Discuss the challenges involved in the process of starting a new business venture.
Assignment Brief
Assessment task 2
Task description
The purpose of this assessment item is to consolidate your knowledge of the challenges associated with starting a new business venture. For this assessment item you are required to write an essay addressing the following question:
What actions can an entrepreneur undertake to maximise the likelihood of success in the start-up process?
This assignment should be answered in an essay format, with an introduction, body, and conclusion. Examples should be used to support your answers. There is no requirement for a table of contents for this assignment, but please use page numbers. You must use a minimum of eight (8) academic references to answer the question.
Criteria Measures Intended Learning Outcome:
Criterion 1
Explain the history of concepts of entrepreneurship and their relevance today.
Criterion 2
Compare and contrast the main features of economic and non-economic theories of the role and function of the entrepreneur, identify the questions addressed by each theory, and appraise the results obtained.
Task length 2500 words
Discuss the challenges involved in the process of starting a new business venture. What actions can an entrepreneur undertake to maximise the likelihood of success in the start-up process?
Sample Answer
Starting a New Business Venture: Challenges and Success Strategies
Introduction
Starting a new business venture is an exciting journey, yet one that is filled with numerous challenges. Entrepreneurs are often driven by innovation, independence, and financial goals, but the road to success is rarely smooth. Many start-ups fail within the first few years due to various reasons such as lack of funding, poor planning, or insufficient market research. This essay discusses the major challenges entrepreneurs face during the start-up process and examines the actions they can take to maximise their chances of success. Relevant theories of entrepreneurship and real-life examples will be used to support the discussion.
1. Understanding Entrepreneurship and Its Evolution
Entrepreneurship has evolved significantly over time. Historically, it was associated with risk-taking and innovation. Richard Cantillon in the 18th century defined an entrepreneur as someone who bears risk by buying at certain prices and selling at uncertain prices. Later, Joseph Schumpeter introduced the idea of the entrepreneur as an innovator who creates “creative destruction” through new products and services (Schumpeter, 1934).
In today’s globalised economy, the role of the entrepreneur has expanded. Entrepreneurs now not only innovate but also act as agents of change, job creators, and problem solvers. Theories have shifted from purely economic (e.g., supply and demand) to include psychological and sociological dimensions.
2. Key Challenges in Starting a New Business
2.1 Lack of Capital and Funding
One of the most common hurdles entrepreneurs face is accessing capital. Without sufficient funding, businesses struggle to buy resources, hire staff, or market their product. Traditional bank loans can be hard to secure, especially without a track record. This issue is even more prominent in developing countries where financial systems are less supportive of small ventures (Robb & Robinson, 2014).
2.2 Inadequate Market Research
Failure to understand the target market can lead to product mismatches and poor customer reception. Entrepreneurs may misjudge demand, pricing, or customer needs, leading to early failure. Conducting thorough market research is critical but often overlooked due to time or budget constraints.
2.3 Poor Business Planning
A solid business plan is the foundation of a successful venture. However, many new entrepreneurs either don’t write one or produce plans lacking detail. A good plan outlines goals, strategies, financial forecasts, and market positioning. Poor planning results in misguided strategies and poor decision-making.
2.4 Competition
The market today is saturated with competitors. New businesses must offer something unique, known as a Unique Selling Proposition (USP), to stand out. Entering an industry without a differentiation strategy makes it hard to gain market share.
2.5 Legal and Regulatory Hurdles
Legal complexities such as business registration, tax obligations, employment laws, and intellectual property rights can overwhelm new entrepreneurs. Non-compliance can lead to fines or business closure.
2.6 Human Resource Challenges
Attracting and retaining talented employees is difficult for start-ups with limited budgets. Additionally, many founders lack experience in managing teams, leading to conflict or inefficiency.
2.7 Psychological and Emotional Pressure
Entrepreneurs often face stress, long hours, and uncertainty. The burden of responsibility, fear of failure, and work-life imbalance can affect mental health and decision-making (Stephan, 2018).
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