Entrepreneurs go through a number of activities in the process of creating a new venture. Although the research literature can't agree on where the process starts and where it ends, it has been suggested that the process starts when one or more people decide to participate in the formation of a new business and devote their time and resources to founding it. Empirical research has shown that the process is iterative, nonlinear, and nonsystematic. While entrepreneurs may go in many directions during the process, they typically adhere to identifiable milestones to measure their progress. These include deciding to start a business, researching the concept, preparing for launch, securing the first customer, obtaining the business license, and many other activities that signal that the business is in operation.

The intent to start a business is not enough to make it happen. Many potential entrepreneurs drop out of the process as they move from intention to preparation. And a very high number give up before the new business makes the transition to an established firm, The Small Business Administration Office of Advocacy reports that, in 1999, about 588,990 firms hiring new employees outnumbered the 528,600 firms experiencing business closures by 8,8 percent. It is important to note that not all business closures are failures. In fact, 57.4 percent of employer firms were successful at closure, while 38.2 percent of firms without employees were successful at closure. The Office of Advocacy also reports that about 66 percent of all new businesses survive at least two years; 49.6 percent survive at least four years; and 39.5 percent survive at least six years.

As of 1999, small businesses continued to employ more workers than large companies. One body of research views/failure as a liability of newness; that is, the firms that are most likely to survive over the long term are those that display superior levels of reliabiJity and accountability in performance, processes, and structure. Because these factors tend to increase with age, failure rates tend to decline with age. 

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