A team of economists analyzed data from 50 million American companies founded between 1981 and 2022 to determine what makes businesses successful. Led by economist John Haltiwanger, they examined various factors, including financing, ownership demographics, and management structure. Their findings reveal that the amount of financing prior to launching significantly influences a company's success, with starting with $1 million increasing success probability by 25 points. However, self-financing via credit cards decreases success chances, while traditional bank loans improve them, although access to such loans is becoming increasingly challenging.
"The strongest correlation between business success and the factors Haltiwanger analyzed is how much financing a company is able to raise before it launches."
"Starting with $1 million boosts the probability of success by a whopping 25 percentage points."
"If you self-finance with credit cards, your chances of success actually decrease by 2 points."
"If you get a loan from a bank, your chances improve by 9 points - but that's been harder and harder to do over the past couple of decades."
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