Exit: failure and success

It may seem odd to learn about business exit and failure in a book about entrepreneurship and starting and growing successful businesses. However, it has been reported by the U.S. Small Business Administration that approximately 10% of all firms in the United States fail each year (Knott and Posen, 2005). In the UK, the rate is thought to be similar with 20% of businesses failing in their first year while a further 30% fail within the first three years (BIS, 2013). It is crucial to understand what is meant by business exit and failure to ensure that entrepreneurs and governments can learn from, and respond to failure. This chapter explores the meaning and importance of business failure followed by why firms fail and the effect this can have on the entrepreneur. It also discusses how to avoid such failures and provides an insight into some famous failures.