Starting a business can be one of the most exciting endeavors in a person’s life. It can also be a significant risk and the process can be very complicated. The key to success lies in the ability to find a good business idea, validate it and then bring it to market. This can be done either through making or manufacturing a product or selling a service. It is important to consider how much it will cost to start the business, what legal requirements are required and if there is a need to register the business. Finally, it is important to have sufficient cash on hand or the means to finance the business through reinvesting profits. The latter is called “bootstrapping” and may be a desirable option, especially in the early years of a startup.
In the past, there was little systematic knowledge about business creation besides a rich array of individual stories and analyses reflecting samples of convenience. Today, however, there is a wide variety of empirical studies providing substantial new insights into the nature and basic features of contemporary business creation. These studies are based on large, representative samples of nascent entrepreneurs and nascent ventures in various economic sectors, followed up over time and analyzed for the characteristics of those that reach profitability.
The insights gained from this research are important to understanding the role that entrepreneurship plays in market economies. They are also important for policy analysts concerned with programs and policies to promote entrepreneurship.