A Global Entrepreneurship Monitor GEM (2005) survey has stressed much on the impact of start-up survival as a significant driver to ultimate growth of retail firms globally. In order to sustain start-up firms’, it’s imperative to uncover those early start-up characteristics that might be predictors of long-term success. Understanding certain predictors of long-term success of start-ups will definitely provide a platform for tracking up start-ups over time, and make strategy recommendations that will foster their sustainability and further growth. Not much has been done to unveil the predictors of new-venture survival, however, through research this piece harmonises possible practices that enhance the likelihood of start-ups to survive. The standard definition for long-term survival in start-ups is four years. Every long-term survival is marked by a series of short-term success. Audretsch (1991) points out that the general environment in which the venture operates greatly impact long-term survival. Audretsch and Mahmood (1995) also support the view, and emphasize the need to consider the industry in which the start-up firm operates together with individual firm characteristics.
Long-term survival Predictors
A diverse ownership structure implies greater availability of managerial labor; a greater variety of complementary skills, and multiple owners may proxy for a deeper commitment (Astebro and Bernhardt 2003). A study conducted by Nassereddine (2010) using the Kauffman Firm Survey suggests that firm characteristics such as a firm’s current size, and relevant experience of the team members are both positive predictors for long-term survival of start-ups. Moreover Audretsch (1991) agrees to the same notion by adding that macro variables, and firm level variables such as size, age of the owners, and ownership structure significantly impact long-term survival of start-up firms. According to Bates (1990) and Headd (2003), characteristics of the founder or business owner such as education, prior experience and age are common predictors of start-up business survival. Nassereddine (2010) articulates that age, prior experience, and education predictors are significantly and positively associated with new business survival and the likelihood that the business survived increased by approximately 7% considering age.
Retail aspect
The existence of a business plan for start-up ventures increases the probability of start-up retail businesses to survive in the long-term. A business plan has been, for a long time, acknowledged for its antecedents towards guiding the business goals. Ligthelm (2010) also supports the view that regular updating of a business plan greatly influences the long-term success rate of newly established firms. In order to stay ahead of competition, a regular analysis of competitors will aid in long-term profitability, consequently increasing the number of years in which the firm stays sustainable and competitive (Nassereddine, 2010). Regarding Indie Boutiques, response to market opportunities by the management is also imperative for long-term survival, this includes developing models that improves market communication or advertisement. Furthermore Ligthelm (2010) reveals that taking calculated risk is a key driver for long-term sustainability and survival of newly established firms. Taking calculated risk is also a vital trait for entrepreneurs as it brings about novel ideas on managing retail acquisition and distribution channels. Hannan and Freeman (1977) support the fact that the propensity to hire competent and resourceful human capital is positive to survival. Furthermore, the ability to access start-up and expansion capital is imperative to sustainability.
Industry structure greatly predicts the survival of newly established retail businesses. Trends such as less competition, a huge customer base, future growth of the industry will ultimately guarantee long-term survival to a newly established firm. As suggested previously, entering a smaller scale industry is a positive predictor of survival; ventures start small, and then mature to fit large industries. In addition, smaller scale industry reduces the impact of the negative effects of debt for capitalization. Technology also improves the efficiency, hence productivity and competitiveness; and the more proprietary the core technology of the new venture, the lesser the advantage held by competitors (Apelund et al., 2005). The propensity of the management team to understand the market, as well as the industry’s demand is important predictors of survival. Retail organizations, and Indie Boutiques operate in a dynamic environment, which is equally uncertain. Overall, the planning, economic timing, advisors, service timing, financial control, age and record keeping – all serve as a cornerstone to predict the long-term survival of new retail firms.
