Storytelling is crucial to entrepreneurship, both in terms of attracting new customers but also investors and other backers.  The sad reality is that most startups fail, so storytelling plays an equally important role in explaining this failure.

Being able to explain the failure of your startup obviously has key implications for your future career, whether as a seasoned entrepreneur or in the salaried world.  New research from Aalto University explores the different approaches entrepreneurs often take when telling their tale.

They analyzed 118 statements about the closure of businesses that were in the public domain.  The statements all had a degree of similarity, in that the entrepreneurs tended to emphasize the effort they put into the business, the positive achievements the startups made and the various lessons they learned along the way.  Seldom did they place any blame on external factors.

“By emphasising positive things, entrepreneurs strive to maintain and strengthen their professional image and their relationships with stakeholders, such as company employees, clients and financiers. For the future, this is important because winding up a company often means ending an entrepreneur’s current job and livelihood,” the researchers say.

Past or future?

Despite the commonality between the statements, there were some distinguishing features, especially with the semantic patterns used and the way impressions were being managed.  This is common in storytelling, and the researchers identified five core approaches: Triumph, harmony, embrace, offset and show.

When triumph and harmony styles were used, the entrepreneur would focus on explaining their competence and the positive business outcomes achieved by their startup.  With triumph, however, a focus would be placed on the personal experiences of the entrepreneur, while with the harmony-based approach, the role of stakeholders was emphasized.

When using the offset approach, the entrepreneurs focused on the future and how their next effort would succeed, whilst also being apologetic about the need to close down the business.  When the embrace style was used, the story tended to focus on the strengths and achievements of the entrepreneur, while also praising the work of partners, employees and other stakeholders.  Lastly, the show approach would focus primarily on facts and details, with a tendency to express negative feelings towards the past.

While the findings are certainly interesting, they also raise a number of questions that the researchers themselves admit to.

“We do not know how the career of the entrepreneurs included in our data evolved after the closure of the companies they set up, so we cannot recommend any of the five narratives/storytelling styles we found. In the future, it would be interesting to study, among other things, whether the positivity and responsibility that entrepreneurs favoured in their statements helped them in their career moving forward,” the researchers say.

Nonetheless, their work is perhaps the first to explore this crucial, and often untold, aspect of the post-startup journey for entrepreneurs.