Weathering the Storm: Financial Variable as a Key Influence to Entrepreneurial Venture Survival Over Time in Canada

Abstract

Each year numerous new small businesses confidently enter the marketplace but a vast majority of these firms will fail to survive beyond their tenth birthday. Past studies have focused on a variety of external factors such as geographic location and industry size. Despite the effects these variables play over time, a great amount of decisions are made internally and thus it is imperative to consider their impact on survival rates. Young firms with little experience can be heavily disadvantaged when attempting to gain funding within financial markets. Evidence indicates that a vast number of new small firms are forced to rely on equity financing, specifically in the form of internal resources. Beyond retained earnings, firms must rely on social networks in an attempt to solidify relationships with potential investors. Firms require capital to fund future growth but face barriers as turning a profit initially can be quite challenging. This chapter takes an in-depth look into one crucial internal variable, financing, and statistically analyzes its effect on the survival of small entrepreneurial ventures. The objective entails uncovering the causation for such internal downfall and providing such an insight may greatly assist small firms to compete and grow in their respected industries, therefore substantially increasing their chance of survival.