What determines whether a small business succeeds or fails? Well, we don’t have any definitive answers-yet. But the more we learn about this, the more it will help government officials create policies that better support small businesses. With that end in mind, the Kauffman Foundation has just released a new study, The Making of a Successful Entrepreneur, which offers insight into what successful entrepreneurs believe most affects the success or failure of a startup business.
The survey polled 549 founders of successful businesses in high-growth industries, including aerospace, defense, computing, electronics and health care. Here’s what they said:
- Their most important success factors: previous work experience, learning from their successes and failures, a strong management team and good fortune;
- 98 percent said prior work experience was an “important” success factor; 58 percent said it was “extremely important;”
- 40 percent said learning from failure was extremely important;
- 82 percent said the management team was important; 35 percent said it was extremely important;
- 73 percent said luck was an important factor;
- Professional networks were key to success for 73 percent of entrepreneurs surveyed, while 62 percent said personal networks were important;
- 68 percent said availability of financing/capital was important, but only 11 percent had received venture capital, and just 9 percent had obtained private/angel financing.
What about the most common barriers to entrepreneurial success? The one most respondents cited (a whopping 98 percent of them) was the failure to take risk. Others included:
- Not putting in the time and effort required (93 percent)
- Difficulty raising capital (91 percent)
- Lack of business management skills (89 percent)
- Lack of knowledge about how to start a business (84 percent)
- Lack of industry and market knowledge (83 percent)
- Family or financial pressures to hold a traditional job (73 percent)
Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation, believes the survey results can lead to job creation and a healthy economy. Litan said, “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.”
The lead researcher, Vivek Wadhwa, agrees: “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.”
I know many of you think the government has no place “interfering” in our business. But, I must admit, Litan’s and Wadhwa’s conclusions make a lot of sense to me.
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About the Author: Rieva Lesonsky is CEO of GrowBiz Media, a content and consulting company that helps entrepreneurs start and grow their businesses. A nationally known speaker and authority on entrepreneurship, Rieva has been covering America ‘s entrepreneurs for nearly 30 years. Follow her on Twitter @Rieva and visit SmallBizDaily to read more of her insights on small business.