Success and Risk Factors in the Pre-Startup Phase

Abstract:     
The question of which factors contribute to success or failure in starting a business is investigated utilizing Gartner’s (1985) framework, which suggests that start-up efforts differ with regard to characteristics of the individual who starts the venture, the organization they create, the environment surrounding the venture, and the process by which the venture is started. The relative importance of approaches and variables in explaining success at the pre-startup phase is estimated. Data on 517 Dutch nascent entrepreneurs was collected and follow-up interviews were conducted over a three year period. After the three years, 187 persons reported success in starting their business, while 105 persons had abandoned their start-up efforts. In addition, 116 persons were not able to be reached and 109 nascent entrepreneurs were still trying to set up their business after the three year time period. Several variables such as industry experience, management experience, and desired start-up capital were then analyzed to determine what factors contributed to the success or failure of these start-up businesses. A logistic regression analysis yielded that perceived risk of the market, industry experience, and exposure to guidance and advice agencies were related to the success of a start-up effort. (LKB)

Keywords: Entrepreneurial Research Consortium, Nascent entrepreneurs, Startups, Experience, Firm performance, Business conditions, Business counseling, Individual traits, Market risks, Consortia, Early stage financing

Accepted Paper Series