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3 Reasons Former Inmates Make Great Entrepreneurs Starting a business is a great option for ex-offenders. Here are 3 reasons why.

By Brian Hamilton Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.


I started teaching entrepreneurship in prisons more than 20 years ago, when a minister-friend who worked in the prison system started inviting me to do so. Then, eight years ago, we formalized this teaching into a program called Inmates to Entrepreneurs; and, today, I go into prisons about once a month to talk about how to start a business.

Since then, Inmates to Entrepreneurs has become the most viral thing we've done at Sageworks: With limited effort, we regularly receive a significant number of inquiries from current and former inmates about how we can help them. Apparently, there is incredible demand for the service, which is a no-fee, no-donation based effort. In fact, our only constraint is getting mentors, meaning people who have run companies and can help these ex-offenders.

Related: 3 Entrepreneurial Skills Inmates Perfect

Meanwhile, having done this work over the years, I've been struck time and time again that starting a business is a great option for people who have been incarcerated, not only because their job options are limited, but because some former inmates offer hard-to-come-by traits that can help tremendously when starting a business. I've outlined them below.

1. Fear of failure is much less of an issue.

According to the most recent Amway Global Entrepreneurship Report, 70 percent of the study's respondents said fear of failure is an obstacle to starting a business. So, there is, understandably, an element of self-preservation that comes into play here: People are afraid they won't be able to make a living. They're afraid that they'll be looked at as "failures."

But this isn't a reaction I hear very often in my conversations with inmates and former inmates. While striking out on your own in business isn't easy for anyone, former inmates, I've found, are much more willing to jump in with both feet. Evidence? The observation, "What do I have to lose?" is one that comes up regularly in my conversations with ex-offenders.

They're not making the decision about whether to leave the comforts of a full-time job with pay and benefits; they're leaving a correctional institution with the expectation that they have to build a new life from the ground up.

Absent the fear of failure, the question isn't, "What if I fail?" Instead, the question is, "How can I get my first customer?" Starting by focusing on the latter question significantly increases the likelihood of success for a would-be entrepreneur.

2. They are no strangers to risk.

Starting a business is weighted with risk: financial risk, operational risk, compliance risk and so on. It's therefore common for entrepreneurs to be branded as risk-takers. They're the ones who have gone past the stage of daydreaming about starting a business from the confines of their corporate cubicles and actually done it.

Former inmates are commonly no strangers to risk, themselves. Oftentimes (but not always), the actions that landed them in prison in the first place involved risks that many other people wouldn't chance.

Related: 6 Life Hacks Learned in Prison That Will Maximize Your Productivity

For many former inmates, taking risks is not unfamiliar, so confronting the new risks that come with starting a business doesn't present the same barrier to them as it does to many other people. In fact, in a 2013 study, conducted by Ross Levine of the University of California-Berkeley and Yona Rubinstein of the London School of Economics, found that "Smart teenagers who engage in illicit activities are more likely to become successful entrepreneurs than equally intelligent, rule-abiding teenagers."

3. The stakes are high.

It is extremely difficult for former inmates to find jobs. Survey results indicate that as many as three-quarters of ex-offenders are jobless up to a year after release. Another survey found that less than half were working full-time five years after their release. Additionally, Bureau of Justice Statistics data for the five-year period ending 2010 showed that about three-fourths of state prisoners were arrested for a new crime within five years.

Ex-offenders don't have many options for quickly becoming productive members of society again, so they're motivated to be successful in business.

Here, then, is my advice to ex-offenders who are looking to start businesses: Start small. Consider a small, service-based business that requires very little up-front investment. Start a landscaping company, a cleaning service, a mobile car-detailing company or a cake and cookie business out of your home.

Related: 11 Mindsets Learned in Prison Made Me Mentally Unstoppable

Focus on getting your first customers, not creating a pages-long business plan. Print a flyer and then distribute it. Start small and grow from there.

Brian Hamilton

Chairman and co-founder of Sageworks

Brian Hamilton is the chairman and co-founder of Sageworks. He is the original architect of Sageworks’ artificial intelligence platform, FIND. He has dedicated his life to bringing greater clarity to financial statements and to increasing financial literacy among businesses. Hamilton regularly leads discussions on private company performance, the financial strength of companies preparing for an IPO and entrepreneurship in major business and financial news outlets such as CNBC and The Wall Street Journal. 

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