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Business Creation

Ten Factors for Entrepreneurial Success

Paul D. Reynolds

Business creation, or entrepreneurship, is a major source of national economic growth and adaptation as well as an important career choice for millions. In this insightful book, Paul D. Reynolds presents an overview of the major factors associated with contemporary business creation, reflecting representative samples of US early stage nascent ventures, and emphasizing the unique features of the two-fifths that achieve profitability.
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Chapter 6: Know what you are doing

Paul D. Reynolds

Extract

Entrepreneurial ventures offering new things, such as ride-sharing or cheap online access to movies, get a lot of attention. But the vast majority of start-ups enter established markets with substantial competition. This provides a major dilemma for nascent entrepreneurs. Established firms are not eager to share customers. Knowing how to manage a firm as a successful competitor is one of the critical components for success. There are several ways to develop this expertise. One is to work in the industry in which the new firm will compete. Another is to take classes, seminars, or workshops to develop expertise in how to implement and manage a new firm. A third option is to get help and assistance from the large variety of agencies and services currently available for those creating new businesses. All these strategies for developing entrepreneurial skills have a positive effect. Virtually all, over 99%, of nascent ventures can be assigned to an existing economic sector. This is a strong indicator that they will have competitors, businesses that were the basis for defining these market sectors. The proportion of these start-ups in each sector are compared with existing businesses in Table 6.1. Counts of existing businesses come from two sources. One provides a count of sole proprietorships based on individual federal tax returns. The other a count of firms with employees based on federal social security payments. There are some variations in the proportions in each sector. For example, there are more firms with employees (8% of the total) in food services (restaurants) than sole proprietorships (1%); it is hard to be a one-person restaurant.

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