What Are Primary Reasons for New Business Success?


Every entrepreneur starting a business knows there is a chance his venture will not succeed. Accepting the risk of failure has always been an aspect of being an entrepreneur. Before launching a company, the founders must make every effort to make sure the venture has the necessary components in place to give the company the best chance of success.

Adequate Capitalization

It costs money to start a business, even a small home-based venture. With most start-ups there is a period of time when cash outflows exceed revenues. Having adequate capital to weather this difficult period until the company reaches positive cash flow is absolutely critical. A company without the necessary capital often goes out of business because it can’t afford to do an adequate job of marketing--reaching out to potential customers.

Outstanding Management Team

How the company builds its management team right from day one significantly impacts whether it will succeed. The founders of the company must understand the skills and experience required to effectively compete in that particular industry and find people who have the right background to fill each key role. But an effective team is more than just a portfolio of skills. The team must be able to work in harmony, must have the personal quality of perseverance in the face of adversity and must be extraordinarily dedicated, because starting a company usually involves long work days and significant stress.

Superior Product or Service Offering

In most industries or market niches, there is not much room for “me-too” ventures to enter the marketplace--those with products or services that are far too similar to what is already available. Unless the company is providing products or services that represent a substantial and demonstrable improvement over what the largest competitors are offering, customers are likely to do business with the established firms, the well-known brand names, rather than with a start-up they have no experience with.

Sufficient Numbers of Potential Customers

Before launching a venture, an entrepreneur needs to know the size of the potential market for the products or services she will be offering. Large numbers of customers must have a need for these products and services. She must also be confident that the target market is ready to make a purchase decision. The customers must perceive that they need the products or services right now, today, not two years in the future when they have more funds available.

Sound Business Plan

Starting a company is like solving a complex puzzle, and the business plan shows exactly what must be done, the time frame for each step in the solution, and what resources are required. Entrepreneurs who take the time to carefully think through all the numerous steps of starting their venture are better able to make confident decisions and have the strategic direction in place to avoid the pitfalls that many times are encountered in a company’s early stages.

Ability to Sell

An often overlooked factor when starting a company is knowing whether you have the persuasive personality to interact successfully with customers--in other words, to make the sale. It’s exciting and mentally challenging to devise marketing strategies in a business plan. Facing rejection over and over from customer prospects is not fun. The implementation of the marketing strategy--the difficult process of going from meeting a prospective customer to getting him to make a purchase--is where many start-up companies stumble.

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