Learning from entrepreneurial failure

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A short overview of how to learn from Entrepreneurial Failure

A short overview of how to learn from Entrepreneurial Failure

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  • 1. Where it went wrong?
    Learning from Entrepreneurial Failure
    Ing. M.H.M. Hammer M.Sc.
  • 2.
    • Theory:
    • 3. What is Entrepreneurial Failure?
    • 4. Can you find some examples?
    • 5. Practice:
    • 6. What could help to prevent an Entrepreneur from failure?
  • 7. Entrepreneurial Failure
    According to the entrepreneur, undesirable stopping the company
  • 8. Introduction to the topic
    Why some entrepreneurs succeed and others fail?
    At the time of launch all entrepreneurs are convinced of their businesses to achieve success (Shane & Venkataraman, 2000; Driessen, 2005, Shane, 2003).
    In the Netherlands ± 50% of the ventures is not surviving the first 5 years (Meijaard et al, 2007; Bangma & Snel, 2009).
    TOP program: dropout rate is 25%, while unaccompanied spin-off companies have a dropout of 40% (University of Twente, 2005).
  • 9. Key concepts
    Why quit a venture (dropout)?:
    Entrepreneurial exit; quit because of good performance (e.g. Detienne, 2008; Wennberg et al, 2009)
    Entrepreneurial failure; quit because the performances are not good (e.g. Samuels et al, 2008; Wennberg et al, 2009)
    Ratio (after 1st 7 years) EE/EF: 50/50 (Wennberg et al, 2009).
  • 10. Key concepts
    Entrepreneurial Failure is divided in (Cardon et al, 2009):
    tough luck
    mistakes by the operator
    Reasons for Entrepreneurial Failure:
    the entrepreneur (e.g., Simon et al, 2000, Ottesen &, 2005, Hayward el al, 2006)
    The entrepreneurial environment (Vaillant, 2007)
  • 11. Theory
    Fostering entrepreneurship:
    the person of the entrepreneur (e.g. Stewart & Roth, 2007, Judge & Ilies, 2002 and Kirton, 1976)
    the process of entrepreneurship (e.g. Shane & Venkataraman, 2000, Gartner, 1985 and Shapero, 1982).
    A starting entrepreneur, sequential runs a number of steps (van der Veen & Wakkee, 2004, van der Sijde, 2004, Shane & Venkataraman, 2000, Low & MacMillen, 1988, Gartner, 1985; Shapero & Sokol, 1982).
  • 12. Theory
    Generalized model is that of Veccio(Veccio, 2003):
    the preparatory phase (pre-start)
    the venture being in action (exploration)
    stopping doing business (exit)
  • 13. Reasons for Failure
    Lack of experience
    Insufficient capital (money)
    Poor location
    Poor inventory management
    Over-investment in fixed assets
    Poor credit arrangements
    Personal use of business funds
    Unexpected growth
    Low sales
    (Source: Michael Ames, Custav Berle)
  • 14. Your turn!
    Please write down some examples you know of an entrepreneur who failed with the enterprise.
    Stopped, unwanted.
    Closed down with grieve.
  • 15. What are causes?
    What could be causes for the failure?
    Please write down as much as you can come-up with.
    (Use yellow post-it’s)
  • 16. Goal / Question
    How to reduce Entrepreneurial Failure (EF) in the post start-up phase of entrepreneurship?
  • 17. Finaly:
    What should have helped the entrepreneur to prevent from failure?
  • 18. Research model
  • 19. Summarize
  • 20. Thank you for your help andattention!
  • 21. For more information, suggestions or cooperation, do not hesitate to contact: