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COMMUNICATION FOR START-UPS

Results of a quantitative study

CHAIR OF BUSINESS ADMINISTRATION ESPECIALLY FOR COMMUNICATIONS AND CULTURAL MANAGEMENTSUBPROJECT 2.1 START-UP SERVICE (INNOVATION INCUBATOR)

Summary I

Entrepreneurs perform several functions at once (entrepreneur, managing director as well as communications manager).

All of the goals with regard to communication investigated here are considered relevant by entrepreneurs; however, these objectives are not fully achieved.

The communications work is executed by entrepreneurs themselves.

Important communication partners are (potential) clients and team members.

Chair of Business Administration especially for Communications and Cultural Management Subproject 2.1 Start-up Service (Innovation Incubator) 2

Summary II

two different strategies with regard to communication

direct communication with immediate feedback (in terms of direct oral communication, online communication, at conventions,

conferences and fairs)

wide-spread communication with the aim to arouse attention by

means of online communication, flyers and image brochures

3Chair of Business Administration especially for Communications and Cultural Management Subproject 2.1 Start-up Service (Innovation Incubator)

Introduction

The Chair of Business Administration especially for Communications and Cultural Managementconducted an extensive quantitative online study. It was executed on behalf of the Subproject 2.1 Start-up Service (Innovation Incubator) initiated by the Professional School of the Leuphana UniversityLüneburg. In the context of this study, new ventures, located in the region of Lüneburg, wereinterviewed on the topic of start-up communication.The questionnaire’s comprehensibility and unambiguity were verified with the help of pilot tests andexpert interviews. The participants of the survey, taking place from 25th June to 19th October, 2014,were primarily recruited by distributing an online questionnaire to multipliers and by approachingentrepreneurs directly. The respondents were asked to agree with different statements on a five-tierrating scale.In total, the data set includes responses by 422 participants.


Preliminary considerations

According to Zerfaß (2014, p. 23), the term corporate communication is used to designatecommunication processes that contribute to task definition and task fulfilment in profit-orientedbusiness units and that equally contribute to internal and external coordination of actions as well as tothe clarification of interests between companies and their stakeholders (own translation).Communication can minimize the risk that start-ups face when entering the market. There is a highlevel of uncertainty between start-ups and the market: On the one hand, entrepreneurs do not haveenough information about stakeholders and their knowledge and attitudes at their disposal; on theother hand, actors in the environment know nothing (or very little) about new ventures and their rangeof services (see also Schulte/Eggers 2010, p. 60 et seqq.). In the early stages of a new venture, thisuncertainty leads to specific problems such as the lack of legitimacy and the related negative effects(‘liabilty of newsness’) (cf. Rao/Chandy/Prabhu 2008, p. 59; Hauge/Stodomskyte/Dai 2012, p. 4).


The objective of the survey: describing the status quo of start-up communication

• In which industries do start-ups operate?• How do communication objectives of start-ups look like?• How is the success of the communication assessed?• Which communication channels are used?• Is the communication of start-ups in the first foundation phase different to those of other stages?• What are the most important communication partners?• Which communication concepts are applied?


Overview of the study


2008 2014

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2009 2010 2011 2012 2013

Entrepreneur 90,1%

Managing director 63,1%

Communications manager 41,0%

20 83

Male 65,3% Female 34,3%

Cultural & creative industry 30,2% Construction 4,3%Economic services 19,7% Financial services 3,4%Personal services 17,5% Transport & communication services 1,8%

Commerce 16,6% Other non-service sectors 1,8%Manufacturing 4,6%

Date of foundation

Age

Gender

Participants of the study belong to the these industries

Position in the new venture

50

Yes 41,2% No 58,8%Are services and products offered

via the Internet?

8,0% 12,2% 15,6% 15,9% 14,5% 19,6% 14,2%

Demographic and descriptive data with regards to new ventures 8

Summary of the demographic and descriptive data with regards to entrepreneurs and new ventures

In order to understand how start-up communication is done today, we considered only new venturesthat were founded between 2008 and 2014. The average age of entrepreneurs who participated in thestudy is 41. The youngest entrepreneur was 20, the oldest was 83 years old. That means that foundinga company is not a question of age.In the sample, male participants dominate at 65,3%. The respondents perform several functions atonce: In addition to being entrepreneur, they are also managing director or communications manager.The ventures investigated here are predominantly new ones (63,3%). The most important sectorconcerns the cultural and creative industry, which accounts for 30,2%.


