Business Workshop: 'User' entrepreneurs last longer

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Looking to create a new business? The results of a recent study by the Ewing Marion Kauffman Foundation suggest that the way to entrepreneurial success may be to invent something that solves a problem you're having.

That's what "user entrepreneurs" do -- start companies that sell products or services they have invented that address specific challenges that they are encountering at home or in the workplace.

According to the Kauffman study, "user entrepreneurs" have founded more than 46 percent of startups that have lasted five years or longer, even though this group creates only 10.7 percent of U.S. startups overall.

The Kauffman study found that user entrepreneurs have been successful in a wide range of industries, including Internet search technology, medical devices, sports equipment and juvenile products.

The Kauffman study identified some key ways in which user entrepreneurs differ from other types of entrepreneurs:

• User entrepreneurs developing products and services for either a business application or their own use in the home both are more likely to attract venture capital financing.

• User entrepreneurs are more common in the high-tech industries.

• User entrepreneurs start with more tangible ideas and more human capital than other entrepreneurs.

• The firms of user entrepreneurs tend to make more revenue than other start-ups.

The study draws its data from the Kauffman Firm Study, a long-term study that tracks the development of nearly 5,000 firms founded in 2004. The Kauffman Firm Study is the largest such study of new businesses in the world.

-- Ann Dugan, Institute for Entrepreneurial Excellence, adugan@katz.pitt.edu

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Business Workshop is a weekly feature from local experts offering tidbits on matters affecting business. To contribute, contact Business Editor Brian Hyslop at bhyslop@post-gazette.com.


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