Startup Failure
Author: Mrunalini P Redkar.
Roll No. 0222050
- Improving the Reach of Entrepreneurship.
Published in: ASCI Journal of Management, Mar2022, Business Source Elite
By: S. K., Adhokshaj
The article discusses the growth of entrepreneurship in India and its impact on the economy. With the support of the government, startups have been given opportunities to build their businesses from the ground up, which has improved the standard of living and created numerous opportunities for employment generation. The article also highlights the increasing number of unicorn startups in India, making it the third country with the most unicorn startups. However, despite the support, startups in India face difficulties in raising capital, which is the most recurring problem leading to their failure. The article further lists some of the reasons that contribute to the failure of startups, including an inability to reach target customers, low adoption, intense competition, inability to pivot, and cash burn. The article suggests that failed startups serve as warning signs for future startups, and entrepreneurs can learn from their mistakes.
- The Bottom Line on Startup Failures.
Published in: BusinessWeek Online,3/5/2002, Business Source Elite
By: Klein, Karen E.
The failure rate of startups is high, but often exaggerated due to the methods used to count “failures.” While some startups do fail quickly, many close for positive reasons such as acquisition, profit, or mergers. Common reasons for startup failure include lack of self-criticism, tunnel vision, poor planning, and undercapitalization. Startups should focus on identifying unmet needs or problems they are uniquely qualified to solve, realistically assessing the competitive environment, and developing a strong business plan. It’s also important for startups to assemble a team with diverse skills and seek outside professional advice. Planning plays an integral part in success, with firms that developed a business plan at the outset having a higher chance of staying in business after three years.
- Six Imperatives to Launching a Successful LCC: Research and history point to the difference between startup failures and winners.
Published in: Air Transport World, Mar2023, Business Source Elite
By: CHANDRASEKHAR, ARVIND; KHURSHID, WASIQ
The article discusses six key factors that a startup low-cost carrier (LCC) must focus on to achieve success in the aviation industry. These include a well-defined market and business model, a robust cost structure, a lean organization structure, a well-thought-out network plan, a focus on operational efficiency, and a strong customer proposition. The article also emphasizes the importance of having a sound financial plan and a clear understanding of the regulatory environment. With these key factors in place, a startup LCC can build a strong foundation and compete effectively in the aviation industry.
- HOW DO INVESTORS EVALUATE PAST ENTREPRENEURIAL FAILURE? UNPACKING FAILURE DUE TO LACK OF SKILL VERSUS BAD LUCK.
Published in: Academy of Management Journal, Aug2022, Business Source Elite
By: ZUNINO, DIEGO; DUSHNITSKY, GARY; VAN PRAAG, MIRJAM
The study investigates how critical resource providers, such as crowdfunding investors, assess serial entrepreneurs and their past experiences. The research aims to understand investors’ perceptions of failure and its root causes, skill and luck, and to explore the implications of serial entrepreneurs who previously failed (rather than succeeded) to the resource-acquisition literature. The study conducts three experimental studies in the setting of equity crowdfunding to advance understanding. The study’s findings suggest that investors are not failure averse and utilize all credible informational cues to make inferences about entrepreneurial skills and the merits of future investments. The study contributes to the literature by shedding light on investors’ assessments of past business failures and aligning with the experimental capitalism literature. The work also joins broader efforts to incorporate luck into the management literature.
- Tips On Startup Success and Failure from Revel Systems, Delivery Hero and Better Place.
Published in: Forbes.com,4/4/2016, Business Source Elite
By: Bertoni, Steven
The article is an interview with three successful startup founders, Lisa Falzone of Revel Systems, Niklas Östberg of Delivery Hero, and Shai Agassi of Better Place. They share their experiences and insights on the dos and don’ts of starting a business.
- Lisa Falzone advises entrepreneurs to build a product that solves a real problem and not to be afraid to pivot if necessary. She also emphasizes the importance of finding the right team members who share the same vision and passion for the product.
- Niklas Östberg suggests that startups should focus on execution and not be too worried about competition. He also highlights the need for a strong company culture and a sense of purpose beyond making money.
