Entrepreneurial Success
by M. Anthony Sacco of Stratalyne Business Solutions LLC
In the July-August, 2015 Harvard Business Review we find an interesting short article (“Entrepreneurship – For Founders, Preparation Trumps Passion”, Dholakia, Herzenstein, & Sonneshein) reporting research findings regarding entrepreneurial success factors. The article compares success of entrepreneurial organizations as related to passion for the endeavor versus preparation. The findings are a bit mixed but significant and definitive.
Passion is recognized by unsophisticated investment capital resources as a positive start up element. Therefore, it is more likely that a very passionate founder of a new business will be able to acquire the friends and family start up capital they solicit. This sounds like a good thing for the start up, right? But is it? Yes, finding funding for a new business will require the recognition of funders that passion exists and is authentic. But they will be looking for something else too. And for good reason according to the research.
What of preparation? (You see where this is going, right?) As it turns out, according to the research, passion will get you some credibility but preparation is a strong indicator of sustainability. When it comes to long-term success of the organization, start ups have more consistently established long-term success that prepare well. They have considered and are cognizant of their markets, have explored their concept, have a solid plan including potential obstacles and a strategy to adjust to or overcome those obstacles.
Therefore, the research showed that professional investors rank passion lower and preparation higher. But the article then cautions us that “crowd funding” does not have the emphasis on preparation that professional investors do. So, as a take away, I think it goes like this:
An entrepreneur must be passionate about the start up business and by nature probably is but to insure a sustainable project preparation has to be well thought out with depth, contingencies, and strategic thinking even if the funding source doesn’t demand the preparation.
Related resources:
Business Planning: Building an Effective Business Plan by Andrew Sherman, Entrepreneurship.org
An Introduction to Business Plans www.entrepreneur.com
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