Entrepreneurs' Perceived Chances for Success

Abstract

Explores the expectations of entrepreneurs in newlyestablished businesses regarding their own chances of success and theirpredictionsregarding the chances for success of others with similarstartup ideas, in one of the first such studies. Past research suggests that,at best, fewer than 50% of firms survive for more than five years with a givenowner/manager. Based on this past research, three hypotheses are posited:entrepreneurs will perceive their odds of success at less than or equal to 50%,entrepreneurs' prediction of others' success will not differ significantly fromtheir prediction of their own success, and entrepreneurs' expectations ofsuccess will be related to a number of personal factors including theirbusiness experience, prior ownership, and educational level. Data were gathered from surveys sent in 1985 to members of the NationalFederation of Independent Business (NFIB) who reported that they had openedtheir own businesses in the United States. Of those responding, 2994entrepreneurs were selected from the original sample. Findings did not support any of the three original hypotheses of cautiousoptimism (as prior research predicted). In fact, the results show thatentrepreneurs' perceptions of their own odds for success display a noteworthydegree of optimism. In addition, entrepreneurs believe their own odds ofsuccess to be greater than other new business owners with similar ideas.Furthermore, an analysis of the predicted factors for success showed aremarkable lack of relationship between an entrepreneur's belief of their ownpotential and the objective predictors. In fact, those who were poorly preparedseemed just as optimistic as those who were well prepared. One implication isthat business founders should seek advice from more objective outsiders.(SFL)