Ten Factors for Entrepreneurial Success
Chapter 9: It takes some effort
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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