Entrepreneurship - Research Paper Example

Entrepreneurs can be mangers while managers cannot attain the status of an entrepreneur. Small businesses have become a significant characteristic of modern microeconomics. However, recent statistics on the US retail sector showed that two thirds of all small business is more likely to close down before attaining five years than large business (Prentice, 1998). Small businesses are characterized by small capitals and they are usually operated as sole proprietorship entities. There are various reasons that contribute to the failure of small businesses.

Traditional factors that cause failure of small businesses include lack of capital and inadequate knowledge. However, it is evident that entrepreneurial problems are the main cause of failure among small businesses. Controversies over the exact cause of business failure has been tossed between lack of managerial or entrepreneurship skills and therefore, it is the purpose of this paper to clarify this controversy by looking at both sides of the issue and coming up with a concise solution to the controversy.

Entrepreneurship is concerned with management of other factors of production in order to sustain the production process. Management of other factors of production is ensuring their availability in sustainable quantities. Capital and labor are two significant factor of production since the enable production of economic goods and services. . Failure of small business is therefore caused by lack of entrepreneurial skills among small business owners. Entrepreneurship is a critical skill that each business owner needs to have.

However, it is evident that not all business owners are entrepreneurs. Unlike management, entrepreneurship skills cannot be achieved through learning the relevant literature this is because entrepreneurship depends more on the personality of an individual than their theoretical knowledge of management. On the other hand, management skills can be acquired through the right education. This indicates that there are more businesses being run by mangers than those that are run by entrepreneurs. Business managers have the responsibility of ensuring that all factors of production are available during the production process while entrepreneurs are concerned with ensuring the sustainability of all factors of production.

This is the main source of failure among small businesses. Failure to reward labor and capital is the main cause of their absence in the chain of production of most small businesses. Labor requires wages or salary as a form of reward while capital is rewarded through interests. Lack of reward from either factor of production results in its elimination from the production process and, this is indicated as failure of the business. The business environment of any business changes constantly. This indicates that businesses have to cope with the changes resulting from their current business environment.

Small businesses have a more dynamic business environment than large and medium sized business. This implies that small business owners have to be more flexible in adopting the changing environment than large businesses. An