Entrepreneurship Delivered in: Islamia University Bahawalpur Presented By: Tasawar Javed

Today’s talk includes: Stagnate & Die Failure The ingredients of Failure

The Exit Most firms usually small firms born to Die – Most of them don’t grow to any size – Mostly business comprises on one or two people & often second is spouse – Most of the businesses cease trading with in few years of their start up – What about Creditors??? They still have to pay may be your business is shut down Example??? – Halifax closed their operation in Ireland? – Their Strategy from customers????

The Exit Sadness??? Or Joy – When exit for a owner-manager – Depends who they end up???? What they achieved??? – Sad If creditors left unpaid This could leave you bankrupt This could be claimed by claiming their personal assets Liquidation of your company plus all personal bankruptcies Is that not Business Failure!!!

The Exit Liquidation of a company – Natural way brining the business to an end!!!! – Voluntary liquidation – If surplus assets then – the company is not insolvent – Owner manager may make a capital Gain – But after paid creditors An attractive exit?? – Sell the firm as a going concern – If achieved then reap the harvest for their years of investment in the business – Entrepreneurs get experience from these types of business failure

The Exit Factors that influence the probability of business Failure ‘Storey’ identified these factors – Age of business – Size of business – Past growth – Sector Less certain influence on failure – Management – Economic conditions – Type of firm – Location – Ownership – Business in receipt of state subsidies

The Exit Storey tells little about the process of failure and how we can avoid this. It implies that failure is influenced by factors outside the control of owner manager He added young are more likely to fail than old; the very small are more likely to fail than their larger counterparts

The Exit Berryman; writer of 50 articles and five books on the subject of small business failure; ‘he focused on managerial causes’ – Accounting – Marketing – Finance – Other internal factors – Behaviour of owner manager – External factors

The Exit The ingredients of Failure – Entrepreneurial character Knowledge of some skill Limited formal education Inflexible to change and not innovative Decisions based upon on intuition, emotion and non-objective factors Past, not future orientation Limited reading in literature Resistant to advice from qualified sources

The Exit The ingredients of Failure – Business Decisions Inability to identify target market or customers Inability to delineate trading area Inability to delegate Belief that advertising is an expense, not an investment Immature understanding of distribution channels No planning Inability to motivate Problem is somebody else’s fault and a loan would solve everything

The Exit The ingredients of Failure – Company weaknesses Weakness and bad decision are closely related Weaknesses comes from bad decisions Poor financial control due to bad decision; infrequent information Major weakness by number of studies is the typical overdependence of small firm on a small number of customers

The Exit The ingredients of Failure – External environment Due to bad luck Due to bad judgement Wrong place at the wrong time (market development) Time period High competition

Thank You!!!! Q&A