UNIT 2: THE ENTREPRENEURIAL DECISION AND SMALL BUSINESS MANAGEMENT

Content
2.0 Aims and Objectives
2.1 Introduction
2.2 The entrepreneurial Decision
2.3 Small business management

2.0 AIMS AND OBJECTIVES

This portion of the text is devoted to the presentation of the decision making process in
entrepreneurship.

After reading this unit, you should be able to:

 identify and explain the different factors under each of the three self ventral sub
decision of the entrepreneurial decision and small business management.

2.1 INTRODUCTION

For a person who actively starts his or her own business, the experience is filled with
enthusiasm, frustration, anxiety, and hard work. There is a high failure rate due to poor sales,
intense competition, or lack of capital. The financial and emotional risk can be very high.
What then causes a person to make this difficult decision?

Many individuals have difficulty bringing their ideas to the market and creating a new venture
yet, entrepreneurship and the actual entrepreneurial decision have resulted in several million
new businesses throughout the world.

2.2 THE ENTREPRENEURIAL DECISION

Many companies have been formed through a very personal human process that, although
unique, has some common characteristics. Like all processes, it entails a movement from
something to something – a movement from a present life-style to forming a new enterprise as
indicated below.
The decision to start an entrepreneurial venture consists of several sequential decisions

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2.2.1 The decision to leave a present career or life style.
2.2.2 The decision that an entrepreneurial venture is desirable.
desirable.
2.2.3 The decision that both external and internal factors make the venture possible.
possible.

2.2.1 Change from Present Life-style

The decision to leave a present career and life style is not an easy one. It takes a great deal of
energy to change and create something new. The two forces driving a person to leave a
present life-style and start a business are; the pull factors and push factors.
~ Pull factors are those which encourage individuals to become entrepreneurs by virtue of
the attractiveness of the entrepreneurial option. Some of the most important pull factors
are:
~ The financial rewards of entrepreneurship
~ The freedom to work for oneself
~ The sense of achievement to be gained from running one’s own venture
~ The freedom to pursue personal innovation
~ A desire to gain the social standing achieved by entrepreneurs.
~ Push factors are those which encourage entrepreneurship by making the conventional
option less attractive. Push factors include.
~ The limitation of financial rewards from conventional jobs
~ Being unemployed in the established economy
~ Job insecurity
~ The inability to pursue a personal innovation in a conventional job
~ Being a misfit in an established organization
The above push and pull forces can also be summarized as: work environment and disruptions

Change from present life style Form new enterprise

 Desirable
 Work environment
- Culture
 Disruption - Subculture
- Family
- Teachers
- Peers
 Possible
~ Government
~ Background
~ Marketing
~ Finance
~ Role models 22
The two most important incentives to leave a present life-style and start a business will be
discussed as follows:

1. Work environment
Individuals tend to start businesses in familiar areas that they are working now. And here two
work environments tend to be particularly good in spawning new enterprises. They are: 1)
Research and Development & 2) Marketing. Working in technology (research and
development) individuals develop new product ideas or processes and often leave to from new
companies when the present employer do not accept the new ideas. Similarly, individuals in
marketing become familiar with the market and unfilled customers’ want and needs and
frequently start a new enterprise to fill these needs.

2. Disruptions
Perhaps even more incentive to leave a present life-style and overcome the inertia by creating
something new comes from a negative force disruption. Disruption is a push factor towards
establishing a new venture. A significant number of companies are formed by people who
have retired, who are relocated, or who have been fired. There is no greater force than
personal dislocation to galvanize a personal into action. Another cause of disruption and
resulting company formation is the completion of an education degree.

2.2.2 The Decision that an Entrepreneurial Venture is Desirable

The perception that starting a new company is desirable results from an individuals culture,
subculture, family, teachers, and peers.

~ Culture
A culture that values an individual who successfully creates a new business will spawn more
company formation than one that does not. For example, the American culture places a high
value on being your own boss, having individual opportunity, being a success, and making
money – all aspects of entrepreneurship. Therefore, it is not surprising to find a high rate of

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company formation in the United States. On the other hand, in some countries (Ethiopia is
included) successfully establishing a new business and making money is not as highly valued
and failure may be a disgrace.

