Critical Incidents Typically Emerging during the Post-Formation Phase of a New Venture: Perspectives for Entrepreneurship Education and Start-Up Counselling

Abstract

During the post-formation phase, young ventures are often in danger of sliding into bankruptcy. The entrepreneur has to deal with a multitude of complex problems, decisions have to be made under time pressure or uncertainty, and upcoming crises have to be perceived in time. This paper presents seven critical incidents that are (1) realistic, typical, and likely to emerge during the first years of a start-up’s existence, (2) assumed to cause severe financial crises for the new venture, but (3) possible to be overcome by the entrepreneur if he makes appropriate decisions. Seven incidents were developed on a theoretical basis and then empirically validated by questionnaires presented to (future) entrepreneurs and start-up counsellors (n = 627) as well as to a sample of students who are at least interested or even engaged in the field of entrepreneurship (n = 367). The incidents reveal likely challenges for entrepreneurs in the post-formation phase. This discovery opens new perspectives for preparing entrepreneurs to deal with the typical risks of the post-formation phase. For example, these lessons provide opportunity for an application within case-oriented courses of entrepreneurship in higher and vocational education and opportunity for reflection on probable emerging crises in start-up counselling.