Entrepreneurs start new businesses after failure for several reasons: 1. They gain valuable experience and exposure from the failure that increases their confidence and resilience. 2. They learn how to improve their skills and adapt their attitudes based on what caused the failure. 3. Their increased social contacts and resilience provide opportunities and support to start again. 4. Factors like changes in the market, technology, or advice from mentors may convince them to pursue a new idea.

1. Entrepreneur
Resilience: What makes
entrepreneurs start
another business after
a failure?
Keywords: Entrepreneurship, Entrepreneur Resilience, Venture failure,
Business Venturing
Muthiah Abbhirami
8/17/2017

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Abstract
The purpose of the study is to bring forth the reasons behind a venture failure and the positive aspects
which impulse an entrepreneur to start another venture.
According to my study the aspects are - the exposure and the experience gained after a venture failure,
the increased level of confidence after the experience and exposure gained, adaptational attitude
towards the business and towards the individual self, relational-self and collective -self after a venture
failure.
1. Introduction:
The urge for sabotaging the exasperation of being in clichéd 9-5 job is the prime reason behind
entrepreneurship. Having understood this statement clearly, it will be easy to comprehend the real
meaning of entrepreneurship.
Entrepreneurship and start-ups are two words that cannot be avoided in this era. New start-ups are
budding with new problems to solve every now and then. The globalization has widened the horizon of
exchange of information, has increased the awareness about the growing problems and has created so
many platforms for to initiate an enterprise. But not all startups and entrepreneurs survive through the
cut-throat competition. Sometimes the venture failure pushes entrepreneurs from their current
business. The venture failure for entrepreneurs is due to various internal and external variables.
Sometimes these variables are out of control which becomes the reason for them to abandon their
current business and move to another one. Not just internal and external factors existing affects the
entrepreneurs but also his/her mindset while carrying out the business and after its failure.
Entrepreneurial-shouldn’t be perceived as valuable, feasible or smart. That’s because entrepreneurism,
rather than referring to anybody who starts a business, is all about seeing the value where nobody else
does (Isenberg Daneil. Worthless, Impossible and Stupid. Harvard Business; Edition edition (10 July
2013)). Understanding this definition will aid in comprehending the qualities of an entrepreneur and will
reveal the importance of certain qualities that are required to be more dominant than the other
qualities. It is these qualities that play a vital role in taking decisions during business and abandoning
them after a venture failure.
And it can also be said that entrepreneur are otherwise called as contrarians. It is here to understand
the fact contrarian meaning independence, freedom, the thrill of the hunt, and ultimately winning
(Root, Wayne Allen. The King of Vegas’ - Guide to Gambling , NewYork)
The Concept of Resilience
Resilience is one of the most considerate characters of an entrepreneur. Resilience is given as synonym
for entrepreneurship. Entrepreneurship involves lot of failure because the process involves in finding
something new when nobody else does. Five factors that constitute resiliency are Active optimism,
Decisive action, Moral compass, Relentless tenacity, Interpersonal support. It is these factors that are

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responsible in helping an entrepreneur during phase of a venture failure. The concept resiliency features
these five factors.
2. Psychological aspects of an entrepreneur (before the venture failure):
Before getting to know about the qualities of any entrepreneur, it is important to understand the
background of a person who is trying to become an entrepreneur and his attitude. It is the background
of a person that aids in deciding between the choices and defining the qualities that a person possesses.
Analyzing the reasons for a venture failure:
Internal factors:
1. Lack of understanding himself/herself (entrepreneur)
2. Lack of understanding in the implementation phase
3. Lack of understanding among the team
4. Lack of understanding between the entrepreneur and the team
5. Lack of communication among the team and the entrepreneur
6. Inefficient listening
7. Lack of team resiliency
8. Lack of interpersonal support
9. Lack of enthusiasm
10. Lack of understanding the skill set the team possesses
11. ego –clashes among the members,
12. Lack of business contacts
13. Lack of understanding about the target audience
14. Not giving attention to the name of the product, service or logo
15. Lack of understanding in user experience
16. Lack of understanding the importance of R&D
17. Lack of marketing
18. Lack of understanding and sometimes not willing to hear negative feedbacks
19. Lack of understanding in selective hearing
20. Lack in defining monthly, quarterly, annual goals
21. Lack in achieving monthly, quarterly, annual goals
22. lack of being transparent
23. Being biased
24. Lack of defining standards and custom
These are the above listed prime factors that are responsible for a venture failure.