~ Subculture
However, even an entire culture is not totally for or against entrepreneurship. Many different
subcultures that shape value systems are operational within a cultural framework. There are
pockets of entrepreneurial subcultures in every culture. More individuals actively plan to form
new enterprises in these supportive environments.

~ Family
Family traits play an important role in entrepreneurship. Studies of companies in a variety of
industries in many countries indicate that 50 to 72 percent of founders of companies had
fathers and /or mothers who valued their independence. The independence achieved by being
company owners, professionals, artists, or farmers permeates the entire family life, giving
encouragement and value to the company formation activity.
~ Teachers
Encouragement to form company is further gained from teachers, who can significantly
influence individuals regarding not only business careers but entrepreneurship as one possible
careers path. Schools with exciting courses in entrepreneurship and innovation tend to spawn.

~ Peers
Finally, peers are very important in the decision to form a company. An area with an
entrepreneurial pool and meeting places where entrepreneurs and potential entrepreneurs meet
and discussion ideas, problems and solutions spawn more new companies than an area where
this does not occur.

2.2.3 Possibility of an Entrepreneurial Decision

While the desire generated from the individuals culture, subculture, family, teachers, and
peers must be present before any action is taken, the second part of the question centers
around the question: what makes it possible to form a new company? Several factors –
government, background, marketing, role models, and finance – contribute to the creation of a
new venture.

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 ~ Government

The government contributes by providing the infrastructure to support a new venture. It is no

wonder that more companies are formed in the United States given the roads, communications
and transportation system utilities, and economic stability available versus that available in
other countries. Even the tax rate for companies and individuals in the United States is better
than in countries such as Ireland or England.

~ Background
Here the entrepreneur must have the necessary background needed to make the company
formation possible and keep it running. This can be knowledge acquired from formal
education or previous business experience.

~ Marketing
There must be a sufficient market size for the products or services of the new venture. In
addition, the entrepreneur must have the marketing know-how to put together the best total
package of product, price, distribution and promotion needed for successful product
launching. A company is more easily formed in an area where there is a market demand.

~ Role Models
The existence of role models will also make the entrepreneurial decision possible. That is, to
see some one else succeed makes it easier to picture yourself doing a similar activity better.
“If that person could do it, so can I”

Finance
While most of the start up money for any new company comes from personal savings, credit,
friends, and relatives there is still often a need for seed (startup) capital. More new companies
are formed when seed capital is readily available.

2.3. Small Business Management

Introduction
Based on socio- economic conditions, countries define small business differently. But all may use
size and economic criteria as a base to define small business. Size criteria include number of
employees and the startup capital. Size does not always reflect the true nature of an enterprise;
in addition qualitative characteristics may be used to differentiate small business from other

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business. The economic/control definition covers market share, independence and personalized
management.

2.3.1. Concepts and definition of Small Business

Specifying and size standard to define small business is necessarily arbitrary, because people
adopt different standards for different purposes. For example, most people would classify
independently owned gasoline stations, neighborhood restaurants, and locally owned retail
stores as small business.
Similarly, most would agree that the major automobile manufacturers are big businesses. And
firms of in between sizes would be classified as large or small on the basis of individual
viewpoints. There are two approaches to define small business. They are:

1. Size criteria
2. Economic/control criteria.
1. Size Criteria
Even the criteria used to measure the size of businesses vary. Size refers to the scale of
operation. Some criteria are applicable to all industrial areas, while others are relevant only to
certain types of business. Examples of criteria used to measure size are: number of employees;
volume, and value of sales turnover, asset size, and volume of deposits, total capital investment,
volume/value of production, and a combination of the stated factors.

Even though number of employees-is the most widely used yardstick, the best criterion in any
given case depends upon the user’s purpose. To provide a clearer image of the small firms, the
following general criteria for defining a small business are suggested by small business
administration (SBA)
 Financing of the business is supplied by one individual or a small group. Only in a rare
case would the business have more than 15 or 20 owners.
 Except for its marketing function, the firm’s operations are geographically localized.
 Compared to the biggest firms in the industry, the business is small.
 The number of employees in the business is usually fewer than 100.

