What Defines Success (and Failure) for Entrepreneurs?

To measure the success of a venture, we tend to focus on the numbers. For example, we look at metrics such as revenue, cash flow, or profitability, or even at its ability to raise capital when it is still little more than a promise for the future. A venture may thrive and deliver very strong financial results, but these advances are not necessarily synonymous with success, as a company can grow at the expense of the values it stands for, such as caring for employees or the environment.

Maximizing profitability while remaining true to a social mission can create tensions that are difficult to reconcile. Faced with this dilemma, entrepreneurs such as Yvon Chouinard, founder of Patagonia, and Hamdi Ulukaya, founder of Chobani, made unconventional decisions about the direction of their companies: Chouinard restructured Patagonia’s ownership to fight climate change, while Ulukaya decided to share part of the company’s ownership with its employees.

These cases challenge deeply rooted ideas about business success, a concept that does not necessarily capture what entrepreneurs themselves consider valuable or the effects generated by their activity. Other entrepreneurs define their own success in terms of maintaining their independence, achieving personal satisfaction, or balancing work and family life. This was the case for Ricardo Frasson, founder of DataSeek, who, after experiencing anxiety and stress due to an excessive workload, decided to reduce his working hours, bring in a partner, and offer psychological therapy to his employees.

What, then, does it mean to succeed as an entrepreneur? This is the question that the Holistic Entrepreneurial Performance (HEP) scale seeks to address. With this scale, we propose measuring entrepreneurial performance across four dimensions: Personal & Interpersonal Growth, Economic Impact, Environmental Commitment, and Spiritual Purpose. The study, published in the Journal of Business Venturing Insights, proposes broadening how we understand entrepreneurial performance by adopting a perspective that considers the whole person rather than focusing solely on business outcomes. This includes personal satisfaction, autonomy, relationships with customers and colleagues, environmental responsibility, and a sense of purpose.

Shifting the focus: from the business to the entrepreneur

The way business performance is measured has broadened in recent years. Predominantly financial indicators gave way to models such as the Balanced Scorecard, which links results to strategic objectives, and later to the Triple Bottom Line, which incorporates economic, social, and environmental dimensions.

The next step was to partially shift the unit of analysis to include the entrepreneur in the assessment of performance, given the particularly close relationship between the individual and the organization in an entrepreneurial venture. Entrepreneurs’ identity, decisions, relationships, and well-being can influence the business, while its successes and failures can, in turn, affect their self-esteem and sense of identity. This perspective gives rise to the concept of whole-person entrepreneurship: understanding entrepreneurs beyond their economic role and considering the different domains that influence how and why they engage in entrepreneurship.

Four dimensions for understanding success

To turn this concept into a measurement instrument, we developed the HEP scale based on interviews with entrepreneurs. Following expert review, preliminary testing, and several statistical analyses, the scale was refined to 20 indicators grouped into four dimensions:

1. Personal & Interpersonal Growth: This dimension includes aspects such as maintaining good relationships with customers, developing personally through entrepreneurship, preserving autonomy in decision-making, trusting in relationships, and experiencing personal satisfaction.
2. Economic Impact: The holistic perspective recognizes that profitability, revenue growth, financial security, and employee well-being are essential to sustaining a business. 
3. Environmental Commitment: This dimension considers aspects such as running an environmentally sustainable business, promoting responsible behaviors, incorporating environmental criteria into processes and supply chains, and seeking a better balance among economic, social, and environmental considerations. 
4. Spiritual Purpose: This includes finding meaning beyond material outcomes, having long-term goals, integrating spirituality into leadership, and drawing on it for support when facing difficulties. This dimension represents a distinct source of meaning, resilience, and long-term orientation.

Success can also be unbalanced

This holistic perspective raises a particularly interesting question: what happens when a venture achieves very different results across each dimension? An entrepreneur may achieve high economic impact while experiencing little personal growth or seeing their relationships deteriorate. Another may demonstrate a strong environmental commitment and a profound sense of purpose while facing financial difficulties. These tensions become visible through our instrument.

In fact, one of its potential applications is to identify strengths and weaknesses at different stages of the entrepreneurial journey. It can help reveal, for example, when excessive attention to economic results begins to compromise workplace relationships or environmental goals, or when insufficient attention to financial sustainability jeopardizes the ability to sustain a long-term purpose. The key is that these dimensions do not necessarily compete with one another, but the scale can help determine the conditions under which they can mutually reinforce each other.

Beyond research

For incubators and entrepreneurship programs, this type of perspective makes it possible to rethink the training offered to participants. Rather than concentrating the bulk of entrepreneurship education on developing business models, obtaining financing, identifying markets, managing teams, or scaling companies, the HEP scale proposes also incorporating personal development, relationships, sustainability, and purpose, while helping to create more constructive narratives around managing failure.

If performance is measured exclusively in terms of revenue, growth, or survival, it seems relatively easy to determine who the winners and losers are. A multidimensional perspective requires asking more complex questions, since a profitable business does not necessarily amount to a fulfilling entrepreneurial journey, just as a company that fails to achieve extraordinary growth does not necessarily constitute a failure.

Rather than downplaying economic results, our scale invites us to stop confusing one dimension of performance—such as the financial dimension—with overall performance. It requires us to look simultaneously at the business, the people who make it possible, the environment in which it operates, and the purpose guiding its decisions. Entrepreneurial success thus ceases to be solely a question of how much a company grows and comes to encompass what value it creates, how it creates that value, and what happens to the people—including the entrepreneur—throughout that process.