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New study reveals why only 2% of businesses succeed

a new study reveals why only 2 of businesses succeed can be used as an inspiration to startups

Headlines typically suggest that all you need to start a business is an inherent killer drive and opportunistic luck, and you’re destined for success. Yet, if that’s all that’s required, why do only 2% of businesses succeed? Our research reveals that it’s the distinctive attitudes of highly successful entrepreneurs that hold the key to venture success.

In a world-first 20-year study of highly successful entrepreneurs and business builders, we examined founders who started and exited businesses within five years for between $6 million and $1.2 billion, and those who profitably grew their business over 10-15 years or more.

We were able to measure 48 individual attitudes (the intrinsic preference you have for business-related activities) and identify the patterns that correlated with entrepreneurial success. According to our research, business success relies on more than a general drive to succeed; you also need the right combination of personal attitudes if you’re going to make it to the 2%.

Awareness of blind spots key to avoiding startup failure.

When looking at the most successful entrepreneurs, we discovered that while they had diverse businesses and backgrounds, their work preferences were surprisingly similar. Drilling down, we were able to benchmark the sweet spot for entrepreneurial attitudes: the ‘fingerprint for success’.

The study confirmed that when an attitude or motivation is too high or too low in a specific area, you’re exposed to business blind spots that could lead directly to failure. Much like the blind spots you check in your car, they’re often invisible and can be catastrophic.

Fortunately, attitudes can be adjusted with awareness, allowing founders to compensate by managing their or their team’s behaviour, consciously dialling motivations up or down as required to maintain a steady pace towards success.

A closer look at avoiding business failure.

For each of the 48 attitudes, our research identified an optimum level that correlated with success at multiple business stages, from startup to scale and exit. Some of the critical attitudes of successful entrepreneurs were:

  • Higher focus on money: not just on receiving a return for great ideas, but taking the time to reflect on the benefit to margins, profit and other financial aspects, and measure over time.
  • Higher focus on big picture thinking and a low focus on detail: rather than get tangled in the ‘how’, successful entrepreneurs quickly grasp the gist and plough forward. A higher focus on detail was linked to delays and failure.
  • High level of initiation to take action and reflect: rather than waiting for the right time to start, successful entrepreneurs are more likely to just want to get things started, and iterate as they go. Fail fast, fail often!
  • Low focus on structure: they don’t plan things out first, but instead get clear on their ‘why’ and create structure as they go along.

How to predict venture success.

With the results of our findings, F4S has created a technology platform that allows aspiring entrepreneurs to visually assess their intrinsic attitudes against those of highly successful entrepreneurs and business builders.

Armed with a clear understanding of their attitudes, founders can align their focus with those of proven successful entrepreneurs, and compare their natural talents – and blind spots – with co-founders and team members.

It seems the formula for success might be closer than we thought…

Want to be a better entrepreneur? Find out how you can align your motivations to maximize your chances of venture success today.

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