This size criteria based definition of SMEs varies from country to country. All over the world,
number of employees or capital investment or both has been used as the basis for defining SMEs.

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The following are size criteria definition of SMEs in some of the developing and developed
countries.

Australia Manufacturing <100 employees

Services <20 employees
Germany SME <500 employees
France SME 10 -499 employees
China SME Depends on product
group.
Usually 100 employees:
investment ceiling US $8
million.
Indonesia SME <100 employees
Malaysia SME <175 full time workers
investment US $1 million
Using capital as size criteria, Ministry of Trade and Industry of Ethiopia adopted official
definition of Micro and Small enterprises as follow:

Microenterprises are business enterprises found in all sectors of the Ethiopian economy with
a paid-up capital (fixed assets) of not more than Birr 20,000, but excluding high-tech
consultancy firms and other high-tech establishments.

Small Enterprises are business enterprises with a paid-up capital of more than Birr 20,000,
but not more than Birr 500,000, but excluding high-tech consultancy firms and other high-
tech establishments. (10/2003)

2. Economic/Control Criteria
Size does not always reflect the true nature of an enterprise; in addition qualitative
characteristics may be used to differentiate small business from other business. The
economic/control definition covers:
a. Market share
b. Independence
c. Personalized management

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All three of these characteristics must be satisfied if the business is to rank as a small business.
 Market share: The characteristic of a small firm’s share of the market is that it is
not large enough to enable it to influence the prices of national quantities of goods
sold to any significant extent.
 Independence: Independence means that the owner has control of the business
himself.
 Personalized Management: It is the most characteristics factor of all. It implies
that the owner actively participates in all aspects of the management of the
business, and in all major decision-making process. There is little devaluation or
delegation of authority. One person is involved when anything material is involved.
 Technology: Small business is generally labor intensive. Only few are technology
intensive.
 Geographical area of operation:
operation: The area of operation of a small firm is often
local
Generally, small business is a business that is privately owned and operated, with a small
number of employees and relatively low volume of sales. Small businesses are normally
privately owned corporations, partnerships, sole proprietorships, or cooperatives.

2.4. Economic, social and political contributions of small business enterprise

Small and medium enterprises (SMEs) cover a wider spectrum of industries and play an
important role in both developed and developing economies. Ethiopia is no exception and SMEs
occupy a prominent position in the development of Ethiopian economy. Over the years, the
number of SMEs is growing form time to time. They need a strong support on Scio- economic
and political ground. Some of the contributions are herewith.

1) Equitable distribution of wealth and decentralization of economic power

Unregulated growth of large scale industries results in concentration of economic power in a
few hands and consequently gross inequalities in the distribution of income and wealth in the
country. On the other hand, income generated in a large number of small enterprises is
dispersed more widely and its benefit is derived by a large population. This is due to wide
spread ownership and decentralized location of small scale units. In this way small scale
enterprises bring about greater equality of income distribution. It is also argued that most of the
small scale units are either proprietary or partnership concerns. As a result relations between
workers and employers are more harmonious in small enterprises than in large enterprises.

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Small enterprises also encourage competitive spirit and generate the impulse of self-
development.

2) More Employment creation capacity

Economic planners have realized the necessity of encouraging small industries because they
require less capital but generate more employment. The small-scale sector has the capacity to
generate a much higher degree of employment than the large-scale sector. This is because small
scale industries are labor intensive and thus create more employment per unit of capital. More
production needs more capital in such a situation. The small industries will stand in good
position because they are less capital intensive and more employment oriented.

3) Removing Regional Imbalance

Another problem is the continuous shifting of people from rural to urban areas which causes
over-crowding in cities with slum conditions due to lack of social and medical amenities which
require heavy investments. This problem can be solved by inducing people to set up small
industries in rural areas.

Large scale industries have the tendency to concentrate in big cities. As a result semi urban and
rural areas remain deprived of the benefits of industrialization. Moreover, undue concentration
of large industries in urban areas creates several problems, e.g., pollution, shortage of civic
facilities, etc. Due to lack of employment opportunities in the country side, people migrate in
large numbers to big cities. Small scale units can be located in rural and semi urban areas to
reduce regional disparities.

