Why Most Entrepreneurs Quit

Ray Kroc. Steve Jobs. Evan Williams.

These powerhouse entrepreneurs have one thing in common—persistence.

Kroc relentlessly built the McDonald’s restaurant chain throughout both America and the world, in spite of stiff opposition from his own business partners.

Jobs epitomized the spirit of not giving up when he rejoined Apple as its CEO—after suffering the humiliation of being fired from that same iconic company that he co-founded years before.

You may know Willams from his work as a co-founder of Twitter. Or as the visionary leader of Medium.

But, Williams’s entrepreneurial journey started well before either of those companies. In late 1998 Williams launched a company that would become Blogger, one of the first web blogging platforms.

During its initial few years, Blogger’s user base expanded rapidly. But, they struggled to find a viable revenue model for their free service.

Blogger’s finances continued to deteriorate. Finally, Williams laid off his entire staff—including himself—in early 2001.

Instead of closing the doors, though, he continued running Blogger alone, without pay.

There were a lot of points in 2001 that I seriously considered quitting. Everybody I know just thought I was crazy.
—Evan Williams, in Founders at Work

But Williams didn’t give up. He persisted.

Business success clearly requires persistence. As it turns out, though, entrepreneurial interest (what causes you to get into the game) is different from entrepreneurial persistence (what causes you stick it out).

Unwinding Entrepreneurial Interest From Persistence

In a 2008 research study, authors Andrew Burke, Felix Fitzroy, and Michael Nolan build a case for why people take that initial plunge into entrepreneurship, and more interestingly, what leads a fraction of those entrepreneurs to persist year after year, refusing to give up on their dream.

Analyzing data collected from thousands of participants across many decades,¹ the study reveals entrepreneurship is rare with only 9.7 percent of the population actively launching a business.

We want to differentiate the factors that make an individual try self-employment from those that make a persistent, dedicated or what we term a ‘die-hard’ entrepreneur.

While combing through the data, the researchers discovered a small, select group they coined die-hard entrepreneurs. The die-hard entrepreneurs—only 6.8 percent of the population—were those who persisted year after year.

Some of the die-hards built successful businesses. Others launched failed business after failed business, all the while never falling back on a regular job.

Die-hard entrepreneurs refuse to quit.

4 Reasons Entrepreneurs Bail Out on Their Dream

Few people quit their jobs on a whim to launch a business. It is a decision they can wrestle with for years.

So, after deciding to go for it, why do so many of them call it quits? The authors of the study present four common reasons entrepreneurs walk away.

1. Bad Bets. The venture just fails (luck or timing was off) and the owner feels a need to retreat to the predictability of employment.
2. Changing Times. The venture either captured an ephemeral opportunity that ran dry or the skills and knowledge needed to stay competitive evolved and the business failed to stay current.
3. Vanity Goals. Some go into entrepreneurship with goals other than building a successful business. Whether seeking prestige or validation, these entrepreneurs accomplished what they were seeking (or not) and decided to hang up their entrepreneurial hat.
4. Greener Pastures. Launching and running a business teaches valuable, often hard-to-obtain skills. These skills can turn entrepreneurs into attractive recruits for larger organizations (often through acquisition).

Why You Shouldn’t Wait to Get Fired to Start Your Business

That great idea for a mobile app is driving you crazy. Without this damned job, you would build the app and money would start flowing in.

But, this job pays pretty well. And you do have a mortgage to worry about.

If only you got canned or downsized. You’d be forced to focus all your time on your new business.

Don’t engineer your own downsizing so quickly.

We find that spells in unemployment do not increase [entrepreneurial interest], and decrease [entrepreneurial persistence]. Thus, we do not find an ‘unemployment push’ into self-employment.

According to the study’s authors, contrary to popular myth, losing your job diminishes interest in starting a business (the mortgage, remember?). If you do strike out on your own after losing your job, you may have a more tenuous grasp on self-employment, making it more likely you’ll fall back on a job in the future.

Women Must Fight Harder For Their Dream

Men and women both have entrepreneurial dreams.

In many ways, both sexes are attracted to entrepreneurship for the same reasons and similar forces shape their entrepreneurial spirit.

For instance, both men and women, according to Burke and his co-authors, leverage their education as a pathway to self-employment. Many professionals end up hanging out shingles as attorneys, doctors, and consultants.

Early-career entrepreneurship exposure—possibly through a parent or grandparent or an influential friend or college course—also appears to build muscles that are useful later when launching a business.

While there are many similarities in how and why men and women take the entrepreneurial leap, and in how they persist over time, there are also notable differences between the sexes.

In fact, long-standing social norms and constructs may explain many of the differences separating men and women.

For instance, the authors’ research shows that large families may hamper a woman’s ability to launch or grow a business, unlike her male counterparts.

Likewise, the study shows that poor health appears to much more dramatically impact a woman’s ability to continue running her business. Perhaps female entrepreneurs who fall ill don’t as often have a spouse who is willing or able to provide the support needed so her business can continue.

None of these points are, unfortunately, news.

We also find self-employed fathers tend to encourage more entrepreneurial [interest] and more persistence among their sons, but only the former among their daughters. This may indicate more relevance of a father’s human capital for a son’s business.

The authors found that self-employed fathers play a larger role in a son’s entrepreneurial future than in a daughter’s.

Is this because of gender stereotyping? Is it because sons have traditionally taken over family businesses?

Whatever the reason, not having as much support from an entrepreneurial father is another obstacle women content with when launching businesses.

Persistence Pays Off

To succeed over time, like Kroc, Jobs, and Williams, there will be times where you’ll need to pull from reserves deep within you.

On the day in 2001 when Williams laid off his entire staff, it would have been easy for him to walk away from Blogger. Everyone would have understood.

“I told everyone they were laid off and said, ‘Work with me if you can.’ And at the time, everyone had already missed one paycheck, and they’d had it. These are, of course, my friends, and we were hanging out all the time and we socialized together, so it’s much more than just the employees. I think that same night I broke up with my girlfriend of 6 months.”
—Evan Williams, in Founders at Work

He didn’t walk away and continued on with Blogger, alone, and in 2003 Google made its first acquisition, buying Williams’s Blogger for an undisclosed sum.

Entrepreneurial persistence comes in many forms, and it will not always guarantee success.

But, no entrepreneur succeeds in the long run without persistence.

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1. The National Child Development Study (NCDS) followed participants living in Great Britain, starting in 1958 and continuing to 1999/2000.