- Shai Agassi stresses the importance of having a clear business model and understanding the market. He also talks about the challenges of raising capital and the need to build a diverse team with complementary skills.
Overall, the three founders agree that building a successful startup requires hard work, perseverance, and a willingness to learn from both success and failure. They also caution against overconfidence and advise entrepreneurs to seek out mentors and advisors who can provide guidance and support.
- Understanding IP Rights Can Help Prevent Startup Failure.
Published in: Business NH Magazine, Dec2022, Regional Business News
By: NIEVES, PETER
The article discusses the importance of understanding intellectual property (IP) rights for startup success and how it can prevent failure. It highlights the fact that many startups overlook the significance of IP protection and fail to protect their innovations, which can lead to costly legal battles and loss of revenue. The article provides some tips for startups on how to protect their IP rights, including identifying all possible IP assets, conducting IP searches, filing for patents and trademarks, and drafting IP agreements. Additionally, the article emphasizes the need for startups to stay up-to-date on IP laws and regulations to ensure they are properly protected. Overall, the article stresses the importance of protecting IP rights for startups to avoid costly legal battles and to ensure long-term success.
- JOINING FORCES: HOW CAN FOUNDING MEMBERS’ PRIOR EXPERIENCE VARIETY AND SHARED EXPERIENCE INCREASE STARTUP SURVIVAL?
Published in: Academy of Management Journal, Feb2022, Business Source Elite
By: HONORÉ, FLORENCE
The study “Joining Forces: How Can Founding Members’ Prior Experience Variety and Shared Experience Increase Startup Survival?” develops a framework to explore how startups can increase their survival chances by combining a variety of experiences and shared experience. The results indicate that while an increasing number of founders with a variety of firm experiences negatively affects startup survival, experience variety measured within individual founders and aggregated at the team level increases the likelihood of failure. However, when combined with prior shared experience, the number of founders with a variety of experience leads to a lower failure likelihood. The study concludes that the variety of knowledge must come from within the founders’ career before being aggregated at the team level. The research has significant implications for the entrepreneurial community as entrepreneurial teams are responsible for roughly half of new ventures created and 85% of all technological ventures.
- Do Small Businesses Have High Failure Rates?
Published in: Journal of Small Business Management, Oct96, Business Source Elite
By: Watson, John; Everett, Jim E.
The article “Do small businesses have high failure rates? Evidence from Australian retailers” examines the failure rates of small businesses in Australia, focusing on the retail sector. The study uses data from the Australian Bureau of Statistics and analyzes the survival rates of small retailers over a period of five years. The authors find that small retailers have a higher failure rate compared to larger retailers, and that the survival rates of small retailers vary by industry. The study also identifies several factors that contribute to the failure of small retailers, including high competition, poor location, lack of managerial experience, and financial problems. The authors suggest that policymakers should focus on supporting small retailers by addressing these factors and providing access to training and financial assistance. Overall, the study highlights the importance of understanding the factors that contribute to small business failure and the need for policies to support the survival and growth of small businesses.
- Technical and Cost Efficiencies as Determinants of Business Failures of Small Firms.
Published in: Eastern European Economics, Jan/Feb2008, Business Source Elite
By: Pusnik, Ksenja; Tajnikar, Maks
The article provides concluding remarks on the survival and failure of small Slovenian firms in the industries included in the analysis. The decrease in profitability is identified as a key indicator of crisis in firms, and owners of threatened firms often lower equity capital before declaring bankruptcy. Surviving firms also experience decreasing profitability, suggesting an increase in crisis even among those firms that survived in all three years of the analyzed period. Bankrupt firms are found to be smaller and more labor-intensive than surviving firms, and the crisis in firms generally occurs within two years, suggesting a short life cycle of successful Slovenian firms. Liquidity ratios are not critical for failed firms, but creditors of failed firms demand quick bill settlement. Failed firms display higher indebtedness than surviving firms, but their indebtedness decreases due to mistrust of outside equity owners. The geographic location is found to be important for the survival of small firms in Slovenia. The article suggests that the reason for bankruptcy lies more within firms’ poor cost efficiency than low technical efficiency in combining production factors. The DEA indicators of efficiency are less significant for explaining bankruptcy probability than financial indicators.
