Pre-Ownership Experience

1. 1

   About half of all small employers either worked in another small business (32%) or operated their own venture (18%) immediately prior to entering their current enterprise. Those small firms were the incubators for new business owners about 60 percent more frequently than would have been expected given small business’s share of employment.

2. 2

   Government, including the military, and non-profit organizations were incubators for comparatively few (about one in 10) current small-business owners. However, compared to their share of employment, they were the incubating organization relatively more often than were for-profit businesses employing more than 1,000 people.

3. 3

   Thirty-six (36) percent of small employers owned and operated at least one business grossing $5,000 or more prior to their current business.

4. 4

   People tend to form businesses in familiar industries and sell familiar products/services to familiar customers. For example, almost two-thirds (65%) have worked a median of 12 years in the industry in which their current business operates. Twenty-two (22) percent placed their firms in unfamiliar industries and sold unfamiliar products/services to unfamiliar types of customers.

5. 5

   Most small businesses initially have little or no division of labor. Their owners must therefore be a “jack-of-all-trades.” Eighteen (18) percent of small employers had functional experience in sales/marketing, accounting/finance, production, servicing or operations, and personnel/human resources prior to entering their current business. Another 17 percent had it in three of the four areas. But 23 percent had no experience in any of the four prior to their current enterprise.

6. 6

   Seventy (70) percent of small employers supervised people prior to entering their current business. Most now manage fewer people than they once did. This is particularly characteristic of those owning ventures now employing fewer than 10 people.

7. 7

   Almost one in three (30%) participated as volunteers at the highest levels of non-profit organizations prior to entering their current business. The activities of that 30 percent included founding or helping create a non-profit organization with a minimum of 10 volunteers working at any one time, serving as president, chair or treasurer of any such organization or club, and organizing or chairing a fund-raising drive or campaign that netted $10,000 or more.

8. 8

   Small employers have notably more formal education than the adult population. The former are twice as likely to have earned a college degree and half as likely to have only completed high school or less.

9. 9

   The most frequent course of study completed by small employers was business administration and related subjects. Fifty-five (55) percent did so. The second most frequently completed course of study was one of the hard sciences including engineering. Except for the few who took advanced degrees in law and health/medicine, those who took business were most likely to find their studies directly relevant to their current enterprise.

Volume 2, Issue 8, 2002
ISSN 154-8326

William J. Dennis, Jr.
NFIB Research Foundation

• 2Before going into your current business, about how many years had you worked in the industry of this business, OR had you never worked in the industry before? Top 100
• 6Prior to this business, did you ever operate a business of your own that grossed at least $5,000? Top 100
• 1Immediately prior to going into this business, did you work for:?
• 1aWas the business:? (type of)
• 3Before going into this business, about how many years had you produced, serviced, distributed or sold the same or similar products and services as the ones you are selling now, OR had you basically not worked with them before?
• 4Before going into this business, about how many years had you worked with the same type of customer, such as the general public, a special segment of the public, a particular industry that you now have as your primary customer, OR have you not worked with this type of customer before?
• 5Was the last organization you worked for prior to entering this business relatively more advanced technologically, relatively less advanced technologically, or about the same technological level as this business? Would that be a lot more/lot less advanced?
• 7About how many years of experience did you have managing or supervising employees before going into this business, OR didn’t you have any experience?
• 7aWhat was the largest number of employees that were under you at any one time?
• 8A(prior experience) Sales or marketing.
• 8B(prior experience) Accounting or finance.
• 8C(prior experience) Production, servicing, or operations.
• 8D(prior experience) Personnel or human resources.
• 9ADid you ever found or help create a non-profit organization, club, campaign, or drive that had 10 or more volunteers working for it at any one time?
• 9BWere you the president, chair or treasurer of any non-profit organization, club or volunteer committee that had 10 or more volunteers working for it at any one time?
• 9CDid you organize or chair a fund-raising event, drive or campaign for a non-profit organization or cause that raised $10,000 or more?
• 9DDid you have a hobby or special interest that was related to the products or services you now sell?
• 10What is your highest level of formal education?
• 10aWhich of the following best describes the course of study at your highest level of formal education?
• 10bIs the primary subject matter in your course of study directly applicable to your current business, indirectly applicable, or not at all applicable?
• 11In the year immediately before entering this business, did you take one or more special workshops or seminars, outside a formal education program, specifically to prepare yourself for this business?
• 12Age of formation - life experience prior to entry (Calculated)