This document summarizes 10 key strategies for entrepreneurial success based on scientific research: 1) Choose an industry with a high startup success rate. 2) Gain relevant industry experience before starting your venture. 3) Prepare by researching the industry and developing initial sales and financial plans. 4) Assemble a strong founding team with complementary skills. 5) Achieve high initial sales to drive early growth. 6) Seek advice from experienced entrepreneurs and business advisors. 7) Obtain a college degree or professional training to strengthen skills. 8) Implement financial controls like budgeting to manage resources. 9) Secure adequate startup funding to launch and grow the business

1. THE SCIENCE OF START
Entrepreneurship Strategies that Work
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2. 1. INDUSTRY CHOICE
IT
Publishing
Health
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3. INC 500 vs. TOTAL STARTS BY INDUSTRY
Source: Shane (2009)
Industry Number of Inc 500 Firm starts Percent of Starts
firms
Pulp mills 6 33 18.182
Computer and office equipment 99 2359 4.197
Guided missiles, space vehicles, parts 2 60 3.333
Nonferrous rolling and drawing 14 581 2.410
Railroad car rental 3 136 2.206
Measuring and controlling devices 49 2482 1.974
Paper mills 3 125 2.400
Search and navigation devices 6 310 1.935
General industrial machinery 26 2173 1.197
Photographic equipment and supplies 7 646 1.084
Manifold business forms 3 281 1.068
Household appliances 4 390 1.026
Electrical industrial apparatus 11 1080 1.019
Legal services 10 129207 0.008
Eating and drinking places 34 494731 0.007
Carpentry and floor work contractors 4 66383 0.006
Real estate operators 5 90042 0.006
Hotels and motels 2 39177 0.005
Painting and paper contractors 2 43987 0.005
Retail bakeries 1 22165 0.005
Grocery stores 5 112473 0.004
Used merchandise stores 1 24442 0.004
Automotive repair shops 5 124725 0.004
Beauty shops 3 79081 0.004
Residential care 1 27710 0.004
Videotape rental 1 27793 0.004
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4. COMPUTER AND OFFICE
EQUIPMENT
Inc 500 Total start ups
99 2,359
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5. EATING AND DRINKING
PLACES
Inc 500 Total start ups
34 494,731
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6. INDUSTRY AND INC 500
Source: Shane (2009)
Computer and Office Equipment Eating and Drinking Places
(1/25) (1/14,550)
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7. MEASURING DEVICES AND
CONTROLLING DEVICES
Inc 500 Total start ups
49 2,482
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8. BEAUTY SHOPS
Inc 500 Total start ups
3 79,081
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9. INDUSTRY AND INC 500
Source: Shane (2009)
Measuring and controlling devices Beauty Shops
(1/50) (1/26,360)
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10. INDUSTRY AND SURVIVAL (4 YEARS)
Source: Mata and Portugal (1994)
Glass Products 85.7
Spinning, weaving and finishing of cottons, artificial and synthetic fibre 81.0
Spinning, weaving and finishing of wool 76.9
Slaughtering 68.0
Knitting Industry 65.7
Cut Stone and Stone Products 65.6
Footwear n.e.c. 65.4
Iron and Steel Industry 64.6
Tanning and Dressing of Leather 63.6
Machinery for the industry n.e.c. 61.5
Radio and TV Communication Equipment 47.4
Fabricated Metal Products n.e.c. 46.7
Manufacturing n.e.c. 44.4
Cement Products 42.7
Clay Products for Construction 42.1
Pottery 41.2
Household Textile Products 40.9
Made-to-Measure Clothing 37.9
Pastry 34.7
Fish Preserving 25.0
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11. INDUSTRY AND SURVIVAL
Source: Mata and Portugal (1994)
Glass Products Fish Preserving
(3/20 failed) (15/20 failed)
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12. INDUSTRY AND PROFITABILITY
Source: SARS (2008)
Industry Sector % Profitable No. Companies No. Profitable
Social and related community services 58.7 7,256 4,261
Coal and petroleum products 56.3 197 111
Medical, dental and other health and veterinary services 56.0 2,416 1,352
Chemicals and chemical, rubber and plastic products 51.2 1,220 625
Scientific, optical and similar equipment 51.1 264 135
Machinery and related items 50.5 2,803 1,416
Vehicles, parts and accessories 49.7 2,156 1,072
