The creation of new businesses is a vital aspect for the economic development of any territory. It can directly create jobs and boost innovation, as well as mobilize resources. In this context, it is necessary to understand how an individual decides to start a business and what determines their success (Garcia, Martinez, and Fernandez 2010; Veciana 1999).
The process of perceiving opportunities is central to the entrepreneurial process. It is a dynamic, creative, and reflective process in which the individual detects unexploited gaps or niches. In some cases, these businesses can progress to Stage III of the Entrepreneurial Cycle (see figure below). However, most stay in the Survival Stage, earning marginal returns on their invested time and money, or even go bankrupt altogether. This is true for a large percentage of small businesses, such as mom-and-pop stores or manufacturing businesses that cannot compete with their larger competitors.
There are many ways to begin a business, but it is important that you do your research and make sure your idea is viable before making any financial decisions. For example, you should consider the amount of upfront capital needed to launch and whether it makes sense for you to hire employees. It is also helpful to look at other businesses that are currently operating in your chosen industry to see what they are doing right.
Another factor that can help with the decision to start a business is knowing other entrepreneurs. Studies have shown that when individuals know people who have created businesses, they are more likely to start their own (Stevenson Reference Stevenson2000; Pereira Reference Pereira, Bartholo, Renato Silva and Proenca2017; Avolio Alecchi Reference Avolio Alecchi2020).