Recipe for Success: Experience, Management and LuckWhile there has been an increased interest among policymakers in supporting small businesses as a way to spur job creation and to end the current recession, little has been known about the factors that cultivate and support entrepreneurialism. In conjunction with Global Entrepreneurship Week, the Kauffman Foundation has released a new study, “Making of a Successful Entrepreneur,” which provides insight into company owners’ beliefs about what influences the success or failure of a startup business.
The survey researched the beliefs of 549 company founders of successful businesses in high-growth industries, including aerospace, defense, computing, electronics and health care. Here are a few of these entrepreneurs’ views:
- Prior work experience, learning from previous successes and failures, a strong management team and good fortune as the most important factors in their success.
- Nearly all of the company founders surveyed – 98 percent – ranked prior work experience as an important success factor, and 58 percent ranked it as extremely important.
- 40 percent cited lessons learned from failures as extremely important – the second-highest “extremely important” rating.
- The company’s management team contributed to success for 82 percent of those surveyed, with 35 percent ranking this factor as extremely important.
- For 73 percent of the entrepreneurs surveyed, luck was an important factor in success.
- Professional networks were important to the success of their current businesses for 73 percent of the entrepreneurs. In comparison, 62 percent felt the same way about personal networks.
- Only 11 percent of the first-time entrepreneurs received venture capital, and 9 percent received private/angel financing. Of the overall sample, 68 percent considered availability of financing/capital as important.
- In identifying barriers to entrepreneurial success, the most commonly named factor – by 98 percent of respondents – was lack of willingness or ability to take risks. Other barriers cited by respondents were the time and effort required (93 percent), difficulty raising capital (91 percent), business management skills (89 percent), knowledge about how to start a business (84 percent), industry and market knowledge (83 percent), and family/financial pressures to keep a traditional, steady job (73 percent).
“This study provides an understanding of the factors that help entrepreneurs achieve success. If we, as a nation, respond to this data by developing policies that encourage entrepreneurship, we have the potential to increase the numbers of high-growth companies that will create jobs and accelerate economic recovery,” said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation
Lead researcher Vivek Wadhwa, commenting on the insights the survey report delivers said: “Entrepreneurs tell us their ranks remain small because others fear the risk and time required to start a venture. But the current economy has given us an opportunity: We could harness the energy of the many workers who are now unemployed, teach them how to be entrepreneurs and provide them with seed financing for their ventures. These workers have nothing to lose, and the economy has a lot to gain.”