Entrepreneurs Failures And Success In Business

Entrepreneurs’ Failures And Success In Business

Contents

TOC o “1-3” h z u HYPERLINK l “_Toc376456475” Introduction PAGEREF _Toc376456475 h 1

HYPERLINK l “_Toc376456476” Reasons for the Failure of Business Enterprises PAGEREF _Toc376456476 h 1

HYPERLINK l “_Toc376456477” Reasons for the Success of Business Enterprises PAGEREF _Toc376456477 h 4

HYPERLINK l “_Toc376456478” Conclusion PAGEREF _Toc376456478 h 7

IntroductionFailure or success of any business enterprise is largely depended on the managerial capabilities of people responsible for running of that particular entrepreneurial venture. This is majorly suggested as the reason behind strong inverse correlation of probability of insolvency (Hall, 1991). There has been tremendous increase in the entrepreneurial activities around the world. This has seen establishment of small, medium and large enterprises venturing into different sectors of the economy. However, most of these establishments have capsized on the way while some have continued to record tremendous increase and expansion of their activities. By exploring a wide range of relevant literature, this paper seeks to discuss circumstances that lead to both failures and success of these entrepreneurial activities.

Reasons for the Failure of Business EnterprisesThere exist several reasons why there is always widespread failure of some businesses. Of the most dormant reason are poor management styles that are employed by these enterprises (Lee, Rogoff & Puryear, 1996). Management can be hazardous when it cannot coordinate its activities in a sound manner. This is because several functions in the organization heavily depend on the management to provide guidance in order to work as one entity in the business environment. Business enterprises that continually disregard and/or accord little emphasis on the realm of management of their various activities have been noted to suffer from a variety of problems which may end up hindering steady upward mobility (Justin et al, 2006). As a matter of fact, it has been observed that a large number of nascent firms fail to grow because they lack sound management principles capable of imparting meaningfully and positively on their day to day activities (Watson & Everett, 1993).

Undercapitalization is another crucial element that makes enterprises to fail in their operations (Watson & Everett, 1993). This factor comes in many forms, for example, insufficient funding results to stalling of business projects. After starting a certain business, the management is required to have a long term funding strategy plan since it is a common knowledge that businesses take some time before it stabilizes. For the business to be to withstand storms after their establishments there is need to have sufficient supply of factors of production. However, with time, the business itself is required to generate these capitals from its own revenue outcome.

Business entities offer their products or services to their clients. The failure and success of the business is therefore depended on the satisfaction of clients to the product or the service. It is therefore imperative that many business enterprises fail when there is customers’ dissatisfaction to these products or services (Folkes, 1984). Dissatisfied customers will never be willing to continue acquiring the product nor the services. a common knowledge therefore dictates that without good sales of the business products, it is doomed to die.

Rigidity in business operation in most cases also contributes to business failures (Watson & Everett, 1993). For example, in the event where the business does not viably respond to competition, it precipitates to the business death. Businesses that do not enjoy the monopoly on the market need to be vigilant on the trends on the market. Businesses need to respond timely to the activities of the competitors in order to remain relevant in the completion arena. It is also important for the business organization to positively embrace technology. Changes in the market go with the changeover of the technology. Therefore, an entity that does not embrace current technologies of the time is likely to be phased out of the business hence its failure.

Uncontrolled growth in business activities is another common reason that leads to business failures (William, Brook & Evans, 1989). Before business entity plans to venture into an expansion program, it is required to have carried out feasibility study for the expansion. When poor feasibility study is done, the business expansion process will be based on false premise which is likely to die and lead to great failure in the business venture.

Strategic planning is a vital component in business management. Poor planning is likely to result into business failures. Poor formulated policies and plans which enhances the probability of poor decision making and in the long run inappropriate actions being taken (Beaver, 2008). Any actions that are taken on wrong plans are always deemed to fail and therefore businesses can not thrive on wrong foundations. For any business entity to perform well, its structures, plans and policies needs to be responsive to the business environment both internally and externally. Weak structures, plans and policies are a prerequisite for business failure.

Before starting any business enterprise, business functions and objectives for establishment need to be clearly outlined and specified. Some entrepreneurs start their business without defining the role, functions, visions and objectives of their operations (Watson & Everett, 1993). This kind of business setting is likely to lack its guiding principles and limits its operations. Such business entities usually operate in a haphazard manner which is a direct path to their demise.

Business entities are established for profit making purposes. It is therefore important that there should be proper mechanisms for cost controls. However, poor cost controls is a major element of business failures (Tracy, 2008). Some business firms do not prioritize cost control and they end up spending haphazardly. In business activities, there is always need to do proper budgeting for business activities. Incurrence of higher costs means that strains to the business spending will definitely bring it to its knees.

In addition, business ventures deal with specific clientele in the market. In occasions where there is poor market analysis by the business entity, business operations are destined to collapse. All businesses operate in a given environment where by external factors determine business survival. It is therefore important that proper market analysis should be undertaken to understand its market needs and trends. Incases where poor or no market analysis is made, the business cannot be able to plan with the market needs in consideration. This results to provision of services and products that are not within the needs of its clients. This often results to losses of greater magnitudes that result to failure of these kinds of business enterprises.

