Abstract
The main objective of this paper is to check whether the youngest small and medium‐size enterprises (SMEs) have potential in comparison with those that we could consider established and at the same time to show the main weaknesses that they could face at the beginning of the 21st century. We have used a 67‐industrial SMEs sample located in the Castilla‐La Mancha Autonomous Community. The information acquired about those firms refers to the years 1994, 1995 and 1996. We have divided this sample into two groups: one formed by newly created firms and another by those companies that have been able to survive their first years of life and develop an activity that we could consider to be established. In order to make the division, we considered new enterprises as those established within the previous five years (created between 1991 and 1994) and established enterprises as those created five or more years previously (created before 1991). The first group consists of 19 enterprises and the second 48 enterprises. A study of those variables that better reflect the potential of the business was carried out. The level of risk, the growth and the profitability, characteristics that we consider very important in order to determine the future viability of any activity were analysed. An early version of this paper was presented at the 22nd Institute for Small Business Affairs Policy and Research Conference held in Leeds, UK, in November 1999.