Learning from entrepreneurial failure


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A short overview of how to learn from Entrepreneurial Failure

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Learning from entrepreneurial failure

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