Entrepreneurial success factors

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The Kauffman Foundation in Kansas City is one of the leading organizations promoting entrepreneurship worldwide.

The Foundation supports a wide range of activities, including sponsoring university based initiatives, grass roots entrepreneur development efforts, and important research.

Most entrepreneurs are not, by nature, interested in the results of academic research. They are too busy taking action to stop and ponder what is being written and said by academics who aren’t building companies.

While it’s true, in my opinion, that much academic research into entrepreneurs and entrepreneurship lacks prescriptive impact, there is some value in descriptive studies. Describing not only what entrepreneurs do, but also how they have done it, can be useful — especially to people who are aspiring to their own entrepreneurial ventures, and to local regions seeking to become more entrepreneurial.

In that spirit, I relate the following descriptive data that was contained in a recent Kauffman foundation study titled “The Anatomy of an Entrepreneur: Making of a Successful Entrepreneur.”

The study was released in November. Researchers interviewed 549 entrepreneurs from a variety of industries, including aerospace and defense, computer and electronics and health care and services. Some of the key findings include:

96 percent ranked prior work experience as an important success factor; 58 percent ranked this factor as extremely important

88 percent said learning from previous successes was important

78 percent said learning from previous failures was important; 40 percent said learning from previous failures was extremely important

82 percent said the management team they chose was important; 35 percent said this was extremely important

73 percent said “good fortune” was an important factor in their success; 22 percent ranked this factor as extremely important

70 percent said their university education was important

The factors noted above are ones that, outside of “good fortune,” are controllable by the entrepreneur. These success factors can be learned by individuals aspiring to launch their own ventures, and used as guides to building successful ventures. For example, it’s fairly clear that some prior work experience, a good management team and the ability to make and learn from mistakes are important success factors. It’s also clear that some university education can be useful, although it is well documented elsewhere that university education is not necessary to be a successful entrepreneur.

From the perspective of regional and state interventions that are designed to promote and/or support entrepreneurs and entrepreneurship, several interesting findings were revealed:

The vast majority of those surveyed (86 percent) ranked the assistance provided by the state or region as “not at all” or “slightly” important

Only 19 percent indicated that university or alumni networks were important

68 percent considered availability of financing/capital as important; 96 percent of those who had actually raised external capital ranked this factor as important

73 percent said professional networks were important to the success of their current business; 62 percent said personal networks were important

From my perspective, the key takeaways from this research are that the primary factors for entrepreneurial success reside primarily with the individual.

Only the individual entrepreneur can decide to enter the competitive fray, knowing full well that the uncontrollable “good fortune” factor will play some role in their success. Of course, the good fortune involved in entrepreneurial success is not the same as that needed to win at the gambling table.

Entrepreneurs improve their chances by learning both from their successes and their failures. They also hedge bad luck by surrounding themselves with professional and personal acquaintances who possess critical knowledge and skills.

The current study also echoed findings from other studies regarding the role of regional and state initiatives to promote entrepreneurship. Such initiatives, although well intended and politically popular, generally do not have impact on entrepreneurial success rates.

The state or regional administrators of such programs often measure their success by the number of aspiring entrepreneurs in their programs. In contrast, investors, who must generate return on invested capital, focus more on the quality of the entrepreneurs they support.

Investors must use as careful due diligence to select potential winners. Public programs to support entrepreneurs normally aren’t as selective.

If we want to create a vibrant entrepreneurial culture in Colorado Springs, we need to adopt the disciplined approach of the investor in the entrepreneurs we support and in the programs we create. Mix in a little capital, and a little luck, and we might just create a new dynamic in our community.

Thomas N. Duening Ph.D. is El Pomar Chair in Business and Entrepreneurship and director of the Center for Entrepreneurship in the College of Business and Administration at the University of Colorado at Colorado Springs. He can be reached at tduening@uccs.edu.

3 Responses to Entrepreneurial success factors

  1. Some key success factors for any entrepreneur are to have a solid business plan and to constantly be willing to evolve and grow with your business. More key success factors for an entrepreneur to think about are to always have dedication and patience, both with your business and potential employees. To plan ahead is to think of these key success factors and doing so will only help your entrepreneurial venture. There are several factors influencing entrepreneur success, unfortunately, there are also plenty of myths about self employment. Getting the facts about becoming an entrepreneur before you launch your business can help to ensure you are prepared for the challenges that lie ahead.

    Role of an entrepreneur
    January 30, 2010 at 12:23 am

  2. “Entrepreneurs usually started their business because of thier greater sense of control over work and personal life., and success is all
    about taking action. Recommend this documentary ” The YES Movie” by Louis Lautman ,about top entrepreneurs, wonderfulness!

    http://www.TheYESmovie.com

    Mary.K
    January 31, 2010 at 2:29 pm

  3. From the linked page above:

    “Revealed… Wealth Building Secrets of Young & Successful Millionaire Entrepreneur”

    There are no secrets. Just lots of continuous hard work when everyone else would have given up and gone home. And charging 30 bucks for “revealing secrets” makes them just another “get rich quick” marketer in my book. It only appeals to that group of people who want it to come easy and give up quickly when it doesn’t.

    There’s a quote that goes something like this:

    Most people miss out on opportunity because opportunity tends to show up wearing work clothes.

    The one thing that always underlines these “success factors” for entrepreneurs is that they work incredibly hard and they never, ever give up.

    Chad
    March 4, 2010 at 9:46 am