Entrepreneurial Success Factors

I’ve written about the psychological makeup of the entrepreneur and it remains an open question as to whether or not a person can be trained to act as an entrepreneur when he or she lacks some of the personality traits that have been identified in the research literature—a need to achieve and/or be their boss; a propensity for risk taking; an ability to learn from failure; and a predisposition toward innovative behavior.  However, apart from the factors that may lead a person to launch into entrepreneurial activities, the more important question is identifying the traits, skills, and actions that are most likely to lead to ultimate success for an entrepreneur.  While there is surprising evidence that formal management development and training for entrepreneurs has relatively little impact on the performance of a company, it is agreed that successful entrepreneurs generally have a keen ability to learn from their experiences.  One of the most important sources of education and development for entrepreneurs is the interaction that they have with other stakeholders in the business, including customers, suppliers, investors and bankers.  In fact, this is part of the basis for the popular notion of the “learning organization” that has been touted as the road to success for larger firms.  Other studies support the importance of dynamic learning with findings that entrepreneurs who become, or remain, task-oriented are more likely to fail.

Of course, while personality factors are certainly important in determining the probability of success for an entrepreneurial venture, there are other matters that should be considered.  For example, evidence indicating that location is positively associated with the success of smaller firms in the United States and other countries suggests that infrastructure and the proximity of the company to skilled labor and inter-firm networks may be just important as the personality traits of the entrepreneur in determining winners and losers.  Also, the specific background of the entrepreneur is important.  While researchers acknowledge that it is possible for someone with substantial capital and no technical experience to launch a new technology-based firm, most of the founders of such firms are technical entrepreneurs.  This generally means that there is a greater risk the entrepreneur will have insufficient capital to fund development and launch of the product and that attention to overall business and marketing strategy will be inadequate.  It is important for entrepreneurs to recognize their potential shortcomings in advance and plan for bringing in additional team members who can compliment their strengths.  Perhaps the best way to do this is to identify mentors who can be trusted to provide the entrepreneur with candid advice about his or her skills and weaknesses and coaching as to how best to reach out to other who can help build the business.

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