BYLINE: Josh Stowe

Newswise — When low-income entrepreneurs start their own businesses, they frequently fear failure — a well-documented phenomenon. But over time, they may also fear success, given the costs and unknowns it can bring, and this barrier to growth is under-studied and underappreciated. A new study from a Keough School of Global Affairs expert breaks new ground by explaining this fear and offers five recommendations to help entrepreneurs overcome it and move out of poverty.

Michael H. Morris, a professor of the practice in the University of Notre Dame’s Keough School and director of the Urban Poverty and Business Initiative, a program offered by the school’s McKenna Center for Human Development and Global Business, is lead author of a journal article where these recommendations are outlined, as recently published in Business Horizons.

“This study is one of the first to deepen our understanding of the fears that poor entrepreneurs commonly face, in particular the unexpected and counterintuitive fear of success,” Morris said. “We believe it’s crucial to address these fears, or they can become a behavioral roadblock that prevents individuals from navigating the uncertainties of creating a new business. We have identified several key priorities that policymakers and support organizations can focus on in order to work more effectively with them.”

Five key priorities

Morris and his co-authors documented the fears experienced by many disadvantaged entrepreneurs by conducting six focus groups with participants from the Urban Poverty and Business Initiative program.

More than 90 percent of participants were people of color and 68 percent were women. Approximately 4 percent were formerly incarcerated, 2 percent were refugees and 1 percent were women who lived in shelters. All came from underprivileged backgrounds. The research was funded with support from WorkRise, a research-to-action network hosted by the Urban Institute.

Disadvantaged entrepreneurs face specific obstacles that mid- and higher-income businesspeople generally do not, Morris said, including lower literacy levels, a scarcity mindset, significant non-business distractions and lower access to finance.

Fear is a common occurrence for people in this group, Morris said, whether it is at the start of a new venture or as a business gains traction and encounters new challenges. And fear of success — while less studied — can have damaging outcomes, Morris said, because it can lead to procrastination, self-sabotage and failure to make key decisions that could help a business grow.

Ultimately, Morris and his co-authors issued five recommendations to help address these fears:

  • Providing entrepreneurial role models to help individuals recognize different paths to, and outcomes from, a successful enterprise
  • Teaching entrepreneurship early, with an emphasis on experiential learning, where success is made more tangible and manifested in different ways beyond just profitability
  • Providing mentorship, where experienced entrepreneurs help business founders understand and address the costs versus benefits of different types and degrees of success
  • Positioning venture creation as an option in workforce development programs (These programs traditionally focus on training participants to work for others.)
  • Developing more flexible and holistic microfinance programs where investments are tied to incremental progress in meeting success goals and targets

A playbook for policymakers and support organizations

Morris co-authored the study with Donald F. Kuratko of Indiana University, Susana C. Santos of Florida State University and Sohab Soleimanof of Louisiana State University. The authors drew on their deep experience to create a playbook they believe can assist policymakers and people who work with disadvantaged entrepreneurs.

Ultimately, Morris said, while success might seem scary and costly to underprivileged businesspeople, identifying a handful of key priorities can focus and sharpen initiatives aimed at helping them succeed.

“We hope that educators, policymakers and the various stakeholders who work with poor entrepreneurs will apply these recommendations,” he said, “and, in so doing, help them overcome their fears and embrace entrepreneurship as a viable pathway out of poverty."

Contact: Tracy DeStazio, associate director of media relations, 574-631-9958 or [email protected]

Journal Link: Business Horizons, Jan/Feb-2024