Starting Off Right: Financial Resources and Achieving Operating Status of Start-up Ventures.

In this paper, I test the liquidity constraint theory facing entrepreneurs as they start new businesses. Previous research points toward a positive relationship between wealth and financial resources of entrepreneurs and the viability of the organizations they found. Specifically, I focus on whether financial resources positively impact the rate of achieving operating status in the new ventures. Using data from the Panel Study of Entrepreneurial Dynamics (PSED), I found that household income and personal financial contributions positively contributed to reaching operational status more quickly, while household net worth did not have any association. Other factors such as start-up experience, both previous and current, had a negative impact on the rate of achieving operating status. [ABSTRACT FROM AUTHOR]