Communication objectives: How important is the respective communication goal for you? (not at all important (1) to very important (5)). If this goal is important to you, (score of at least „important“ (3)), then please assess the extent to which the communication objective has already been achieved (not at all (1) to completely (5)).

Importance Goal achievement

Mean Mean

Arousal of interest 4,23 3,48

Increase of awareness 4,02 3,42

Recommendation 4,01 3,45

Creation of trust 4,01 3,85

Long-term commitment 3,93 3,58

Persuasion 3,72 3,56


Summary of the communication objectives and their achievement

All the requested communication objectives reached high mean values.The most important communication goals concern the arousal of interest (mean score of 4,23), theincrease of awareness (4,02), recommendation (4,01) and the creation of trust (4,01). Generatingattention is the main focus of start-up communication. These objectives are thus in line with our initialassumptions.The goal attainment does not, however, show equally high mean values. They are, nonetheless,positive. In other words, all average scores have a value higher than 3, which describes the range of‘almost completely achieved’ and ‘completely achieved.’Entrepreneurs are very successful when it comes to the creation of trust (3,85).


Communication channels: Which of the following communication channels do you use in order to reach your most important communication partner? (never (1) to very often(5)).

1,35

2,02

2,03

2,25

2,6

2,64

2,73

3,3

4,07

1 2 3 4 5

Advertisements / Spots in traditional media

Traditional PR efforts in specialist & industry media

Traditional PR work in public media

Web advertisements in online media

Conventions, Conferences, Fairs, Events

Social media communication

Flyers, Image brochures, Posters

Online communication

Direct oral communication, also by phone


Success of the communication channels: If you use this channel at least some of the times, please assess its usefulness (assessment from 1 = not at all useful to 5 = very useful)

3,58

3,6

3,71

3,73

3,79

3,81

3,87

3,97

4,39

1 2 3 4 5

Traditional PR work in public media

Traditional PR efforts in specialist and industry media

Flyers, Image brochures, Posters

Web advertisements in online media

Social media communication

Advertisements / Spots in traditional media

Online communication

Conventions, Conferences, Fairs, Events

Direct oral communication, also by phone


Summary of the communication channels

The two most important communication channels are direct oral communication and, to a lesser extent,online communication. They are followed by flyers, social media communication as well asconventions, conferences and fairs. Channels such as web advertisements, traditional PR work as wellas advertisements and spots are rather neglected.Two different communication strategies can hereby be identified: On the one hand, there is directcommunication with immediate feedback (related to direct oral communication, online communicationas well as conventions, conferences and fairs). On the other hand, other channels such as onlinecommunication, flyers and image brochures can be used to disseminate to the largest audiencepossible.The most successful communication channels are listed at the top of the scale. The highest value isreached by direct oral communication. Here, it should be pointed out that the analysis of the usefulnessis a self-ascription by the entrepreneurs of the survey.


Planning and implementing of communication activities (1=strongly disagree to 5=strongly agree)

3,2

3,33

2,02

3,88

2,74

1 2 3 4 5

Communication activities demand more resources (e.g. money, time) than originally anticipated.

My communication activities work as intended, without major breakdowns and flaws.

I delegate my communications work (to, for instance, graphic artists, web designers, copywriters,

agencies).

Communications is part of my daily schedule.

There is a (financial) budget for communications.


Identifying distinct stages of new ventures

Ventures were categorized in two steps: On the basis of the „Phasenmodell der Gründungsplanung“(cf. Klandt 2006), the first step was to define entrepreneurs who described their venture to be in eitherone of the two later stages(early development (key feature: entering the market as a market actor) orgrowth stage (key feature: stabilisation and/or extension of the corporate structure, growth in salesand/or market shares)).In order to confirm this self-assessment, we used, in a second step, the following questions: ‘Are youofficially self-employed or have you already established your business?’ and ‘Have you alreadygenerated revenue?.’Those entrepreneurs who considered their venture to be in one of the later stages, according toKlandt’s model (2006), and who, at the same time, responded to the questions with ‘yes’, weredesignated as ‘entrepreneurs of the second stage’ or entrepreneurs of the growth stage. All the otherswere assigned to the first, “early” or pre-start-up stage.105 respondents are in the pre-start-up (24,9%) and 316 respondents in the growth stage (75,1%).


