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 firstname.lastname@example.org.