The most successful - those running businesses with a turnover above USD10 million - may have 3-4 businesses, but this is almost
"Act with passion. Cut away
from routine and get ahead of the competition. Your goal is to bring a suite of innovations to market."
FRENCH ENTREPRENEUR WITH A FAMILY BUSINESS BACKGROUND,
of all entrepreneurs in Asia and the
Middle East decided either at school or college to become entrepreneurs
64% of Chinese entrepreneurs have no intention to sell their businesses
The average age when Middle Eastern entrepreneurs set up their first business is just 26
half of the number of their counterparts in the United States and Western Europe. Rather than a series of sprints, these business owners are running an entrepreneurial marathon.
Indeed, one could characterise business owners in Asia and the Middle East as "training" for entrepreneurship from an early age. Notably, 37% of all entrepreneurs in these countries decided either at school or college to become entrepreneurs - compared to 27% in the United States and Western Europe.
Crucially, however, the most successful business owners in Mainland China, Hong Kong, Singapore and the Middle East are more likely to have spent a number of years in a professional role before they go it alone.
Once their enterprises flourish, sustaining that growth often becomes a personal passion. As a result, entrepreneurs in Asia and the Middle East are more likely to run larger enterprises with higher turnovers than their counterparts in the United States and Western Europe.
On average, an entrepreneur in Mainland China, Hong Kong, Singapore and the Middle East employs 100 staff and generates revenues of over USD10 million. These figures are roughly double the equivalent results for enterprises in the United States, the United Kingdom, France and Germany. Reflecting the maturity of their business ventures, their priorities often centre on expansion and diversification.
Interestingly, entrepreneurs in Asia and the Middle East are notably more concerned that the limits of their personal network may constrain their business growth. More than one third believe their lack of connections could hold them back. In China, where the term "guanxi" is used to describe the importance of relationship building to enable business and society to thrive, this increases to 46% of entrepreneurs.
Together, these findings may suggest that in general, entrepreneurs in Mainland China, Hong Kong, Singapore and the Middle East prefer to bide their time before launching into entrepreneurship; they build their network first and then they build their businesses.
MALE, AGE 66
Interestingly though, identifying the point at which the entrepreneurial journey begins polarises nations around the world. In the Middle East, for example, 46% decided to become entrepreneurs at school or college, which is the highest percentage of any country or region.
The Middle East also has the youngest average age of entrepreneurship at just 26 years old. However, more than a quarter of entrepreneurs in this region state that their entrepreneurial journey actually began while in a professional career. In other words, the desire to set up in business is strong across the Middle East region, but many seek some professional experience before going it alone.
Meanwhile, in China the decision to become an entrepreneur often happens later, with 56% stating they did not even decide to set up in business until they were in a professional career. The Chinese are also less likely to refer to themselves as an entrepreneur until they have set up or even started to grow their business. Yet, interestingly, a sizeable 24% fit the Game Changer profile. This is second only to Hong Kong, where 27% of entrepreneurs state that having an impact in the world was a key motivation for them to launch into private enterprise.
There is similar variance across Western Europe and the United States.
In Germany and France, for example, the age of entrepreneurship is often much later than in other countries, but business owners in these countries are more likely to identify themselves as having always been entrepreneurs. It seems they were not so much "training" to become entrepreneurs in the early years, but rather they have always brought an entrepreneurial mind-set to their professional work.
Meanwhile, the United States and United Kingdom stand out for the number of individuals who state that they became entrepreneurs as a result of other circumstances in their lives. Indeed, in the United Kingdom, 13% fit the "unintentional entrepreneur" profile. Entrepreneurship may not have been
a direct choice for many in these countries, yet like their counterparts in Germany and France, a sizeable proportion felt they have always had an entrepreneurial streak. For many, it was this attitude that enabled them to swim rather than sink when their circumstances changed.
