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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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Index

Paul D. Reynolds

activity clusters
creating an infrastructure 91
funding related efforts 91
impact of 92
legal recognition of intellectual property 91
operation of business activity 90
organizing of start-up team 91
overview of 956
planning efforts 91
policy implications of 96
public presence 90
relationship with profitability 91
see also multiple activity clusters
activity domains and outcomes 91, 94
allocation, of economic resources 42
asset backed loans 117
attracting customers 8990
significance of 90
autonomy, notion of 30
benefits, of business creation 146, 151
business administration
courses and outcomes 74
skills for 17
business associates 60, 65
business creation 12, 49
benefits of 146
dominated by immigrants 18
major issues associated with 10
overview of 10
participation in see participation in business creation
policy implications 1011
ten things to know about 4
business creators 17, 20, 26, 30, 37, 38, 40, 423, 51, 148
social networks of 23
business ideas 57, 92, 96, 98, 119, 1289, 150, 152
development of 6, 30
nascent ventures based on 76
sources of 7071
business license 88
business management 745, 77, 145
business opportunity 1617, 23, 268, 32, 434, 47, 51, 125, 148
business owners 6, 11, 267, 32, 135
rewards of business ownership 26
social network of 17
business plan adjustments, reasons for 128
business planning 79, 92, 149
business services 7, 61, 63, 65
business skills 61
career
employment 17
opportunities 88, 139
case weights, development of
duration in process adjustment 1567
effect on
start-up process outcomes 158
time in start-up process 159
sample screening adjustment 156
team size adjustment 156
triple-adjusted 158
challenges, in business creation 88, 90
classroom experience 745
complications, in business creation
attracting customers/revenues 89
financial support 89
operational 89
personal and family issues 90
consulting agencies assistance and outcomes 75
Consumer Price Index (CPI) 24
control index, five-point scale of 40
copyrights 79, 91
credit cards, loans through 117, 121
crowdsourcing 114
customer discovery 96
debt financing 119
decision-making styles 40, 423, 51
discontinued ventures, reasons for 90
disengagement, from business creation 85, 87, 95, 12932, 135, 1389, 142, 145, 146, 151, 156
Eatwell business 35, 37
economic resources, allocation of 42
economic sector 77, 106, 110
adaptation and creation of 4
new firms and their 6870
economic sophistication
in decision-making process 423
measurement of 42
Employer Identification Number (EIN) 7
entrepreneurial
careers 17
initiatives 23
intensity see entrepreneurial intensity
entrepreneurial experience, ten things about 14850
entrepreneurial intensity 38
and level of commitment 49
measurement of 44
and participation in business creation 39
shifts over time 49, 50
systematic reduction in 49
entrepreneurial personality 26, 49
entrepreneurs
growth oriented 33, 43
human capital and outcomes 134
nascent see nascent entrepreneurs
personality traits 43
socio-demographic characteristics 133
post-quit options 141
and reasons for quitting 140
entrepreneurship 2
educational programs on 17
genetic predisposition of 327
need for achievement (N-Ach) 335
personal dispositions 33
risk preference 357
readiness for 1517
equity
investments 119
ownership 101
sweat equity 98101, 104, 152
established firms
nascent ventures and 69
sector distribution of 69
sharing of customers 68
work experience in 77
Facebook 1, 149
factors affecting outcomes, of
business creation
economic sophistication 423
innovation versus adaptation 4042
motives and orientations 434
family business 17, 55
federal social security 68, 82
federal tax returns 68
financial institutions 117, 1256
financial support
formal see formal financial support
informal see informal financial support
policy implications of 126
firm life course 23
formal financial support 11923
to all nascent ventures 124
amounts of 120
attributes of 125
contracts for 119
impact of 1235
to legally registered ventures 122
outcomes of 121, 122, 124
sources of 120
