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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 9: It takes some effort

Paul D. Reynolds

Extract

Starting a firm requires some personal investments. Start-up teams expect to invest time and money in a nascent venture before it will be profitable. While every start-up reflects a unique business idea and the social and economic context may vary widely, it is useful to consider the range of investments reported by those in the start-up process. The range of contributions of time and money is considered in relation to outcomes, followed by a discussion of factors that may affect the amount of the investments. While the amounts for individual ventures may be modest, the total annual investments for ten million start-ups being initiated by eighteen million nascent entrepreneurs in 2016 is considerable: about three and a half million work years and $200 billion.1 How much work is required to start a new firm? The average time invested in those ventures that reach profitability is about 1,500 person-hours, or 38 person-weeks of full-time work, presented in the top panel of Figure 9.1. But the distribution is very skewed. About half take less than 560 person-hours, the median value. A small proportion take considerable investments. About one in 11 (9%) absorb over 4,000 person-hours and the maximum in this cohort is 22,800 person-hours, over ten years of full-time work.

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