Leather, leather goods and fur (excl. footwear & clothing) 42.6 108 46
Transport equipment 41.8 208 87
Paper, printing and publishing 38.7 1,649 638
Wholesale trade 38.4 8,484 3,260
Wood, wood products and furniture 38.3 1,086 416
Food, drink and tobacco 37.0 1,580 584
Mining and quarrying 35.3 320 113
Research and scientific institutes 30.2 344 104
Retail trade 29.6 33,867 10,011
Employment (director of a company/member of CC) 28.7 261 75
Transport, storage and communications 28.6 7,953 2,278
Recreation and cultural services 27.4 1,835 502
Educational services 26.0 2,175 566
Catering and accommodation 23.6 5,892 1,390
Agencies and other services 23.3 71,327 16,587
Agriculture, forestry and fishing 23.3 6,248 1,456
Construction 22.8 19,839 4,532
Personal and household services 22.6 2,659 600
Long term insurance 22.2 45 10
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13. INDUSTRY AND PROFITABLITY
Source: Lussier (1996)
Coal and Petroleum products Personal and household
(12/20 profitable) services (4/20 profitable)
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14. 5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
0.00%
Source: Porter (2008)
Security Brokers
Soft Drinks
Software
Pharamaceuticals
Perfume, Cosmetics,…
Ad Agencies
Distilled Spirits
Semiconductors
Medical Instruments
Mens' and Boys'…
Tires
INDUSTRY AND PROFITABILITY (ROIC)
Household Appliances
Malt Beverages
Child Day Care Services
Drug Stores
Mobile Homes
Book Publishing
Soft Drink Bottling
Knitting Mills
Hotels
Mail-Order Houses
Airlines
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15. INDUSTRY AND ROIC
Source Porter (2008)
Soft drinks Airlines
(37.6%) (5.9%)
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16. TOTAL VC INVESTMENT PER INDUSTRY
Source: Wustenhagen & Teppo (2006)
1 Bio technology
2 Software
3 Telecommunications
4 Medicine and Pharmaceuticals
5 Electrical engineering
6 Mechanical engineering
7 Computer hardware
8 Industrial automation
9 Computer semi-conductors
10 Energy
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17. 1) INDUSTRY CHOICE
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18. 2. INDUSTRY EXPERIENCE
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19. INDUSTRY EXPERIENCE
Source: Barreria (2004)
Growing No
Ventures Growth
(15/20 profitable) (5/20 profitable)
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20. INDUSTRY EXPERIENCE
Source: Fresser and Willard (1990)
No industry
experience, 25%
Industry
experience, 75%
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21. 1) INDUSTRY CHOICE
2) INDUSTRY EXPEREINCE
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22. 3. PREPARATION
To prepare or not to
prepare, that is the paulshawsmith
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question!?!

23. BUSINESS PLANS
Source: Lange, Mollov, Pearlmutter, Singh and Bygrave (2007)
“new ventures launched with formal written
business plans do not outperform ones
launched without them.”
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24. BUSINESS PLAN?
Source: Bhide (2000)
79%
21%
Yes!
No!
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25. BUSINESS PLAN?
Source: Duchesneau and Gartner (1990)
Successful Unsuccessful
firms firms
(Avg. 237.3 hrs) (Avg. 84.9 hrs)
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26. INC 500: IDEA TO START UP
Source: Bhide (2000)
Less than a
month, 24%
More than a
month, 74%
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27. 1) INDUSTRY CHOICE
2) INDUSTRY EXPEREINCE
3) PREPARE
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28. 4. GET A TEAM
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29. PERCENTAGE SUCCEED (6 YRS)
Source: Eisenhart & Schooven (19900
Strong Weak
Team Team
(15/20) (4/20)
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30. DID YOU GROW TO 20 PEOPLE?
Source: Stam and Schutjens (2004)
(0.4% yes) (3.3% yes)
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31. 1) INDUSTRY CHOICE
2) INDUSTRY EXPEREINCE
3) PREPARE
4) TEAM
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32. 5. HIGH INTIAL SALES
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33. START UP SALES (8 YEARS)
Source: Doutriaux (1992)
< R400,000 > R400,000
Sales Sales
(R3,312,000 avg.) (R12,652,800 avg.)