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External factors:
1. Economical weather conditions prevailing:
Any business to survive the cut-throat competition it has to take into consideration the economic
condition that is prevailing in the area of business and the condition prevailing in location of its target
audience. If the entrepreneur is not aware of the economical conditions this would certainly lead to
venture failure.
2. Entrepreneur knowledge on money
Understanding how money works is very significant during any business phase. The lack of this
knowledge will naturally result in many economical crises and will never let the business stand for a
longer time.
3. Technology and Idea cohesion
Sometimes the idea becomes more superior to technology that currently exists or sometimes the lack of
technology will create a major impact in venture failure.
The usage of the technology to market the product or the service is considered important due to the
impact that contributes.
4. Culture, Political and environmental influences
Even when ideas are seem to be logical, certain factors like culture, environment and politics are to be
considered before the establishment of a venture.
5. Insufficient investment
Initial investment for any business is necessary. If any business ventures into the market without any
economical support it is certain to fall due to its inability to withhold the business and the business is
about to fall.
6. Lack of venture capitalists
Sometimes the initial investment cannot be met by the entrepreneurs, so they tend to approach venture
capitalist. If they don’t get a proper venture capitalist they still lose the chance of executing their idea.
Not just the above stated reason, sometimes the idea suggested by an entrepreneur fails to get an
acceptance by the venture capitalist there by creating a halt.

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After venture failure (start of new business venture)
What makes entrepreneurs start another business after failure?
Failure is regarded to be a result that is obtained by an action or state. It is subjective and also objective.
For the society, any business that does not yield profit is regarded to be a failure model but for the
entrepreneur, it can be a lesson or an opportunity (costly, because nothing comes free). And also any
business venture that is regarded successful might not be seen as a successful one by an entrepreneur.
This feeling can push an entrepreneur to start another business venture.
1. Understanding method of implementation
Business is the act of implementation of an idea. Methods of implementation can change but the aim
that an entrepreneur wants to achieve remains the same. Method of implementation cannot be
defined. Since there is no defined method of implementation, it creates multiple causes for a venture
failure. So an entrepreneur tends to start another business after a venture failure.
2. Entrepreneurial learning satisfaction after a venture failure
The level of understanding after a venture failure is more significant and details more information than a
successful business venture.
Skill based – improvements
Having analyzed the reasons for the failure, it is significant for an entrepreneur to take those factors and
study them. The entrepreneurial learning helps in improvising the skill based qualities that are essential
to have the venture stand for a long time.
Attitude based improvements
Not just skill based learning is important for a long business run but also the attitude that is possessed
by the entrepreneur and his team. Organization culture after a venture failure has to be viewed more
carefully as it is one of the factors that influence the success of a business venture.
3. Entrepreneurial Psychology
While risk taking and resilience are seen as the quintessential qualities of an entrepreneur, it is
important to know that the quality, resilience is acquired from risk taking and entrepreneurs are people
who enjoy and thrive in the process of fall and rise.
And it is always to be remembered that any business that is started by entrepreneur is solely on trial and
error basis, which involves risks. But the risks can be calculated to some extent. Having calculated the
risk it is necessary for an entrepreneur to stay optimistic with the activities carried in the business.

