Recent studies have shown the equity sources view experienced entrepreneurs more favorably than those with little or no experience (Kim, Clelland, & Bach, 2010; Zaleski, 2011). Read, Dew, Sarasvathy, Song, and Wiltbank (2009) found experienced entrepreneurs can dispel risk more efficiently through small trial and error steps unlike less experienced entrepreneurs. Trevelyan (2011) found experienced entrepreneurs balance promoting innovations with preventive thinking improving their chances of success.
The perceived influence of entrepreneurial experience helps entrepreneurs raise capital. Investors view entrepreneurs with experience as more adept at planning and managing. Investors view firms that first tap internal funding before seeking external financing more desirable and better equipped to deal with external capital (Myers, 1984). Experienced entrepreneurs showing they can manage their own money gain confidence of outside investors.
If a person wants to start a business, but has little experience that person needs to gain experience managing the resources at his or her disposal. How can a person find help if that person has little experience? Click here to find out more.
Kim, J.-N., Clelland, I., & Bach, S. (2010). Entrepreneurs as parallel processors: An examination of a cognitive model of new venture opportunity evaluation. Academy of Entrepreneurship Journal, 16(2), 57(29).
Myers, S. (1984). The capital structure puzzle. The Journal of Finance, 39(3), 575-592.
Read, S., Dew, N., Sarasvathy, S. D., Song, M., & Wiltbank, R. (2009). Marketing under uncertainty: The logic of an effectual approach. Journal of Marketing, 73(3), 1-18. doi: 10.1509/jmkg. 73.3.1
Trevelyan, R. (2011). Self-regulation and effor in entrepreneurial tasks. International Journal of Manufacturing Technology Management, 18(8), 966-984. doi: 10118/17410380710828280
Zaleski, P. A. (2011). Start-ups and external equity: The role of entrpreneurial experience. Business Economics, 46(1), 42-50.