Drawbacks of Entrepreneurship



Innovation creates new opportunities, but radical or “disruptive” innovation can expose the industry to greater risks. Entrepreneurs have personal traits and behaviors that can compromise their roles as managers and employees. Therefore, entrepreneurs are often called risk takers. Entrepreneurs may need to manage risk and make the right decisions against uncertainty in order not to be overwhelmed by demand for new products, competitor activity, and government intervention. Therefore, while it is very important for owners to build certain business activities, it can be detrimental to entrepreneurship due to the following reasons:

Life cycle of the business venture:

The entrepreneurial development stage can fail due to the life cycle of the company. Entrepreneurs can only be paid in the pre-founding stage due to competition from other sectors. This competition creates potential threats that are irresistible. They buy patents to protect their business. During the start-up stage, market demand is less certain and profits are lower, so entrepreneurs face increased risk and potential business failure. Still, most entrepreneurs may choose to sell a company based on its current growth stage performance. However, when it reaches maturity, sales and profits decline, and the competitive pressure of sales factors increases. Finally, during the decline period, sales and profits decline rapidly due to poor strategic positioning in the entrepreneur's business prospects.

  Entrepreneurs are unable to categorize and differentiate opportunities in new processes, so most of them do not maintain opportunities as technology changes.

Making wrong decisions:

Managers may not have detailed knowledge of the likelihood of what might happen in the future, which can lead to uncertainties in decisions. You can minimize your losses or maximize your minimum returns. In addition, decision-making can be ambiguous when caught between uncertainty and limitless risk.

The failure of new small firms:

Most entrepreneurs are creative and develop new ventures. However, not all entrepreneurs founded companies or are managed by entrepreneurs. However, the most common reasons for new business failures are management incompetence, lack of experience, poor financial management, lack of strategic management, wrong or inappropriate location, poor inventory management, and business migration or change management lose. Therefore, starting a business requires a lot of dedication and discipline to make the business successful. Entrepreneurs can encounter various obstacles that make it impossible.

Poor quality of the analysis for Business plan:

Importantly, adhering to clear business documents plays an important role in an organization. Today, most entrepreneurs face some difficulties when preparing a business plan for making poor quality products. In addition, entrepreneurs are funded by benefits, but business plans are not written back. In this way, companies are more likely to fail because they change with the environment. Additionally, you need not only a clear mission statement, but also clear goals for your company. Today's entrepreneurs fail not because their business plans are unclear, but because their company's goals and mission statements are unclear.

A company cannot fulfill its mission without the following facts: One of his reasons is the lack of a unique selling proposition (USP) that encourages consumers to buy from the company and differentiates the company from its competitors. Additionally, entrepreneurs write bad mission statements. It's long and confusing to remember, not a clear one that's easy to remember. For this reason; neither our customers, our employees nor ourselves can recall our memories without achieving the company's goals and objectives.

A series of ethical issues:

Entrepreneurs face different ethical issues than other business people because they introduce new technologies and innovate how they do business. Entrepreneurs are the first to encounter new ethical dilemmas that can complicate the demand for innovation in the entrepreneurial environment. Opportunities for low-level entrepreneurship abound in developing countries as many basic needs are unmet. Furthermore, Australian economist Joseph Schumpeter outlines that entrepreneurship creates and destroys economic structures in the economy.

 Entrepreneurship shows a “stronger ethical awareness” of the relationships with the companies in which they are involved. Entrepreneurs can be more demanding when making ethical decisions. Thus, the personal characteristics of individual entrepreneurs influence their ethical perspectives and business decisions. Entrepreneurs inside and outside the organization must address the perspectives of others and resolve moral conflicts. The competitive pressures of the market will undermine the ethical standing of entrepreneurs.

Entrepreneurs typically face the 'promoter's dilemma' as they need to attract customers, investors, bankers and suppliers to bear the risks and uncertainties of their new venture. The promoter's dilemma includes uncertainty about how detailed information should be communicated about the company's risks. Additionally, an entrepreneur's high level of optimism and enthusiasm can limit his/her ability to identify and assess potential ethical issues. Furthermore, entrepreneurial innovation can be accompanied by complex negative externalities that can force society to rethink certain norms and values.

Legal Considerations:

There are many challenges from various legal and regulatory environments. In order to cope with internationalization, entrepreneurs need not only extensive knowledge of the legal system of the country, but also lawyers to deal with the peculiarities. Without an understanding of intellectual property, we may not be able to remember and protect assets such as patents, trademarks and copyrights. In addition, they should understand the taxes, liabilities and interest of each country and be aware of the regulations that may affect the new company.

Uncertainty of Income:

Starting and running a business does not guarantee making money. Many small businesses make barely enough money to provide a decent income for their owners. In the first days of a company, companies often fail to offer attractive salaries to their owners and fail to meet their financial obligations. If you want to live off your savings, entrepreneurship is for you.

Risk of Loss:

Business failure can ruin an entrepreneur financially, and yes, failure rates for small businesses are relatively high compared to established businesses. You should ask yourself if you are psychologically ready to deal with.

High Stress Levels:

Starting and running a business can seem very rewarding on the one hand, but it can also be very stressful on the other. Apart from a large investment and a steady monthly income, Entrepreneurs always thrive under the stress of failure leading to financial ruin. In addition, disturbances in your personal life also contribute to stress levels.

Long Working Hours:

Startups often require long hours of work. Many start-ups require you to have your own company, making it difficult for entrepreneurs to balance work and personal life. It becomes a full-time job with constant work to do.

 There are many challenges in starting and running a business, but entrepreneurs are always happy with their decisions. What makes them excel in everything they do is their conviction.