This paper examines why some individuals survive as entrepreneurs and others do not, and analyzes the growth of entrepreneurial enterprises, conditional on surviving. The study focuses on the role of access to capital and how liquidity constraints affect entrepreneurial survival and success. The empirical strategy is based on the logic that if entrepreneurs cannot borrow to attain their profit-maximizing levels of capital, those with substantial personal financial resources are more likely to succeed. The data used are from the 1981 and 1985 federal individual income tax returns of individuals who received inheritances. These data allow the identification of individuals who were sole proprietors in 1981 and the extent to which the decision to remain a sole proprietor was influenced by the magnitude of the inheritance-induced increase in liquidity. The results show that liquidity constraints have a noticeable influence on the viability of entrepreneurial enterprises. For example, a $150,000 inheritance increases the probability that an individual will continue as a sole proprietor by 1.3 percentage points, and conditional on surviving, the receipts of the enterprise increase by almost 20 percent. The study also finds that the presence of liquidity constraints affects the decision to remain an entrepreneur, with higher inheritances leading to higher survival rates and better enterprise performance. The analysis suggests that entrepreneurs with access to capital are more likely to survive and perform better, highlighting the importance of liquidity constraints in entrepreneurial success. The findings are consistent with the notion that lack of capital inhibits the growth of small firms.This paper examines why some individuals survive as entrepreneurs and others do not, and analyzes the growth of entrepreneurial enterprises, conditional on surviving. The study focuses on the role of access to capital and how liquidity constraints affect entrepreneurial survival and success. The empirical strategy is based on the logic that if entrepreneurs cannot borrow to attain their profit-maximizing levels of capital, those with substantial personal financial resources are more likely to succeed. The data used are from the 1981 and 1985 federal individual income tax returns of individuals who received inheritances. These data allow the identification of individuals who were sole proprietors in 1981 and the extent to which the decision to remain a sole proprietor was influenced by the magnitude of the inheritance-induced increase in liquidity. The results show that liquidity constraints have a noticeable influence on the viability of entrepreneurial enterprises. For example, a $150,000 inheritance increases the probability that an individual will continue as a sole proprietor by 1.3 percentage points, and conditional on surviving, the receipts of the enterprise increase by almost 20 percent. The study also finds that the presence of liquidity constraints affects the decision to remain an entrepreneur, with higher inheritances leading to higher survival rates and better enterprise performance. The analysis suggests that entrepreneurs with access to capital are more likely to survive and perform better, highlighting the importance of liquidity constraints in entrepreneurial success. The findings are consistent with the notion that lack of capital inhibits the growth of small firms.