What are the key success factors for entrepreneurs?
The “Making of a Successful Entrepreneur” report, published by the Kauffman Foundation (November 2009), sheds light on this interesting question. The study explored the opinions of 549 successful company founders in the US on the crucial factors that led to the failure or success of their businesses.
Companies surveyed were from industries as diverse as aerospace and defense, to computer services, software and programming. Only companies that had made it past the start up stage were surveyed for the report.
The top three factors that had a major influence on whether an entrepreneur was successful were experience, management and luck, according to the company founders.
Statistics from the Kauffman Report revealed the following:
- “96 percent ranked prior work experience as an “important” success factor; 58 percent ranked this as “extremely important”.
- 88 percent said that learning from previous successes played an “important” role in their present success, and 78 percent said that learning from previous failures was similarly “important”. 40 percent of company founders claimed that lessons from failures were “extremely important” (the factor rated second highest as “extremely important”.
- 82 percent said their management team was “important” to their success. 35 percent said this was “extremely important”.
- 73 percent said that good fortune was an “important” factor in their success. 22 percent ranked this as “extremely important”.”
Interestingly enough, the majority of company founders surveyed in the report were serial entrepreneurs – i.e. those who had successfully launched two or more businesses.
As a budding entrepreneur, it is vital to learn from projects that have failed or not been as successful as hoped for. It is also important to take incremental steps that will help you progress towards your business goals.
The Report alluded to “good fortune” being an “important” success factor. If this is the case, then a question that comes to mind is whether we create our own good fortune or wait until luck comes our way?
I have always been a firm believer that it is important to take action rather than sit around and wait for good fortune to arrive. If the law of attraction via action appeals to you, it might be time to welcome some “good fortune” your way and get moving on your next business steps.
The Report revealed some of the most common barriers that prevented people from starting their own business. These barriers included the following:
Risk Taking
The factor most commonly ranked as “important” by 98% of respondees was the lack of willingness or lack of ability to take risks. In addition, 50% believed this to be an “extremely important” barrier to entrepreneurship.
Time and Effort
93% of respondees surveyed felt that the amount of time and effort required to launch a successful business was an “important” barrier to being a successful entrepreneur.
Funding
Entrepreneurs tended to use their own personal savings to fund their first business. 70% of respondents had used their personal savings as a main source of funding for their first business.
It was usually not till after their first business succeeded that entrepreneurs considered securing venture capital. On a related matter, venture capital became easier to secure for subsequent projects once the company founder had an existing successful business in operation.
Education
Only 20% of entrepreneurs ranked university education as “extremely important”.
Key Takeaways
The report has been an excellent resource in providing readers with a lowdown on the key factors of successful entrepreneurs. My key takeaways from this report were as follows:
Learn from your failures. Even better, learn from someone else’s failures.
The report suggests that experience is a key factor to success. However, if you were just starting out on your first business venture, you may not necessarily have much experience. A useful strategy to implement is to find a successful entrepreneur who would be willing to mentor you and help you avoid making the same mistakes he or she made.
Be willing to put in considerable time and effort into your business venture.
Be willing to take risks.
Save hard from your own personal finances to raise money for your first successful business venture.
The report has identified savings to be the most common method by which successful entrepreneurs have funded their own businesses, especially first time businesses.
The report identifies a good management team to be a prerequisite to becoming a successful entrepreneur.
Consider developing your own management skills to run your business effectively. Each of us is equipped with a unique set of skills, so it is a good idea to identify your current skill set and any gaps that exist. That way, you have the necessary information to take action to develop necessary new skills.
Another good strategy to adopt is to hire people who can contribute good management or specialized skills to your team. As an owner of a start up, you will find out sooner or later that it’s not feasible to do everything yourself.
Don’t get hung up on whether you have an Ivy League university education.
Only 20% of entrepreneurs in the survey felt that a university education was an “extremely important” factor. Looks like coming from an Ivy League school will not guarantee your success as an entrepreneur.
Armed with some useful evidence from this report on what it takes to become a successful entrepreneur, its time to remove your own personal barriers to success and get cracking with your own business venture.
If you are already part way through your business venture, continue refining and improving upon those systems and procedures that will help your business achieve success. Taking intelligent risks, learning from your failures and getting a good management team in place will help you achieve success even faster.