Thursday, June 7, 2012

Find Out Why Some Start Ups Succeed and Others Fail

 Find Out Why Some Start Ups Succeed and Others Fail

Why do some startups succeed and others fail?

The Business Insider has some interesting insight on the subject:

Paul Gompers, Anna Kovner, Josh Lerner and David Scharfstein put together a Harvard Business School working paper to answer that question, Performance Persistence in Entrepreneurship.
In it, they answer things like:
Check Out a few of those answers below:

Do serial entrepreneurs have a leg up on first time entrepreneurs?

Answer: Yes. Serial entrepreneurs are more likely to build successful startups.
According to the Harvard researchers, there is performance persistence in entrepreneurship.
They write, "All else equal, a venture-capital-backed entrepreneur who succeeds in a venture (by our definition, starts a company that goes public) has a 30% chance of succeeding in his next venture. By contrast, first-time entrepreneurs have only an 18% chance of succeeding and entrepreneurs who previously failed have a 20% chance of succeeding."  

But we have to state that no one should give up on their dreams for a start up business. Where there is a will, there is a way. We believe if the business dream is desired and sought after to its end, it will be fulfilled.

Who is more likely to get a VC's check; a founder who failed at their last venture or a founder who succeeded?

Answer: If it's the same VC firm, the failed entrepreneur.
Failed entrepreneurs are more likely to get funding than successful entrepreneurs from the same VC firm.
Strange but true.

Is running a successful venture skill, luck or timing?

Answer: Successful entrepreneurs are skilled at timing the market.

Here's why:

According to the Harvard paper, "The industry-year success rate in the first venture is the best predictor of success in the subsequent venture.  Entrepreneurs who succeeded by investing in a good industry and year (e.g., computers in 1983) are far more likely to succeed in their subsequent ventures than those who succeeded by doing better than other firms founded in the same industry and year (e.g., succeeding in computers in 1985).
Read more on the 10 Harvard findings here.

To get started with your business venture, make sure to check out our services. A business plan is your first step to success in your new business.


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