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TIIE ENTREPRENEURSHIP CHAPTER 6 157

SIT.IITLL BI-r.;INISS ENTRY: PA.IHS

owners of comlnon br-rsinesses go to so much effort to try to ntake a difl'erence between their busi-
ness ancl other, essentially identical, firms. An example is l.tow Morton's of Chicago
and the Ruth's
Chris steak houses operate. Careful sarnpling of each firrn's steaks reveals no significant diff'erence
in price, quality. tenclerness, size, or taste. The restaurants have similar menus and wine lists. Each,
however, has distinctive interior decorating and presentation of their rneals. Mor-ton's brings a selec-
tign ol'huge uncookeci steaks to each table fbr patrons to tnake their choices. The cooked steaks are
served on oversizecl china plates. Ruth's Chris provides equally large steaks, selected from a printecl
rneflu, Servecl on plates that are heated to a high temperitture to create the trademark "sizzle."
Amy is an example of an accidental business start-up. She did not set out to create a new busi-
ness model. However, her strict standards and ability to pay for standby sitters has made her service
unique- The high reliability of her service and the confidence that parents have in the abilities of her
sitters have made a business that is usually considered to be a par-t-time thing for the girl next door
irlto a prot'essional and profitable business for its fbunder.
The specific concept that leads to a start-up business usually comes from the experience of the
person starting the business. Two-thirds of all start-ups are based on ideas from prior work experi-
ence, hobbies, and family businesses.s These businesses are generally rnore likely to succeed than
are businesses based on ideas fiom other sources. Research into the indicators of successful start-ups
shows that one ofthe best predictors ofsuccess is the level ofexperience ofthefounders. Random founder
events, suggestions from tiiends and associates, and specilic education courses are the sources of People who create or start a new

only a relatively few start-up ideas. business.

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The probabitity of creating a successful start-up is increased greatly when the fodnder has certain
attributes and when the founder takes certain actions. Doing the fbllowing things has been shown to
be the r.nost ef'fective route to success (see Exhibit 6. l).
O Start the business in a business incubator: A business incubator is an organization tl.rat
provides flnancial, technical, and managerial help to start-up businesses. Most incubators are
associated with economic development agencies and are integrated into the community. In-
cubators provide access to angel investors, public grants tbr seed money, and technology
support.
Business incubators are created to strengthen the local economy by helping create jobs
through the establishment of successful small br-rsinesses. But incubators do much more than
just create new jobs. They aid in the commercialization of new technologies, the revititlization

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)-st 1. Start the business in a business incubator.
\t 2. lake pan in a mentoring program.
3. Have a detailed start-up budget.
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4.
5.
Produce a product or seruice for which there is a proven demand.
Secure outside investment.
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2t 6. Start with more than one founder.
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pr 7. Have experience managing small firms.
8. Have industry experience.
-.gl 9. Have previous experience in creating a start-up business.
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1t 1 0. Choose a business that produces high margins.

4t 1'1. Start the business with established customers.

J 12. Build trust in your "story."
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