Half of all SMEs in Switzerland don’t make it past five years. To boost their chances of success, some entrepreneurs are challenging the taboo around failure by considering – from the early stages – how their startup might one day come to an end.
One in two companies in Switzerland closes within five years. This is according to the latest figures from the Federal Statistical Office, covering the period from 2017 to 2022. In light of this high failure rate, certain methods can help entrepreneurs anticipate the risk of closure from the very beginning.
Pre-mortem analysis
In 2007, American psychologist Gary Klein introduced the “pre-mortem” analysis concept. In this exercise, entrepreneurs are asked to imagine that their project has failed within six to twelve months. Each participant then has a few minutes to write down all the plausible reasons that could have led to the failure, followed by a debriefing session.
Johann Schlieper, an angel investor and AI coach based in Zurich is aware of this method. "It's interesting because it underlines the fact that in entrepreneurship, failure is part of the game, especially in breakthrough fields such as AI, ICT, medtech and fintech. It's generally said that eight of every ten innovations launched on the market fail. Personally, I've invested in 20 start-ups, eight of which no longer exist."
Timing matters
However, it's best to choose your timing carefully if you want to imagine your company failing. "When preparing the pitch for example (which consists of a five- to ten-page business idea proposal), entrepreneurs need to ask themselves what can go wrong, and see whether the company's high potential compensates for the risks involved."
Then, during the second phase, known as due diligence, external experts should be invited. "They will ask whether the plan is realistic, in terms of technical feasibility, costs and expected financial benefits, as well as market opportunities and the relevance of the team."
Beyond these two stages, the Zurich-based investor questions the relevance of a pre-mortem analysis. "Once everyone's up and running, it can be demoralizing to say to the enthusiastic team ‘so imagine it all dying and ask yourself what could have happened’."
Sharing your idea
For Thomas Dübendorfer, president of SICTIC – Switzerland’s leading business angel network – it’s important to keep in mind the Silicon Valley mantra: "Fail fast and fail cheap."
"You shouldn’t behave like those isolated founders who invest all their resources into developing a startup, and who – either out of fear of judgment or out of overconfidence – avoid talking about it for years, only to eventually fail." Instead, he advises entrepreneurs to share their project as widely as possible from the outset, to challenge all their assumptions.
Challenging your product
Named Business Angel of the Year 2024 by SECA, Thomas Dübendorfer – who has co-founded nine tech startups – identifies two main causes of failure that entrepreneurs should watch for. The first is the fit between the company’s solution and the market. "You need to question your product as early as possible through a systematic approach known as Product-Market Fit," he explains. "Does my product truly solve a real problem? Do consumers actually need this solution – and if so, are they willing to pay for it? And is the target market large enough?" Based on this analysis, a company might, for example, decide to shift from a B2C to a B2B model, realizing that building trust with end users under its own brand would take too long.
Choosing the right team
The other major pitfall often lies in the team. "Take founders from an academic background, for example," says Thomas Dübendorfer. "They may have seen their startup primarily as a research project to manage. But they need to realize it’s not just a project – it’s an entire business that must grow, generate profit, take risks, hire staff, break into foreign markets, and more."
That’s why it’s essential to assess the leadership team’s suitability early on. "Does the team have the skills needed to meet all these demands? Are the founders aligned in their ambitions – for example, do they agree on building a slow-growth company versus a fast-scaling one? Do they want to grow a long-term SME or aim for a quick exit?" For Johann Schlieper the choice of team is crucial: "Having an experienced entrepreneur on board, who has perhaps already experienced failure himself, represents a strength for the start-up."
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Events to help break the taboo of failure
Pitching your startup idea in front of strangers isn’t easy. To help entrepreneurs overcome this fear and grow, several startup support organizations – including Impact Hub Switzerland and IFJ – host networking and exchange events. It all began over a decade ago with the first FUN evenings (Fuck-up Nights) in Switzerland. From Geneva to Zurich, Basel to Lugano, dozens of founders have taken the stage to share what went wrong with their businesses. Since then, new formats have emerged – such as Pitch’n’Bar. In a friendly, laid-back atmosphere and in front of a live audience, entrepreneurs take turns delivering quick, compelling pitches. At the end of the evening, both the jury and the audience score the most impactful presentations, with prizes awarded to the winners.
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Last modification 02.04.2025