for-profit new ventures 4
full-time work 98, 100, 106, 10910
Gamblers Anonymous 512
growth oriented entrepreneurs 33, 42
growth ventures 28, 43, 51, 1045
helper assistance, types of 64
helpful others 5961
assistance provided by 61
relationship to 60
by start-up team structure 60
helping agencies 756, 77
high technology ventures 18
hours of work 104, 161
household income 21, 145
human capital 18, 20, 132, 134
participation in business creation and 20
I-Corp (Innovation Corp) training 96
immigrant business creation 18
income tax payments 82
“industry creating” start-ups 149
informal financial support 114, 11619, 125
outcomes of 118
sources and amounts of 116
innovation versus adaptation, in business creation 4042
intellectual property 79
intellectual property rights (IPR) 82, 93
legal recognition of 91
internet based social interaction 1
intrinsic rewards, types of 26, 3032
investments, in nascent ventures
equity ownership 101
factors affecting 1049
formal financial support 11923
forms of 114
informal financial support 114, 11619
method of contribution 1014
overview of 109
ownership 116
person-hour investments 106
policy relevance 11012
profitability in 102
sole proprietorship factors associated with 107
by start-up teams 102
monthly financial contributions 104
team member factors associated with 108
venture characteristics and 105 see also team investments
jobs
creation 4, 153
market 49
satisfaction 11
labor force 32, 142
“lean start-up” strategy 96
lease obligation debts 121
legal registration, of the firm 11415, 125
living expenses, of start-up team 114
strategy for covering 114
loans
asset backed 117
by credit cards 117
by financial institutions 117
personal 116, 117, 121
post-legal registration 120
sources of 117
through personal relationships 117
market economies 2
mentors
assistance provided by 61
relationship to 60
by start-up team 60
minority participation, in business creation 2, 15, 21, 77, 109, 121, 144, 148, 162
more start-ups 6, 73, 76, 79, 834, 139, 142, 145, 151
motivation, for business creation 25, 268
assessment of 4951
contextual 268, 479
cross-national comparisons 2830
exceptions of 29
intrinsic rewards of 3032
personal goals 49
policy implications 52
“push” and “pull” factors of 27
and rewards of business ownership 26
shifts over time 479
stability of 47
multiple activity clusters
domains of 94
outcomes of 935
nascent entrepreneurs 17, 21, 43
classroom experience 745
commitment intensity 51
dispositions, and outcomes of 449
entrepreneurial intensity 38
genetic predisposition 327
motivation for business creation 25, 268, 449
cross-national comparisons 2830
intrinsic rewards 3032
overview of 4951
personal control of outcomes 4044
personal financial situation of 212
personality traits 43
policy implications 52
problems expected by 89
profitability 83
risk preferences 378
satisfaction by outcome 9
tolerance for risk 51
versus typical adults 8
U.S. population of 18
nascent ventures 65
business ideas 76
discontinued 89
economic sector 6870
factors associated with duration in process 16061
guided by individuals 767
helping agencies for 756, 77
investments in see investments, in nascent ventures
overview 767
policy implications 77
prior experience 7074
problems expected and reasons for quitting 89
sector distribution of 69
start-up experience 76
still in process 101
time devoted by outcome 99
National Science Foundation 96
need for achievement (N-Ach) 335, 44
index score 44
and participation in business creation 34
not-for-profit initiatives 4
operation of business activity 90
ownership investments 116
Panel Study of Entrepreneurial
Dynamics (PSED) 2
participation in business creation 12
by age and gender 13
contextual motivations and 27, 29
due to a lack of good options 30
entrepreneurial intensity and 39
by ethnic background and gender 1415
factors affecting 23, 29
global assessment of 30
and human capital 20
by minority 15
need for achievement and 34
outcomes of 44
overview of 213
personal characteristics in 1821
personal dispositions and 41
policy implications of 23
by readiness for entrepreneurship 1517
risk orientation and 36
socio-demographic characteristics of 19
part-time jobs 135
