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Using a sample of some 300 small independent businesses, drawn from Central London, the paper examines how entrepreneurial behaviour affects business performance. It is argued that small businesses motivated by a desire to grow in terms of sales and/or employees and to survive ina dynamic and competitive environment need to be innovative. However, to what extent they willinnovate successfully depends on their capacity to plan ahead, their capacity to innovate and theirwillingness to take risk. It is shown that entrepreneurial businesses are characterised by these competencies that allow them to innovate and thus develop and grow successfully. Not surprisingly,not all small businesses are equipped with these three competencies owing to their diverse array ofstrengths and weaknesses arising from the diversity in the managerial motives and aspirations ofentrepreneurship. These results highlight the …