The Data On Entrepreneurial Success

The Origin and Evolution of New Businesses Amar V. Bhide, (c) 2000
This is a heavy book containing some of the rare research on entrepreneurial ventures and small businesses. The research is based on the Inc. 500 vs. the Fortune 500 that constitute the majority of academic research.

What They Say: Most entrepreneurial businesses aren't truly profitable beyond providing their owner with an income. For many entrepreneurs, this wage is actually lower than that which they would earn working for someone else. More promising entrepreneurial businesses, defined by their membership in the "Inc. 500" list, share the following attributes:

• Generated positive cash flow within months of launch
• Grew sales, on average, 169% per year over a 5-year period
• 25% fall in computer-related fields
• 88% claim success mainly due to the "exceptional execution of an ordinary idea"
• 60% of founders had prior experience working in their chosen field
• Most founders are self-funded (no external fundraising)
• 60% started out serving just local or regional markets

What This Means For You: When starting a business, it is tempting to believe the popular myths and big dreams of getting millions in venture funding and taking the world by storm, but the vast majority of financially successful entrepreneurs work in relatively "unsexy" fields and take on no outside investment. They don't take years to become cash-flow positive, and the entrepreneur has the education and managerial skills to run a profitable enterprise.  

What to Do: Seek business opportunities that will maximize your skills but don't require a massive investment to get started. Watch your business results constantly to look for the time when you begin to plateau, and seek support as soon as you see your numbers stalling.

Virginia Ginsburg is founder and chief consultant at Swell Strategies. She is passionate about supporting small business owners and entrepreneurs in starting and running successful enterprises. An avid reader, in this blog she reviews books and articles and relates specific learning points back to entrepreneurial businesses.