In a world where nearly 1 in 5 people live in poverty, and even in developed countries like the U.S., poverty rates surpass 12%, the persistence of poverty amidst technological progress is alarming. As societies evolve, the question arises: Can those in poverty forge their own path to prosperity through entrepreneurship? Can venture creation serve as a viable tool for poverty alleviation?

Recent research suggests that entrepreneurship can indeed be a powerful means to combat poverty – but only with the right support systems in place. Unfortunately, such support is often missing, largely due to misconceptions and a lack of understanding about poverty and entrepreneurship. These misconceptions influence public policies and economic strategies, leading to the undervaluation of small ventures run by those in poverty.

To address these issues, here are six crucial facts about poverty and entrepreneurship that challenge common myths and shed light on the potential of venture creation to alleviate poverty.

1. Poor People Are Entrepreneurs Too
Contrary to popular belief, entrepreneurship isn’t just for the wealthy. In fact, many businesses across the globe are started by individuals in disadvantaged circumstances. In high-poverty regions, such as certain sub-Saharan African countries, up to two-thirds of adults are either running or starting their own businesses. These small businesses form the backbone of many developing economies, contributing significantly to the gross domestic product, even in developed nations.

2. Businesses Run by Poor People Create Value
While it’s true that many ventures started by those in poverty are “survival businesses” with small profits, they are far from insignificant. These businesses provide jobs and serve as economic lifelines for millions, filling market niches that larger firms may overlook. Moreover, they contribute to social stability by being deeply embedded in their communities, reducing crime, improving school completion rates, and fostering community pride.

3. Entrepreneurship Can Help Alleviate Poverty
A growing body of evidence suggests that higher levels of entrepreneurship correlate with greater reductions in poverty. Areas with high rates of entrepreneurship among the poor have seen significant poverty reduction over time. The process of starting a business equips individuals with essential skills in production management, customer service, pricing, and logistics, which are critical for personal and economic development.

4. Off-the-Books Businesses Have Value
Many entrepreneurs in poverty operate “informal” or unregistered businesses, often seen as illegal. However, in many developing countries, the informal sector constitutes over 50% of the economy, serving as an incubator for those experimenting with business ideas. This hidden enterprise culture is vital for sustaining the poor and should be supported rather than suppressed.

5. The Biggest Challenge Isn’t Always Lack of Money
It’s a common misconception that providing more capital is the key to helping entrepreneurs in poverty. While funding is necessary, it’s not always sufficient. The main challenge often lies in the ability to convert resources into successful business outcomes. This requires capabilities in areas like bookkeeping, selling, and inventory management. Therefore, financial support should be coupled with training, mentoring, and access to networks and developmental activities to be truly effective.

6. Success Comes in Many Forms
The entrepreneurial world often glorifies big success stories, but this mindset can work against poor entrepreneurs, who typically start with basic businesses and limited resources. Success for these individuals might mean simply establishing a business, making consistent sales, earning a profit, or even just maintaining the business over time. It could also involve hiring employees, expanding to another location, or giving back to the community. Ultimately, success is about improving one’s quality of life, and entrepreneurship can be a powerful tool in making this a reality.

In conclusion, while venture creation is not a panacea for poverty, it holds significant potential when coupled with the right support. To unlock this potential, it’s essential to dispel myths, value small ventures, and create supportive environments that empower those in poverty to succeed.