Which stakeholders are the most important for the successful development of your start-up (maximum of three answers)?

Pre-start-up phase Growth phase

Potential customers/ users 31,4% 51,6%Team members 29,5% 24,1%Consultants 18,1% 12,7%Investors 10,5% 6,0%General public 5,7% 2,5%Suppliers 3,8% 2,2%Other communication partners 1,0% 0,9%

For both groups, customers and team members are the most important communicationpartners.


Communication concepts: How frequently (from 1=never to 5=very frequently) do you use the following communication elements in order to establish the communication with your most important stakeholder group?

3,34

3,03

3,82

2,58

2,93

3,77

3,44

4,07

3,38

3,19

1 2 3 4 5

Encourage users communicate the entrepreneur/ new venture

Engagement in an ongoing dialogue

Invitation to an open exchange

Receiving support

Generating understanding

Pre-start-up phase Growth phase


Summary of the communication behaviour in relation to the distinct stages

The entrepreneurs of the pre-start-up phase try harder to find support and to achieve understanding fortheir range of services than entrepreneurs of the growth stage.

This objective is also reflected in the communication activities: Entrepreneurs of the pre-start-up stageare more likely to use dialogic and interactive media and invite to an open exchange more often thanentrepreneurs of the growth stage.

Moreover, the tendency to choose dialogic or other interactive formats is closely linked to a preferencefor online communication strategies that encourage users to comment on the products and services bynew ventures.


Recommended actions

On the basis of the survey‘s results, the following course of action can be recommended:

• The start-up aims at making itself and its offer known.

• To generate attention, two approaches should be used and equally pursued. On the one hand, a

general strategy for raising awareness by means of flyers and image brochures should be applied.

On the other hand, they have to develop a dialogue-oriented strategy for both the offline (direct oral

communication, conventions, conferences, fairs) and online sectors (social media and online

communication).

• Customers and employees are the main recipients of the communication.


Literature

21

Hauge, S., Strodomskyte, L. and Dai, X. (2012): “All you need is trust”- to overcome the liability of newness by forming alliances.Online document available at: https://www.duo.uio.no/bitstream/handle/10852/12893/DaiHaugeStrodomskyte.pdfKlandt, H. (2006): Gründungsmanagement: der integrierte Unternehmensplan: Business Plan als zentrales Instrument für dieGründungsplanung, Oldenburg: Oldenbourg Verlag.Rao, R.S., Chandy, R.K. and Prabhu, J.C. (2008): The fruits of legitimacy: why some new ventures gain more from innovationthan others, in: Journal of Marketing, 72 (4), 58-75.Schulte, R. and Eggers, F. (2010): Entrepreneurial marketing and the role of information - evidence from young service ventures,in: International Journal of Entrepreneurship and Innovation Management, 11 (1), 56-74.Zerfaß, A. (2014): Unternehmenskommunikation und Kommunikationsmanagement: Strategie, Management und Controlling, in:Zerfaß, A. und Piwinger, M. (Hrsg.): Handbuch Unternehmenskommunikation, Wiesbaden: Springer.

Chair of Business Administration especially for Communications and Cultural Management Subproject 2.1 Start-up Service (Innovation Incubator)

Contact details

22

Chair of Communications and Cultural Management: Prof. Dr. Sigrid Bekmeier-FeuerhahnLeuphana Universität LüneburgScharnhorststraße 1, UC – 6.1421335 LüneburgFon +49 [email protected]

Subproject 2.1 Start-up Service (InnovationIncubator) / Entrepreneurship Hub:PD Dr. Mark EulerDr. Christian RudeloffLeuphana Universität LüneburgProfessional SchoolEntrepreneurship HubScharnhorststraße 1, UC – 7.40521335 LüneburgFon +49 [email protected]

Chair of Business Administration especially for Communications and Cultural Management Subproject 2.1 Start-up Service (Innovation Incubator)

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