- ESTIMATING THE SMALL BUSINESS FAILURE RATE: A REAPPRAISAL.
Published in: Journal of Small Business Management, Jul89, Business Source Elite
By: Haswell, Stephen; Holmes, Scott
According to various studies, the main causes of small business failure are attributed to management inadequacy, either inexperience or incompetence. Around 60.5% to 90% of small business failures are caused by management inefficiency, which includes inadequate accounting records and deficiencies in accounting knowledge. A lack of access to information necessary for decision-making is also a contributing factor. Inadequate accounting records were found to have a significant relationship with business failure, with firms maintaining adequate records being more likely to survive. These findings have implications for government business agencies, educators, and practicing accountants.
Conclusion
The articles explore various aspects of startup success and failure. “Improving the Reach of Entrepreneurship” focuses on the growth of entrepreneurship in India and the challenges startups face in raising capital and reaching customers. It suggests that failed startups can serve as a learning opportunity for future entrepreneurs. “The Bottom Line on Startup Failures” delves into the reasons for startup failures, including poor planning, undercapitalization, and tunnel vision. It recommends that startups focus on identifying unmet needs and developing a strong business plan. “Six Imperatives to Launching a Successful LCC” outlines key factors that a low-cost carrier (LCC) startup must focus on to achieve success in the aviation industry. “How Do Investors Evaluate Past Entrepreneurial Failure?” investigates how investors assess past entrepreneurial experiences and whether failure due to skill or bad luck affects their decisions. Finally, “Tips On Startup Success and Failure” features an interview with successful startup founders who share their experiences and insights on building a strong team, understanding the market and competition, and building a product that solves a real problem. “Understanding IP Rights Can Help Prevent Startup Failure” highlight the importance of understanding intellectual property (IP) rights for startup success and avoiding costly legal battles. Overall, the articles emphasize the importance of careful planning, market research, and strong leadership for startup success.
References
- Bertoni, S. (2016). Tips On Startup Success And Failure From Revel Systems, Delivery Hero And Better Place. Forbes.Com, 28.
- CHANDRASEKHAR, A., & KHURSHID, W. (2023). Six Imperatives to Launching a Successful LCC: Research and history point to the difference between startup failures and winners. Air Transport World, 60(3), 48–50.
- Haswell, S., & Holmes, S. (1989). Estimating the Small Business Failure Rate: A Reappraisal. Journal of Small Business Management, 27(3), 68–74.
- HONORÉ, F. (2022). Joining Forces: How Can Founding Members’ Prior Experience Variety and Shared Experience Increase Startup Survival? Academy of Management Journal, 65(1), 248–272. https://doi.org/10.5465/amj.2018.1386
- Klein, K. E. (2002). The Bottom Line on Startup Failures. BusinessWeek Online, N.PAG.
- NIEVES, P. (2022). Understanding IP Rights Can Help Prevent Startup Failure. Business NH Magazine, 39(12), 38–39.
- Pušnik, K., & Tajnikar, M. (2008). Technical and Cost Efficiencies as Determinants of Business Failures of Small Firms. Eastern European Economics, 46(1), 43–62. https://doi.org/10.2753/EEE0012-8775460103
- K., A. (2022). Improving the Reach of Entrepreneurship. ASCI Journal of Management, 51(1), 74–78.
- Watson, J., & Everett, J. E. (1996). Do Small Businesses Have High Failure Rates? Journal of Small Business Management, 34(4), 45–62.
- ZUNINO, D., DUSHNITSKY, G., & VAN PRAAG, M. (2022). How Do Investors Evaluate past Entrepreneurial Failure? Unpacking Failure Due to Lack of Skill Versus Bad Luck. Academy of Management Journal, 65(4), 1083–1109. https://doi.org/10.5465/amj.2018.0579
