Corporate Reputation, Business Plan and Start-up Sustainability

Many young companies do not survive the first stage of life. This trend is typical of these young companies because the low survival rates characterize these companies regardless of the year they were started, industry and country of operation (in the fifth paragraph of this chapter the findings of the analysis are shown). For this reason, the cause of their fragility is to be found in what companies have in common in the early years of their life. These distinguishing factors differentiate those ones that have already passed the first stage of life. Young companies do not have a history demonstrating the ability to meet the expectations of customers, investors, lenders, strategic partners, suppliers, and dealers. Therefore, the main cause of the fragility of the new businesses is the lack of a reputation. Although different in many other characteristics, young companies have an inherent lack of reputation making them very vulnerable. This weakness actually characterizes newly established firms, distinguishing them from those ones that have passed the first stage of life. The phenomena and events of context affecting the survival of businesses cannot be influenced byindividual companies. For this reason, typical problems affecting young businesses’ survival shouldbe prevented prior to birth of the enterprise. The business plan is the ideal tool to detect these problems and prevent them. Analyzing the assumptions underlying the strategic plan: errors and inconsistencies in the start-up strategy can be identified. In this way, any genetic defects of the enterprise can be prevented and it will be more resistant to the difficulties of the initial stage. The business plan is useful to quickly build corporate reputation and to create strong and lasting bonds of trust with stakeholders who provide the resources needed to achieve long-term sustainability.