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What determines entrepreneurial success?

Only 50% of start-ups survive past the first 5 years (US Bureau of Labor Statistics). However, there are factors that make start-ups more likely to survive and thrive.

What determines entrepreneurial success?

What is entrepreneurial success?

As noted by @daOnlyBG, in the context of this question, I’ll offer a broad definition of success. I understand there may be other definitions of success which will produce different answers. I realize my definition of success may be naive, but a definition is in order. Let’s define entrepreneurial success as (1) firm survival, (2) firm revenue growth, and (3) firm employment growth.

What kind of answer do I expect?

There are plenty of opinions on what makes start-ups successful. These opinions are found in popular press business books, online, TV, radio, magazines, etc… I am not looking for another opinion. I am looking for data. By data I mean, academic research published in a reputable peer-reviewed journal or an academic book by a team of professors from a reputable, accredited university. The accepted answer should have a description of the factors that make a start-up successful along with a link to the original academic study, following my example. Additionally, avoid creating a new answer. Instead, add to the most comprehensive answer below.

Why did I answer my own question?

I’m going to answer my own question with the research that I have done, with the intention of the answer becoming a master list of entrepreneurial success factors. I intend for this answer to be continually updated as new academic research is published. In other words, the answer I provide below is NOT meant to be exhaustive. It is meant to be a start for a community wiki, similar to this question. I’m going to provide a short answer to get the ball rolling and add to it as I find new research and hope that you add your own research to this answer.

Answer 1629

It is impossible to answer this question, but a few factors that affect outcome are:

But this is not a formula. You can’t force all these things into one place and then expect a successful company.

Another problem in the “study” of successful startups is that of survivor bias. Just because one set of people were wildly successful does not mean that it will be beneficial to copy their their strategy or experience.

Answer 1049

This post is the master list of entrepreneurial success factors. Please append your research and links to the list below.

Market

  1. Business to Business model (B2B), not Business to Consumer (B2C) (1)
  2. High growth market (1)
  3. Target customer's missed by others (1)

Industry

  1. Growth industry (1)
  2. High technology impact on the industry (1)
  3. Low capital intensity (1)
  4. Small average firm size (1)

Company

  1. Written business plan (1)
  2. Focus activity on a single product or service (1)
  3. Don't compete based on price, but on quality or some other dimension (1)
  4. Early, frequent and intense marketing plans (1)
  5. Tight financial controls (1)
  6. Minimum $100,000 in start-up capital (1)
  7. C corporation, not sole proprietorship (1) Source

Team

  1. Large, diverse venture team, not sole individual (1) (3)
  2. Graduate degrees (1)
  3. Management experience (1)
  4. Work experience in the new industry (1)
  5. Employed full-time prior to new venture (1)
  6. Prior successful entrepreneurial experience (1)
  7. Full time involvement in the new venture (1)
  8. Motivated by high profits, not independence (1)
  9. Number and diversity of individual's social ties (2)

Sources:

(1) Shane, S. A. (2008). The illusions of entrepreneurship: The costly myths that entrepreneurs, investors, and policy makers live by. Yale University Press

(2) Hansen, E. L. (1995). Entrepreneurial networks and new organization growth. Entrepreneurship theory and practice, 19, 7-20.

(3) Eisenhardt, K. M., & Schoonhoven, C. B. (1990). Organizational growth: Linking founding team, strategy, environment, and growth among US semiconductor ventures, 1978-1988. Administrative science quarterly, 504-529.

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