Lit review on'Small Business growth is solely dependent on the skills Essay

Lit review on'Small Business growth is solely dependent on the skills of the entrepreneur and their attitude towards risk.' - Essay Example According to Schumpeter, an entrepreneur identifies and seizes business opportunities then converts these opportunities into viable and marketable ideas. Being one of the factors of production, an entrepreneur combines the other factors of production, that is, land, labour and capital. He or she then assumes the risks involved in order to realize a profit. Small businesses have developed into economy drivers over the last two decades. This is the period when most governments have been liberalizing their previously closed market. Before then, the government corporations were the economic growth agents but since the markets are now freer, many small businesses have spruced up. Their massive number has however, stunted their growth because of stiff competition (Hubbard, 2009). This necessitates possession of an array of special skills and characteristics that are possessed by an entrepreneur. Any person can start a business, but the successful ones persevere to see the business navigate tough times and eventually succeed and grow. Some of these skills are tackled in this paper. It is, however, imperative to note that even though the entrepreneurs are painted as the more successful people when it comes to small business growth, they still experience a high failure rates. The studies conducted by Business Growth Index showed that the failure rate stood at 75% (Shiu et al, 2007). A business failure can be defined as the inability of the business to get the required return on investment. Since the business is small, and most of the time funded through personal savings or through debt financing after leveraging individual’s property, starting a small business with such a high failure rate becomes too risky. However, this is one of the major characteristics separating a business person and an entrepreneur; an entrepreneur is alert for opportunities that an ordinary business person ignores or does not see; most importantly, an entrepreneur assumes risks that an or dinary business person is reluctant to assume (Minniti, 2013). Risk according to many people has a negative connotation, and rightly so because many start up businesses have ended up declaring bankruptcy after assuming unnecessary risks. But to entrepreneurs, a risk is a positive force; it is an opportunity in disguise and a challenge that needs to be tackled. Beneath the risk the entrepreneur sees the rewards which are the profits (Lowe and Marriott, 2006). Being a risk taker rather than risk averse like most business persons does not mean being reckless, it only implies taking calculated risks to realize profits. This requires some expertise in combining factors of production, utilizing innovation and creativity wells of the business, entrepreneurial skills and patience. There are millions of small businesses started every year, but their mortality rate is just as high. Most of those that weather the storms are those that were started by entrepreneurs (Gabardi and Tichy, 2013). Th ese businesses do not just seek to be operational but also, as a main objective, to grow. Entrepreneurs, through their skills, are the agent of small business growth (Minniti, 2013). The following are some of the skills possessed by successful entrepreneurs that have helped in growing of their small businesses. The first skill possessed by