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4. Understanding People’s Psychology
An idea must create an impact on a large scale of people rather than confining it to the team that
created the idea. Only if the idea is able to convince a large scale of people, it becomes successful. Any
idea that is brought into the society without understanding the people’s psychology and their
perspective, results in a venture failure.
Culture is very significant in determining the perspective of the people. So any business venture that is
started in a region must familiarize itself with the location it is placed in and also the people living.
5. Pervasive Study and Scope
The process of understanding the competition and competitors is significant. And to have survival
demands fixed to a venture is influential for the venture to survive. If the entrepreneur after analysis
finds that the scope of the aim is decreasing then there is a possibility for the entrepreneur to start
another business venture.
Creativity is a defining factor for any business venture. It helps is establishing a brand name. If an
entrepreneur thinks that the current business limits his creativity, there is a possibility for the
entrepreneur to start another business venture.
6. For Profit
There are entrepreneur who starts another business venture for profit. Having an innovative idea is not
really necessary for an entrepreneur, as he/she knows that entrepreneurship is all about seeing the
value where nobody else does and utilizing it for making a handsome of money.
7. Equating the fall with another immediate business venture
Venture failure for all entrepreneurs causes psychological problems which increases their push to find a
quick fix to the failure that they have met with. The quick fix can be another business venture. The
growing peer pressure and societal pressure after a failure will create an urge to equate the fall. This can
also be a reason for an entrepreneur to start another business after a failure.
8. Environmental and Economical push
Sometimes environmental factors can create unfavorable situations for a business venture which results
in a failure. This provokes an entrepreneur to start another business venture. Economical and political
unfavorable conditions can also result in start of another business.
9. Utilizing the chance of growing demands
It is important for an entrepreneur to utilize the growing demand for a product or a service by investing
his/her ideas in it. The growing demand for a product or a service can increase the possibility of profit,
there by resulting in a venture success. So if an entrepreneur finds another business venture doing the
very job, he has a chance to move to another business.

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10. Technology – Idea cohesion ratio
If an entrepreneur finds that the technology is not so advanced in his current business and thinks that
even bringing great technology into the current business will not result in major impact, he is required
to start another business that involves the best technology to bring out best results.
11. Advice from the mentors
If an entrepreneur’s mentor advices to abandon the current business, it is knowledgeable to start
another business venture. Mentors are considered before starting another business, as they have
experience to guide the budding entrepreneurs.
12. Lack of results
Sometimes entrepreneurs don’t get predicted results even after a thorough analysis. It is during this
phase any entrepreneur is ready to quit and start another business venture. It is the business activities
that fetch results. If any entrepreneur feels that the current business limits the activities that are carried
out in a business, an entrepreneur tends to start another business quitting the current one.
13. Decision making & Deciding between the choices
Any decision that is taken during the phase of business has its influence. It is the right choice at the right
time for the right people that yield better results. If an entrepreneur feels that choices are problematic
with respect to the time he/she is advised to halt. But being in the fast paced world it is advisable to do
something to understand and learn the process. So this phase pushes them to start another business.
14. Increased social contacts
A venture failure not only makes an entrepreneur more resilient but also increases the possibility of
social contact there by gaining support and advice.
Increased social contact increases the possibilities of opportunities. It is during a failure any entrepreneur
tries to correct by understanding the situation. If he is not an entrepreneur there is a possibility of him to
skip the idea of a new business venture and involve himself in a 9-5 job. Using a dataset of 149 new
ventures that were founded by MIT graduates, Hsu (2004) shows that experience helps entrepreneurs
develop new skills and generate social capital that can be used to, for example, recruit executive officers.
15. Increased Resiliency
Many venture failures for entrepreneurs teaches entrepreneur not only the reasons for a failure but also
helps in increasing the resiliency an entrepreneur possesses. This resilience in return helps to build an
active optimism. The increased active optimism helps building more and more social contacts there by
increasing the possibility

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Conclusion
To summarize, this paper gives the possible aspects for what makes the entrepreneurs to get into new
business ventures after a venture failure. As discussed earlier these possible aspects acts as an impulse
in transforming the entrepreneur into better business men.
The confidence, the entrepreneur gets after a venture failure is solely responsible to increase the
resiliency which in turn helps an entrepreneur gain more insight into cognition. Thus an entrepreneur
bounces back every time he falls.
References
Hayward, M.L.A., et al.,, (2009) Beyond hubris: How highly confident entrepreneurs rebound to venture again, Journal of Business Venturing
Hsu, D., 2004. Experienced entrepreneurial founders and venture capital funding. Working Paper. Wharton School, University of Pennsylvania.
Isenberg Daneil. Worthless, Impossible and Stupid”. Harvard Business
Root, Wayne Allen. The King of Vegas’ - Guide to Gambling” , NewYork
Constantine Sedikides Marilynn b. Brewer: Individual Self, Relational Self, and Collective Self Partners, Opponents, or Strangers?
George S. Everly Jr., Douglas A. Strouse and Dennis K. McCormack. Stronger- Develop the Resilience You Need to Succeed
C. Mirjam van Praag, Peter H. Versloot August 2007, What Is the Value of Entrepreneurship? A Review of Recent Research
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