While a majority of Americans prefer to be self-employed, relatively few actually take the plunge. What's stopping them?
According to a 2012 survey conducted for the European Commission by TNS Custom Research, 51 percent of Americans would rather be self-employed and 44 percent think it would be possible for them to go into business for themselves within the next five years -- a figure that has increased 8 percentage points since 2009.
But despite the relatively large number of Americans who want to be in business for themselves and believe it feasible in the near future, relatively few would-be entrepreneurs actually take the initiative. Bureau of Labor Statistics data indicate that only about 6 percent of the adult population is self-employed, making the fraction of Americans who would prefer self-employment to wage employment about eight times as large as the share of Americans actually working for themselves.
Related: Why Americans Love Small Business
Why are so few would-be entrepreneurs starting businesses?
While a number of those surveyed have no intention of becoming entrepreneurs any more than they might act out their preference to play professional basketball or be a runway model rather than continue their day job, a surprising number have legitimately considered founding their own company and not followed through. One third of the people who told TNS they wanted to start a business said they gave up on the idea after having thought about it or taken steps to get the company going.
A number of those who wanted to start-up but didn't, faced real obstacles that kept them from going into business for themselves -- 4 percent could not come up with a business idea, 15 percent didn't have enough capital, 8 percent said they lacked the necessary skills and 2 percent said administrative barriers held them back.
Most people, however, didn't go into business for themselves because they were afraid of what would happen if they didn't succeed. When asked to identify what would-be entrepreneurs most feared about starting a business, the top responses were a fear of going bankrupt (38 percent) and a fear of irregular income (37 percent), which amount to a significantly larger sum than those who feared personal failure and losing job security.
But while the largest number of would-be entrepreneurs often stop themselves from starting a business because of the financial risks that self-employment entails, making money isn't the reason most Americans prefer to be entrepreneurs in the first place. Only 9 percent of respondents said they preferred self-employment because it offered a greater potential for making money than working for others. Instead, a majority -- 54 percent -- said they preferred to be entrepreneurs because of the independence self-employment affords, and a third said they would prefer it for the freedom to decide when and where to work.
In the end, money still plays an important role in influencing whether or not people go into business for themselves. While the opportunity to make money doesn't draw many Americans to entrepreneurship, the fear of going broke keeps them from taking the plunge.
Related: Train Your Brain to Overcome Fear
The author is an Entrepreneur contributor. The opinions expressed are those of the writer.
Scott Shane is the A. Malachi Mixon III professor of entrepreneurial studies at Case Western Reserve University. His books include Illusions of Entrepreneurship: The Costly Myths That Entrepreneurs, Investors, and Policy Makers Live by (Yale University Press, 2008) and Finding Fertile Ground: Identifying Extraordinary Opportunities for New Businesses (Pearson Prentice Hall, 2005).