For anybody who is ready to start a business or to find out some of the challenges that SMEs face in operations of the business in day to day life.

1. MZUZU UNIVERSITY
FACULTY OF INNOVATION AND
DEPARTMENT OF INFORMATION AND COMMUNICATION
TECHNOLOGY
COURSE TITLE : ENTREPRENEURSHIP
STUDENT NAME : KENNEDY MEMBA
REG. NUMBER : BICTU 22/17
SUPERVISOR : MR. G. MHANGO
DUE DATE : 7th
June 2019

2. Increasingly, economic development experts are abandoning traditional approaches to economic
development that rely on recruiting large enterprises with tax breaks, financial incentives, and
other inducements. Instead, they are relying on building businesses from the ground up and
supporting the growth of existing enterprises. In this essay we will focus on three areas which will
include: factors contributing to the increase of small ventures, roles of small business in the
economy and causes of small business failures.
To begin with, there are several factors that contribute to the increase of small ventures or
businesses. Not all people can be business personnel or entrepreneurs. Some have to be educated
to be in the offices and be the driving force in the various departments of organizations. Firstly,
people need the freedom i.e. that freedom of being free from roaming to do business and meeting
customers in particular organisations there are no chances that one can go out to do any activity to
bring them money. Some people prefer to be not in the offices but to go in the streets to look for
money. Secondly, freedom of money is another issue that contributes to the increase of small
business people. Business people chose to have full control of money that they are making on daily
basis. This totally differs from the salary that one makes at the end of a month, salary does not
make one to have the full control of money due to activities that come through during the time that
you have money, people chose to do a business so that they can have the freedom to have money
so that they can do developments they wish at any time they like.
Additionally, passion and enthusiasm is what also brings new ventures that risk takers see that they
can react and deliver what is required on the ground. Some people loves to see their efforts business
growing from one point to another as a result this enhances a high number of small ventures in a
particular area. Furthermore, due to lack of employment some people choose to go for a particular
business which it can support them in finding needs to support their life in daily activities.
Although some people do business, some do it because they don’t have anything to do, their
passion goes to the offices where they want to be running with files and get paid at the end of the
month not watching their work progressing and growing into a big business. Lastly, due to the
missing gaps in the market some people tries to come up with solutions which can generate money
as a result this brings up new companies.
As these ventures are being rolled up and operating there are roles that have to fulfill to the
economy of the particular area. In this section I will say much concerning the roles of small
businesses in the economy. The following are some of the facts: to be more innovative. Here, the
business has to be too dynamic in its operations. E.g. in a business of producing and supply, the
owners has to always make sure that new products are produced as well innovating the existing
products. This can also help to reduce competition with fellow competitors. Furthermore,
employing local employees is the other important area where we focus. Once a company or small
business starts operating it is the hope of everybody to see local people benefitting from the
business by getting jobs not by stealing materials of the business. Introduction of small businesses
enhances the chances of creating more jobs.

3. When the company/business is operating they pay taxes, which goes to the government. This
money helps in the development of the country in various activities of the government. If there
cannot be the presence of the small businesses paying tax that means the government cannot
generate enough money to support in its activities or operations in various sectors of it. Adapting
to the changing climate, the business has to ready to adapt to changes in environment, managers
have to be ready to respond to any changes made in the business whether are business policies.
Customers will love to see the supplier who responds to the environment changes. Lastly, growing
a small business into a corporation is one of the important factors that everybody hopes and dreams
of. This is a long term plan that if not well preparation and good strategies are not followed no
company or small business can develop into a corporation. It is recommended to think and grow
to build and achieve the highest dream that seem impossible.
Finally, there are several factors that lead to a failure of a small business. Some businesses succeed
while some fail on their way to grow and reach a successful peak of its operations. The factors
include: poor business planning. This happens when one lacks management and planning skills
essentially for growth of the business. Some of the necessary plans required to this point include
identify the mission; cost structure; market; external influences; and strengths and weakness of a
business. Lack of industrial experience is also another factor that fuels to the fall of the various
businesses, this leads to poor organisation of the firm and resources. Inadequate financing is also
another challenge which hinders most of the small businesses. It is not a matter of unavailability
of funding, but the lack of planning for funding to support opportunities for growth. Planning in
advance, rather than looking for financing just when needed, is a good practice.
Ignoring the competition from partners or fellow competitors is another challenge that can take the
business to the ground. Customers looks for better deals, good prices, this attracts the customers
to the business and helps the supplier to get acknowledged for the services being offered.
Competition brings good things. Management incompetence is also another factor that if not highly
monitored can lead to catastrophe of a business, management efficiently implements and monitors the
strategic and operational plan of a business. A good strategic plan is only good as the management’s
ability to implement changes in day to day operations. Additionally, lack of adequate cash flow
which makes it had for the business managers to fail on projections in cash of daily activities and
from sales and production. Business people fail to calculate all expenses as a result the business
fails to progress and the stop operations.
Sometimes it is also due to lack of entrepreneurial skills that makes businesses fail. It might happen
that the risk taker has no any skills related to business as a result this mounts to business failure in
the end. It is recommended that business owners possess the skills to enable them operate in the
field of their business.

4. References
1. Kelly Edmiston (2017). The Role of Small and Large Businesses in Economic
Development.
2. G. Mhango (2019) Challenges facing small scale businesses, Small scale business and
Business failures
3. Nickels understanding business 12th edition 2019