Findings from the Bettany Centre for Entrepreneurship at Cranfield School suggests that business builders who decide to keep a lean operation and go it alone fare better down the road.
The research study looks at whether the start-up size of a new business makes a difference to survival and success rates.
It finds that entrepreneurs which ‘take their time’ and ‘build up their workforce slowly’ have a higher chance of survival and ultimate success.
This allows them, the report says, to find out whether there is demand for a product or service before investing more heavily in the business.
Results reveal that among the new ventures which hire employees, the annual company closure rate is reduced from 20 per cent to 8 per cent when the entrepreneur starts up on a solo basis.
Andrew Burke, director of the Cranfield Business Growth Programme (BGP), comments, ‘Too often aspiring entrepreneurs think that starting a business with all the financial and resource characteristics of a successful established business is a “professional approach” to entrepreneurship that is more likely to succeed than a start-up based in somebody’s bedroom.
‘The data does not support this view. By contrast we have found that a lone start-up creates a positive double whammy by lowering risk and increasing the flexibility of the new venture.’
Burke says that he also notices the same trend when analysing some of the more ‘successful businesses’ which have come out of the Business Growth Programme.
The research has been jointly undertaken by Panteia/EIM in the Netherlands and the University of Huelva in Spain.