In the data, however, minimum firm size (in terms of employees) is zero, and not all entrepreneurs have high ability. Hence, estimated versions of such models have trouble accounting for small firms and their persistence. While this may not be a problem for all applications, it should be taken into account in others, e.g. the analysis of entry. It may also affect quantification, as available data and model concepts may refer to different groups of firms. Heterogeneity in outside options could solve that problem, as shown below in the model.