Few institutions do as much entrepreneurial research as the Kauffman Foundation. Kauffman polled 549 company founders of successful organizations in high-growth sectors for his new research, Making a Successful Entrepreneur, to uncover the characteristics that impact startup success or failure. It turns out that the primary success determinants are “past job experience, learning from past triumphs and mistakes, a competent management team, and good fortune.” Let’s go through the highlights one by one.
- “Nearly all of the firm founders polled – 98 percent – rated past job experience as a significant success criterion, with 58 percent rating it highly significant.” This may sound apparent, yet it’s astonishing (or even disturbing) how many individuals start firms with no relevant past expertise. I’ve met folks who were laid off and felt driven into business, only to fail because they had no role models for success. That is not to say that persons with no relevant experience should not become businesses.
It simply means they must recognize the gap they must fill and take their insufficiency seriously.
- “Lessons learnt from failures were identified as highly significant by 40% of respondents.” There you have it, the Catch-22. In business, you may have to fail before you succeed. If you’ve never run a company before, you’ll need to learn how to fail without ruining everything. This might include understanding when to change strategy or when to quit an investment. Nowadays, many businesses are “solopreneuring” companies with just one full-time employee, the proprietor. However, it is quite difficult to play all of the roles on a team. Knowing how to outsource and construct a virtual team is a must if you want to construct something that expands beyond what you can achieve alone. If you do everything alone, no matter how good your concept is, you will be naturally constrained. Find other individuals to do things for you that you don’t have to do right away. Find a virtual assistant, outsource telesales to qualify leads, and have your accounting done by your CPA’s office. You concentrate on things that only you can accomplish, such as generating new revenue.
- “For 73 percent of the entrepreneurs polled, luck played a significant part in their success.” The cliché “some individuals manufacture their own luck” is true. There is lottery luck and then there is entrepreneurial luck. Inquire of any successful company owner about the luckiest event that has ever occurred to them in business that has helped them to be successful. I promise you that the “luck” was created with great care.
4. “For 73 percent of the entrepreneurs, professional networks were critical to the development of their present enterprises. Personal networks, on the other hand, elicited the same response from 62 percent of respondents.” Again, no entrepreneur stands alone. It is vital to know individuals. How many individuals have you contacted and attempted to assist? Learn how to network and how to help others. Earn some karma points, and you’ll find the route much simpler to navigate when you need help.
5. “Only 11% of first-time entrepreneurs obtained venture money, while 9% obtained private/angel funding. The availability of financing/capital was deemed relevant by 68 percent of the whole sample.” Message: If you believe you will get formal private money (venture, angel, or private equity), you are most likely mistaken. You will almost certainly need funding from a traditional bank, the Small Business Administration (SBA), or your parents, siblings, or others. How do you feel about asking others for money, particularly individuals you know?
- “When asked to identify hurdles to entrepreneurial success, 98 percent of respondents indicated a lack of desire or capacity to take risks.” Knowing the difference between a planned risk and a stupid one is a crucial ability. Are you the sort of person who, when preparing to take a business risk, gets caught up in the moment with your gut feeling and goes for it, second mortgage and all? Or do you thoroughly research the problem, ruminate over the figures, ensure you’ve considered all that may be predicted, and then make your move?
“Other barriers…were the time and effort necessary (93 percent), trouble acquiring cash (91 percent), business management skills (89 percent), information on how to start a company (84 percent), industry and market expertise (83 percent), and family/financial pressures to remain a typical, stable employment (73%).” Wow, what motivates someone to start a business? Even the most successful individuals speak of enormous challenges and problems. All the more reason to assume that if you go into business for yourself, there is nothing else you would rather do.