Newswise:
Howard Van Auken knows the drill. Entrepreneurs are often so enthused about their chances of success when starting a new business that failure literally is not an option.
‘When you start a business, the last thing you think about is going bankrupt,’ said Van Auken, the Bob and Kay Smith Fellow in Entrepreneurship at Iowa State University. ‘You’re so pumped up, so hyped and so positive about this opportunity that you can’t even imagine it failing.”
But maybe entrepreneurs should, since the most recent U.S. Census Bureau data estimates that approximately 50 percent of small businesses (less than 500 employees) close within 4 years of launch.
And according to a new study of 90 Iowa small business owners by Van Auken and his ISU management faculty colleagues Jeffrey Kaufmann and Pol Herrmann, there is very little awareness of bankruptcy protection among those small business owners. Most respondents didn’t know about the state exemptions available to them to protect personal property if their business went bankrupt - not even how they can protect themselves from losing their homes.
Based on these results, the researchers propose that new business owners learn more about bankruptcy protection available to them and make a failure plan part of the start-up process. Continue reading.
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