Considering entrepreneurs' significant roles and contributions, it is essential to understand the primary and common elements that determine their success. The critical success factors can be categorised into three broad components as follows:
- Entrepreneurship
Successful entrepreneurs must fundamentally possess adequate education, relevant experience; deep market knowledge and professional networks; and a marketable idea. To manage the whole business process, they must also have a solid command of management skills covering marketing, cost control, cash flow management, and specific legal requirements (e.g., business registration). Entrepreneurial knowledge and creativity are essential in driving continuous improvement in a business. entrepreneurial knowledge – superior understanding of specific business issues. - Resources
Resources are another crucial factor influencing the success of new business ventures, with the most important being financial, technological and human. Entrepreneurs need to guarantee adequate start-up funds from their capital, family support or external financial supporters, such as “angel investors”.211 Among other factors, human resources are the foundation of a successful and well-functioning enterprise, and technological expertise is essential to realising ideas. - Business plan
A unique and well-developed business plan is essential in competitive markets as it is an assessment of all factors and coordinates entrepreneurs’ strengths and available resources. Successful business plans consist of clearly-defined corporate missions, strengths and weaknesses, and competitive products and services. During the implementation of business plans, successful entrepreneurs should always pay close attention to (a) the trends of the market and customer needs; (b) policy changes, including public spending and procurement; (c) advancement of technologies; and (d) economic volatilities (boom or decline).
Figure 6. Key success factors for entrepreneurs
Source: ESCAP, Policy Guidebook for SME Development in Asia and the Pacific (2012), with adaptations from the Entrepreneurship Model (GEM, 2011); Kim, Bo-Young & Kim, Hyojin & Jeon, Youngok. (2018). Critical Success Factors of a Design Startup Business. Sustainability. 10. 2981. 10.3390/su10092981.
While entrepreneurs can influence the factors mentioned above for success, the external environment in which entrepreneurial activities occur is beyond their control. The external environment includes factors such as the overall macroeconomic stability, the existence and efficiency of institutions and infrastructure, and appropriate levels of health and education. A favourable external environment will play a key role in determining the likelihood of entrepreneurial success. In addition, entrepreneurs also benefit from being highly aware of the specific social, cultural and political context in which they are operating. An adequate understanding of these dimensions helps them obtain market insights and develop context-specific products or services. Figure 3 illustrates the overall framework of critical factors for successful entrepreneurs.
Whereas MSMEs are more vulnerable to changes in market structure, increase in competition, and changes in customer product preferences, it will be difficult for them to survive if they lack an entrepreneurial spirit and orientation.212
211 An “angel investor” is an affluent individual who funds business start-ups in exchange for ownership equity or future repayment of loans.
212 Gudmundson S.V., Lechner C. (2014). Entrepreneurial orientation, firm strategy and small
firm performance, “International Small Business Research”.
