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Entrepreneurial Risk Traits and the Ability to Manage Uncertainties - Essay Example

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Impacts of the entrepreneurial risk taking traits and ability to cope with uncertainties on the operating environment of a small business The importance of entrepreneurship for economic development has grown over the past few decades. Entrepreneurship is perceived as a source of innovation, growth, and job creation according to Burns (2010, p.4-6)…
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Entrepreneurial Risk Traits and the Ability to Manage Uncertainties
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Download file to see previous pages As the owner of the business, an entrepreneur is also perceived as a risk taker. This is because all the decisions pertaining to the success or failure of the business lies with him. Despite this revelation, the Global Entrepreneurship Monitor in 2006 reported that many people in the UK are risk averse, with more than two-thirds of respondents revealing so. As many of businesses fail, such fears are well placed. Many businesses fail due to a number of reasons among them being lack of finance, poor infrastructure, shortage of skills and complexity of regulations or the red tape among others (Storey 1994, p.5-9). Nevertheless, the ability to evaluate the uncertainties and risks that are integral part of all businesses decisions is a vital element of successful entrepreneurship. For this to be accomplished, entrepreneurs must do their research properly to ensure that all reasonable steps are taken to mitigate any potential failure. This is because, the outcome of a successful risk taking result into a profitable venture (Timmons 1999, p.15-22). The objective of this paper is to explore how the entrepreneurial trait of risk taking and the ability to cope with uncertainty may impact the operating environment of a small business. ...
Because of these risks and uncertainties, small business entrepreneurs live in fear of failing to accomplish their goals of business success. It is, therefore, imperative that small business entrepreneurs must be vigilant to ensure that they do not plunge into the ‘pit holes’ of the business. Business expansion for instance comes with many challenges most of which comes as a result of lack of knowledge of new locations, and lack of the ability of manage large strategic, structural, technological and the human resource and the constrain of monetary base as well according to Rae (2007, p.10). Expanding the size of the business implies that more employees are required; more capital is also needed as well as the challenges of coping under the new business environment. Some of the risks and uncertainties that an entrepreneur must be aware of and device proper ways to manage them for the success of the business include: Financial constraints Entrepreneurs are definitely faced by the risk of inadequate finance especially when trying to expand their business venture. This is because no single business can be expanded without the need of more capital investment. Since the business is small, it may not be at a position to provide the more capital outlay required to meet all the business needs. As such, an entrepreneur must be at a position to take all the risks necessary to ensure that the probable financial needs are available. For instance, an entrepreneur should take the risk by borrowing the required finance from financial institutions. The other strategy that may be employed by the entrepreneur includes seeking a merger with other firms to help pull resources together for the success of the business. An entrepreneur with such a risk-taking trait will easily come ...Download file to see next pagesRead More
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