patents 79
personal dispositions 33
and participation in business creation 41
personal loans 116, 117, 121, 125
personal savings 11617, 125
personal social networks 17
person-hour investments 106
person-hours, devoted to start-up effort 101
pre-legal registration 119
previous experience, with business creation 7074
problem-solving 42
profitability, of nascent ventures 834, 95, 98, 102, 14950
activity clusters and 91
time to 85
and total start-up activity 85
profitable business, creation of 6, 10, 92, 110
PSED protocol
case weights 15662
cohort development overview 154
data sets 15363
access to 162
PSED I 33, 153, 161
PSED II 153, 161
date of entry 1556
documentation 162
follow-up interviews 153
process weights adjustment 1579
sources of time in duration variation 15962
public education systems 1011
public presence, for nascent venture 90, 93, 95
“push” and “pull” factors, for business creation 27
quitting, a start-up venture 1359
for better career opportunities 139
entrepreneur socio-demographic characteristics and 140
non-business complication 136
organizational and management issues 139
policy implications 146
post-quit options 13942
reasons for 1379
reduced interest 142
real entrepreneurs 28, 33, 51
reasons for pursuing, business creation 25, 26
registered ventures 119, 121, 123, 150
respect, idea of 30
retirement plan 25
rewards, of business ownership 26
risk preferences
commentary on 378
Eatwell business 35
idea of 357
and participation in business creation 36
Sleepwell business 35
seed funding 136
self-confidence 6, 148
self-employment 8, 10, 135
sense of satisfaction 148
shutdown of business, factors influencing 89
Sleepwell business 35, 37
Small Business Development Centers (SBDC) 75
social contacts, with entrepreneurs 17
social costs, of business creation 45, 151, 152
social networks 60, 66, 149, 151
of business creators 23
of business owners 17
of start-up teams 55
sole proprietors 55, 6061, 106, 159
sole proprietorships 60, 62, 65, 68, 106, 110
and nascent venture investments 107
Southeast Foundations 12
stability of motivations 47
start-up activities 79
defining the market and customer base 82
implementation of 84
investments of funds 82
and outcomes 834, 9093
overview of 867
policy implications 87
by popularity 80
prevalence of 81
schedule of 87
timing of 8082
outcomes 845
profitability 85
quitting 86
Startup.com 2
start-up experience 72, 73, 76, 106, 109, 139, 1445
start-up initiatives, funding for 114, 121, 151
start-up process 79, 112, 131, 154
concept of 3
features of 92
patterns related to pivoting during 1445
timing of financial support events in 115
start-up skills 16
start-up teams 556, 86
age distribution among 109
business operation of 59
of business partners 149
business services 63
ethnic composition of 109
experience and outcomes 72, 73
factors associated with duration in process 163
family start-up 55
helper assistance and outcomes 64
helpful others 5961
industry work experience 71
investments, in nascent ventures 102
job responsibility 57
living expenses of 114
management of 59
members and contributions 1079
mixed gender teams 107
monthly financial contributions 104
organization of 579
overview of 65
personal involvement and outcomes 623
policy implications of 66
previous start-up experience 109
profitability of 59, 63
size and structure of 55, 56
social relationships 56, 57, 65
steps in business creation 7980
team member responsibilities 58
team structure and outcomes 62
types of activities 57
“still in process” nascent ventures 101
sunk costs 42, 84, 86, 93, 1512
supplier credits 67, 13, 15, 82, 90, 121
sweat equity 98101, 104, 152
task achievement 30, 32, 43
team investments
factors affecting 1049
sole proprietors 106
start-up team members 1079
funds provided to start-up effort 103
tendency, to pursue business creation 22
time line, for business creation 155
by outcome 99
tolerance for risk 35, 51
and the outcomes 47
trademarks 79, 91
unemployment taxes 82
venture capital funds 2
venture sponsored credit cards 121
wealth, significance of 30
work career 6, 910, 137
work experience 6, 1314, 21, 37, 7072, 767, 106, 110, 135, 139, 142, 144, 162
work satisfaction 78
Zuckerberg, Mark 1