Reasons for the Success of Business EnterprisesOn the other hand, while other firms struggle in their entrepreneurial activities, some firms have continued to carry out their activities in more successful trends. There are a number of reasons that results to success of these business entities. Some of these reasons include:

Good managerial competences; management determines the success of business activities. Apart from the normal management function which include planning, organizing, coordination, staffing and directing, the top management needs to have a sound sponsorship of the business activities. This is always important since business processes changes from time to time for example changes in technology and work place culture. These changes require sufficient resource allocation. Provision of strong and consistent support in business process improves the chances of business success (Radhakrishnan & Balasubramanian, 2008).

It is also important to note that an entrepreneur who is ready and willing to learn new things is destined to success in his/her business venture. In order for any entrepreneur to be successful in the venture, he or she should be curious, open minded to acquire new knowledge and willing to ask whenever he or she is not sure. One can not be self sufficient in the area of his or her venture and therefore it is important that for one to be successful, he or she needs to continually explore knowledge in the area of venture. Most successful entrepreneurs value acquisition of new knowledge in their area of operation so as any decision they make is always an informed action.

In addition, successful entrepreneurs are always keen in building networks (Lewis, 2010). It is a common knowledge that no business exists in a vacuum, therefore, businesses that builds relevant network in their operations becomes a spice for success of their businesses. For example, entrepreneurial business that deals with production needs to build necessary networks with the suppliers, customers and other stakeholders. Good networks ensure continued business operations. For example, the network ensures that there is always continued supply of raw material needed for product production and that there is always a continued client which leads to a continued growth of the enterprise.

Proper and good strategic planning is another critical reason for entrepreneurial success (Oster & Hamel, 2001). Those entrepreneurs who have put concentration on coming up with sound strategic planning, their entrepreneurial activities turn to successful ventures. Good goal setting is a prerequisite for good business performance. Successful entrepreneur invest in proper strategic planning where by proper environmental factors are understood well before plans are formulated that are responsive to the conditions of the operational environment.

Personal motivation also plays an important role in entrepreneurial operations (McClelland, 1987). Venturing in any entrepreneurial activities without personal motivations is precipitate of business failure. Successful entrepreneurs are always motivated in their activities and they are always inspired by their inner spirit to work hard and smart. Internal motivation makes these people dedicated in their ventures. Their dedications bear fruits as most of the ventures blossoms. However, an enterprise that is not driven by personal motivations of the key participants is only destined to failure.

Lastly, it is important to remember that entrepreneurial ventures operate in an environment which changes rapidly in terms of technology, management style and other aspects. In this respect, successful enterprises calls for sound change management in these business operations. Successful managers are good change managers. For example, change in technology is usually met with on time response in order to remain relevant in the competition arena of the business environment. It is important to note that technology determines the success of business operation in the present world. Therefore, successful entrepreneurs prioritize technology and usually change with the trends in order to remain relevant in the business field.

In conclusion, success factors in entrepreneurial activities are largely determined by internal locus of control where by success depends on one’s own efforts (Justin et al, 2006). However, the external locus of control also determines the fate of the entrepreneurial venture. The success of business entrepreneurs needs to have a sound management and leadership just like other well performing institutions. Self discipline is also paramount for the success of the venture. In general good moral standings and practices are important species for success of these entrepreneurs. It is evident that success or failure of entrepreneurial establishments is a two sided thing where by reasons that leads to the success when not adhered to leads to the failure of the establishments. It is therefore important that one need to be positive and work smartly. However, it is also imperative to remember that before one venturing into any business enterprise, one has to have a valid reason for the venture, passion in the sector and desire to succeed in the operation.

ConclusionFirms are established by entrepreneurs to thrive and never to wither. It is therefore the will of all entrepreneurs to succeed in their ventures. However, several factors as discussed in this paper determine any venture success. In the event where these factors are not fully accomplished and used, the firms turn to failures path which leads to their eventual deaths. Business ventures operate in a two sided conditions where by they are either in successful or in failure operations. It is therefore important for entrepreneurs who want to be successful in their venture to follow the discussed reasons to the later.

References

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Folkes, V, 1984, ‘Consumer reaction to product failure: An Attributional approach’, The Journal of Consumer Research, vol.10.

Hall, G, 1991, ‘Reasons for insolvency amongst small firms – ‘A review and fresh evidence’, Small Business and Economics, vol.4, No.3, 237-250.

Lee, M, Rogoff, EG & Puryear, AN, 1996, ‘Black Entrepreneurship: It has a past and it can have a future’, The Entrepreneurial Executive, vol.1, no.2.

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McClelland, DC, 1987, Human Motivation, University of Cambridge Press: New York.

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William, A, Brook, S & Evans, D, 1989, ‘Business and Economics’, Small Business Economics, vol.1, No.1, 7-20.