How Indonesian start-up went through the valley of death period
List of Authors
  • Chandra Adhitya Bima Saputra , Zuliani Dalimunthe

Keyword
  • start-up company, start-up failure, turnaround strategy

Abstract
  • Recently, many start-up companies in Indonesia are broadcasted failed and going to bankrupt. The main reasons are running out of cash, failure to obtain new capital, lack of resources, bad management, and environmental exposure. Therefore, this study peek behind the veil of how start-up faces the hurdle to survive and the effort to sustain by implementing the strategy as a turnaround strategy by changing its behavioral operation from a revenue generation focus to an efficient manner. However, little research has addressed implementing a turnaround strategy in Indonesia, especially in Indonesian Start-up Companies. This strategy is supported by the survival-based theory that an organization must operate efficiently and be able to respond to the rapidly changing environment. To obtain depth analysis and reveal the secret of implementing the turnaround strategy, this study uses the case study approach in one of the surviving Indonesian Start-up Companies, PT Eximku Logistik Indonesia (the company). We use financial ratios to measure the company's efficiency and Z-Altman Score to measure bankruptcy risk. At the end of 2021, the company faced the brink of the Valley of Death, with a remaining cash balance only adequate to fulfilled three months of the company's operation. Fortunately, it received the investor funding on time. To prevent this near-death experience, the company implemented the turnaround strategy started in 2022 consisting of operating cash flow improvement, cost efficiency, internal control improvement, and revenue generation. At the end of 2022, the strategy works. The respective financial ratios show that the company's operating cash flows, profitability, and efficiency improved. There is also an improvement in the company's bankruptcy risk as measured by the Z-Altman score. However, the company is still in a net loss and negative cash flow position, striving in the emergence phase of a turnaround strategy.

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