Factors Related to the Performance of Entrepreneurial Firms in their Initial Years of Operation

Abstract

This research aimed to identify a number of analyses that have to be conducted in the prelaunch stage of establishing an entrepreneurial firm, and before spending significant time and money of realizing it. The research also aimed to investigate the nature of the relationship between conducting feasibility analysis, conducting industry and competitor analysis and developing a business model, and the performance of entrepreneurial firms during the gestation period.

    For the purpose of the research, a questionnaire was designed and distributed among the entrepreneurial founders and members of top management who were actively engaged in their organizations establishment. The population of the study included a total number of forty publicly-held Jordanian companies whose operating age ranges between 3.5 and 8 years.

    The study showed the following two main results. First, conducting Feasibility Analysis, Industry & Competitor Analysis and building a Business Model in the pre-launch stage enhances the performance of the entrepreneurial firms in their initial years of operation. Second, the conduction of Feasibility Analysis and the development of a Business Model were able to explain 24.1% of the reasons behind new enterprises survivability and growth.

    It was concluded that Jordanian companies should drop the traditional thought that conducting “feasibility study” is sufficient in the pre-launch stage to investigate the merits of business idea, but rather, they should conduct a full feasibility analysis that is a thoroughly well-established thought through the business idea and supported by customers’ feedback on the product idea, a careful industry and market analysis, a general feeling regarding the passion and competence of the initial management team, and finally a reasonable estimation of the financial feasibility of the proposed firm.

    Moreover, they should also conduct a deep analysis on industry and competitor and have  a business model in place that should stipulate the proper strategy to be followed; customer interface and its potential core competence that will give it a competitive edge over rival firms.