Entrepreneurs Finding it Harder to be Successful

Editor’s Note: A few weeks ago Dr. Scott Shane, a very talented professor here in our home town of Cleveland, Ohio hit our radar screen. He recently was named as principal investigator for a new study commissioned by the Ewing Marion Kauffman Foundation to examine what factors affect the performance of newly founded companies. We are very pleased to have Dr. Shane offer the following insights about one recent entrepreneurial trend.

Dr. Shane, professor of economics at Case Western Reserve University, says starting a business is more popular than ever in the United States. But he also says it is harder to be successful at a new business:

“Entrepreneurship is becoming an increasingly popular activity, with 4% of the population annually starting a new business — more individuals than get married each year. But success rates at entrepreneurial activity are not keeping up with start-up rates, making it harder than it used to be to become a successful entrepreneur.”

Dr. Shane also says that starting the right kind of business is crucial to the rate of success. He believes the best new businesses to start right now are high technology businesses. “By that I mean not just Internet businesses but companies in any kind of new technology from nanotechnology to new materials to telecom to advanced manufacturing to biotech,” he notes.

He offers these ten factors on what it takes to be successful starting a new technology business in the 21st Century:

1. Select the right industry
2. Identify valuable business opportunities
3. Manage technological transitions
4. Identify and satisfying real market needs
5. Understand customer adoption
6. Exploit established company weaknesses
7. Manage intellectual property
8. Create barriers to imitation
9. Choose the right organizational form
10. Manage risk and uncertainty

Check out his most recent book, Finding Fertile Ground: Identifying Extraordinary Opportunities for New Ventures, for more on these ten rules for a successful startup.

In addition to being a professor at Case Western Reserve University, Dr. Shane also serves as academic director of the Center for Regional Economic Issues. He is the author of another book, Academic Entrepreneurship: University Spinoffs and Wealth Creation.

[Thanks to George at Brewed Fresh Daily for arranging the email introduction to Dr. Shane.] 3 Comments ▼

Scott Shane Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool's Gold: The Truth Behind Angel Investing in America ; Illusions of Entrepreneurship: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.

3 Reactions
  1. I would just like to suggest or I guess to add some suggestions on the list, that in order to avoid bankruptcy in business,I guess every entrepreneurs should think small. That’s it.

  2. If we were isolated in the desert, the value of water would far exceed that of money. However, most of us don’t run our businesses from an isolated desert location. So money becomes a necessity.

    Unfortunately, my consulting experience suggests that most entrepreneurs don’t have enough of the green stuff to grow their business so that revenues create sustainable profits. The sad truth remains that some entrepreneurs don’t have enough money to sustain their business long enough to create sustainable profits.

    So what to do? What is the elixir that fixes our cash flow and profit challenge?

    Truth? There is none. However, here are a few recommendations that may help keep you afloat until income exceeds expenses.

    1. Create a business plan before you start your business.
    Within the plan, be sure your numbers best reflect reality, so you know before you put out the open for business sign that you have enough money to keep the business up and running until positive cash flow occurs.
    2. Create a realistic strategic plan that includes measurable goals, strategies and tactics for success before your business opens and don’t shelve it. Use it! And measure, measure, measure, adjust, adjust, adjust.
    3. Be certain your strategic plan aligns with your business plan.
    4. Sell great customer experiences, not products and services.

    And from Seth Godin, here are three more rules:

    1. Great product development and marketing almost always comes from organizations that don’t have enough money. Having less money keeps you from trying to buy your way out of trouble.
    2. Learning to live with less money means you will develop skills and resources instead of buying them. And it means that when you have less money (again), you will be prepared.
    3. When you need money for something specific, go get it. But just for that. With good terms. As soon as you spend money to protect your money or leverage your money or account for your money or send a message about your money, the money is not only wasted, it hurts you.