The Essence of Enterprise report 2016 19
Figure 6: The entrepreneurial tipping point around the world
Another notable difference in the culture of entrepreneurship across Asia and the Middle East,
in Asia and Middle East
in US and Western Europe
when compared to the United States and Western Europe, is that the approach to enterprise is also often more collaborative.
I have always thought of myself as an entrepreneur
At school or college
During my professional career
Once I had set up my first business
Once I had started to grow my first business
I do not think of myself as an entrepreneur
% of respondents
Not only are those in Mainland China, Hong Kong, Singapore and the Middle East more likely to identify themselves as shareholders, rather than business owners, they are also more likely to seek investment from a wider circle of friends, family, acquaintances and professional funders. As they build their businesses, this approach continues with these entrepreneurs taking advice from a wide range of professional advisers.
Indeed, the desire to grow successful enterprises appears to be a life's work for entrepreneurs in Asia and the Middle East.
Even when they exit a business, they are far more likely to focus on how to reinvest the capital into new business ventures than to consider the leisure opportunities that their new found wealth will afford.
In fact, they are more likely to prioritise bringing the family into
the business than leaving their businesses to spend more time with
Figure 7: Entrepreneurial tribes around the world
Global France Gemany
China Singapore Hong Kong Middle East
40 20 18 15 8
35 28 18 13 7
42 15 19 17 6
41 14 11 21 13
43 19 13 16 9
35 25 24 9 6
46 18 17 14 5
34 21 27 12 5
42 18 15 16 9
0 20 40 60 80 100
"Innovation is the soul of business, product quality is its heart and customer service ensures survival. You need to be the first to grasp new technology and market information."
CHINESE ENTREPRENEUR, MALE, AGE 40
% of respondents
The Essence of Enterprise report 2016 21
CHAPTER 3: Learning from family business
Indeed, regardless of the country or culture of an entrepreneur, the one constant that cannot be ignored in the entrepreneurial equation is the role of family. Not only is family the main motivation for some to strive and succeed; it is also a source of direct inspiration for many others.
Almost half of the entrepreneurs who took part in this research came from a business-owning family, where parents or grandparents had forged an entrepreneurial path before them.
Their views bring a fresh perspective to the question of whether entrepreneurs are born or made. The results suggest that proximity
to business-owning parents creates the conditions for practical learning and personal entrepreneurial development. Yet, when the time comes, the next generation then take on the challenges of entrepreneurship in their own right.
In other words, the family influence can give them a head start on their entrepreneurial journey, but the path they forge is their own.
When looking at the personal wealth of this new generation of family business owners, they are typically USD1 million wealthier than peers who do not have a family heritage of entrepreneurship. Next-generation entrepreneurs also run businesses that are almost three times larger.
However, on par with their first-generation peers, half their wealth was created through their own activities as an entrepreneur. This suggests the advantage gained by those with a business-owning family is principally experiential rather than financial.
Put simply, the success of next-generation entrepreneurs is down to more than just their heritage. In fact, it is their desire to challenge the status quo that sets them apart.
"You have to be mentally prepared to lose everything
- or don't even think of starting a business."
SINGAPOREAN PATHFINDER, MALE, AGE 38
While hard work, confidence, focus and risk-taking are widely cited as success factors, next-generation entrepreneurs also touch on softer business skills such as loyalty and the ability to inspire.
Interestingly, the family influence even extends to personal motivation with 22% of next-generation business owners fitting the Game Changer profile, compared to just 13% among first-generation owners. What they learn from their parents, it would seem, is the importance of having an impact in the world.
So while on the one hand, next-generation entrepreneurs grow up with a strategic blueprint for success, on the other, their personal desire to achieve is entirely their own.
Less surprising, perhaps, is that first-generation entrepreneurs tend to be Pathfinders: driven by the autonomy that entrepreneurialism can deliver.
"Each company is different and every business owner needs to find their own way."
OWNER MANAGER WITH A FAMILY HISTORY OF ENTREPRENEURIALISM, GERMANY, AGE 47
The Essence of Enterprise report 2016 23