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34. START UP SIZE & GROWTH
Source: Reynolds (1987)
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35. 1) INDUSTRY CHOICE
2) INDUSTRY EXPEREINCE
3) PREPARE
4) TEAM
5) HIGH INTIAL SALES
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36. 6. SEEK ADVICE
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37. GUIDED PREP AND GROWTH
Source: Chrisman, McMullun and Hall (2005)
Guided
Preparation
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38. ADVICE AND SURVIVAL
Source: Watson (2007)
Advice from accountants 3< /yr No advice from accountants
(16/20 survived ) (9/20 survived)
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39. NETWORKING & SURVIVAL
Source: Watson (2007)
Network range = How often an entrepreneur networks
x How widely an entrepreneur networks
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40. INCUBATOR & SURVIVAL (5 YRS)
Source: Phillips (2002) and Audretch (1995)
Incubator average Industry average
(3/20 fail) (10/20 fail)
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41. 1) INDUSTRY CHOICE
2) INDUSTRY EXPEREINCE
3) PREPARE
4) TEAM
5) HIGH INTIAL SALES
6) ADVICE
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42. 7. GET AN EDUCATION
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43. UNIVERSITY EDUCATION?
Source: Fairlie and Robb (2007)
University drop outs University graduates Post graduate degree
(25% greater sales) (75% greater sales)
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44. INC 500 FOUNDERS
Source: Bhide (2000)
Other High school,
advanced 11%
degree, 20%
Two-year
college, 6%
MBA, 15%
Four-year
college, 48%
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45. 1) INDUSTRY CHOICE
2) INDUSTRY EXPEREINCE
3) PREPARE
4) TEAM
5) HIGH INTIAL SALES
6) ADVICE
7) EDUCATION
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46. 8. USE FINANCIAL CONTROLS
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47. BUGETING AND GROWTH
Source: Davila and Foster (2005)
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48. WHY DID YOU FAIL?
Source: Lussier (1996)
31% Creditor problems &
Slow account receivables
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49. 1) INDUSTRY CHOICE
2) INDUSTRY EXPEREINCE
3) PREPARE
4) TEAM
5) HIGH INTIAL SALES
6) ADVICE
7) EDUCATION
8) FINANCIAL CONTORL
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50. 9. START WITH MONEY
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51. MONEY AND SURVIVAL
Source: Bruderl, Preisendorfer & Ziegler (1992)
R250,000 or more R100,000 or less
(3/20 fail) (11/20 fail)
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52. VC BACKING AND LISTING
Source: Gomper et al. (2009), Shane (2009), CIPRO
(1/10 list) (1/2500 list)
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53. 1) INDUSTRY CHOICE
2) INDUSTRY EXPEREINCE
3) PREPARE
4) TEAM
5) HIGH INTIAL SALES
6) ADVICE
7) EDUCATION
8) FINANCIAL CONTORL
9) MONEY
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54. 10. TIME
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55. TIME AND SURVIVAL RATES
Source: Evans and Leighton (1989)
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56. START UP EXP AND SURVIVAL
Source: Bruderl, Ziegler & Preisendorfer (1992)
Start up No start up
Experience Experience
(3/20 failed) (6/20 failed)
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57. 1) INDUSTRY CHOICE
2) INDUSTRY EXPEREINCE
3) PREPARE
4) TEAM
5) HIGH INTIAL SALES
6) ADVICE
7) EDUCATION
8) FINANCIAL CONTORL
9) MONEY
10) TIME
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58. 11. MANY GOOD DECISIONS
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59. GROWTH FACTORS
Source: Schutjens and Wever (2000)
 Team  One person biz
 Well prepared  Less prepared
 High initial sales  Low initial sales
(46% grew) (4% grew)
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60.  Team
 Well prepared =
 High initial sales
10 times
more likely
to grow
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61. Predicting New Firm Survival
Source: Cooper et. al (1994)
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62. 1) INDUSTRY CHOICE
2) INDUSTRY EXPEREINCE
3) PREPARE
4) TEAM
5) HIGH INTIAL SALES
6) ADVICE
7) EDUCATION
8) FINANCIAL CONTORL
9) MONEY
10) TIME
11) MANY GOOD DECISIONS
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63. www.paulshawsmith.co.za
paulshawsmith@gmail.com
073 954 1346
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