any factors play a role in the success or failure of a small business, but how can these factors be accessed across business types and how do we identify which ones are key?In previous articles we have addressed how businesses can compete relative to one another but here we will dig into the key factors that permit startup and long-term success.
Through the 80s, as the study of entrepreneurs and small businesses became more prevalent, it was recognized that a formal structure to describe venture creation would be helpful. William B. Gartner in his 1985 work ‘A Conceptual Framework for Describing the Phenomenon of New Venture Creation’ set out to establish such a structure.
The goal is to identify the specific variables that describe how each new venture was created, in order that meaningful contrasts and comparisons among new ventures can be made.” (Gartner 1985, 701)
As Gartner puts it
The framework integrates four major perspectives in entrepreneurship: characteristics of the individual(s) who start the venture, the organization which they create, the environment surrounding the new venture, and the process by which the new venture is started.” (Gartner 1985, 696)
Gartner’s first category the “individual” includes characteristics such as the need for achievement, locus or control, risk taking propensity, work experience, age, and education.
The “organization” is the entity that is created and consists of the product or service, the customer contracts, licensing, focus, and resource usage.
The “environment” is the external conditions outside the ventures scope of influence. Environmental factors include the available capital, skilled labor force, market accessibility, living conditions, and availability of supplies.
Lastly the “process” is the behavior and activities of the individual. Examples of process would be finding a business opportunity, gathering resources, making the product, or marketing.
This framework provides a common ground to compare the primary factors at a venture’s creation to the factors that play a role in the overall success. You will be suprised to find they are quite different.
Key Startup Success Factors

The application of Gartner’s framework upon business startup was conducted by Marco Van Gelderen when he used the framework to assess the relative importance of factors in successfully getting a venture started. (Van Gelderen 2006). The empirical study followed 512 entrepreneurs over the course of three years and determined that there were three primary contributing variables in the startup phase.
The first factor he found to be associated with startup success was the perceived risk of the market. In other words Individuals may or may not start a business given their perception of the risk associate with the venture. Van Gelderen points out that the actual risk may not be the same as the perceived risk but argues that a lower perceived risk will result in an earlier start to a venture. Risk or perceived risk of the market would be considered by Gartner to be an environmental condition.
The second factor associated with success at startup was found to be starting full time verses starting part time. Van Gelderen noted that starting part time is less risky but is also a sign of lower commitment. Starting full time assumes more risk but is also a sign of greater commitment. Individuals who started full time with a greater commitment are more likely to get their venture off the ground. Within the scope of Gartner’s frame work this would fall under the banner of an organizational factor.
The last factor Van Gelderen cites is the early capital requirements. Van Gelderen noted that those who lower their capital requirements increase their chances of getting started while those who intend to use more startup capital have a lower probability of getting their business running. Capital requirements would be considered by Gartner to be an environmental factor.
To summarize Van Gelderen’s findings in terms of Gartner’s framework, the primary success factors associated with getting a business started are (1) the perceived risk of the market, an environmental factor (2)starting full time verses starting part time, an organizational factor (3) the initial capital requirements, an environmentalfactor.