4) Ancillary Function
Many small-scale industries units supply parts and accessories to bigger industries. This
ancillary function involves specialization in specific areas and results in greater profitability.
The government has, therefore, relaxed the ceiling of investment in plant and machinery for
ancillary unit.

5) Export Promotion
Small-scale industries are nowadays opening up fresh avenues in the export market in our
world. Realizing the importance of the small-scale sector in the economy the Ethiopian
government has adopted several measures to speed up the growth for small industries.

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 2.5. Advantages of going into Small Business
The desire for individuals to own and operate their own small business is growing. As stated
earlier, this continual creation of new business at the heart of free enterprise system. For
individuals pursuing a career in business ownership, numerous benefits can be attained
personally as well as professionally. The next section examines the following more common
advantages of owning a small business:

a. Independence
Most small business owners enjoy being their own boss; they like the freedom to do things
their way. Although often a great deal of responsibility is associated with this independence,
they are willing to assume it.

b. Financial Opportunities
Another major reason for going into business for oneself is financial opportunity. Many small
business owners make more money running their own company than they would be working
for someone else.

c. Community Service
Sometimes an individual will realize that a particular good or service is not available. If the
person has reason to believe the public will pay for such output, he or she will start a small
company to provide it.

d. Job Security
When one owns a business, job security is ensured. The individual can work as long as he or she
wants; no mandatory retirement exists

e. Family Employment
Another advantage is the opportunity to provide family member with a place of employment.
This has several benefits. First, owner-managers want to perpetuate their business and how
better to do, then to get children or relatives to take it over. Second higher moral and trust
usually occur more in family-run businesses than others. Third, in times of severe economic
downturn, small business owners can provide employment for family members.

f. Learning from Challenge

Many small business owners are attracted by the challenge that accompanies going in to

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business for oneself. Research reveals that most successful small business owners like to feel
they have a chance to succeed (they want to know success is possible) and the chance to fall.
They learn from the past failure or success.

g. Introducing Innovation
New products that originate in the research laboratories of big business make a valuable
contribution to our standard of living. There is question, however, as to the relative importance
of big business in achieving the truly significant innovations. The record shows that many
scientific breakthroughs originated with independent inventors and small organizations.

h. Catering for limited or niche markets:

Large firms with high overheads must produce high levels of output to spread costs. By contrast,
small firms are able to make a profit on much lower sales figures. They can therefore sell into
much smaller markets which are ignored by larger organization: e.g. a local window cleaner
serving a few hundred houses, a specialist jewellery maker with personal clients.

2.6. Small Business Failure factors

The following are some of the major factors which cause most small business failures.
 Poor operations management – The manager lacks the ability to operate a small
business.
 Lack of experience – Many owners start businesses in industries in which they
have no experience
 Poor financial management – Many owners start with too little money and with
little or no understanding of financial spreadsheet applications.
 Over-investing in fixed assets – Owners who over-invest in fixed assets may find
themselves with no access to funds for working capital or expansion.
 Poor credit practices – Owners often sell on credit to meet (or beat) the
competition and find that they lack the additional working capital required or the
ability to collect on accounts.
 Failure to plan – The lack of a strategic plan to guide the business in the long run
 Unplanned and uncontrolled growth – Growth is natural and healthy, but
unplanned growth can be fatal to a business.

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  Inappropriate location – Owners who choose a business location without proper
analysis, investigation, and planning often fail. Too often, owners seek “cheap” sites
and locate themselves straight into failure.

Other common causes of business failure include neglect, fraud, and disaster.
 Neglect occurs whenever an owner does not pay sufficient attention to the enterprise. The
owner who has someone else manage the business while he or she goes fishing often finds
the business failing because of neglect.
 Fraud involves intentional misrepresentation or deception. If one of the people responsible
for keeping the business’s books begins purchasing materials or goods for himself or herself
with the company's money, the business might find itself bankrupt before too long.
 Disaster refers to some unforeseen happening or ' act of God'. If a hurricane hits the area and
destroys materials sitting in the company's yard, the loss may require the firm to declare
bankruptcy. The same is true for fires, burglaries, robberies, or extended strikes

2.7. Small business problems in Ethiopia

Small-scale industries have not been able to contribute substantially as needed to the economic
development particularly because of -financial, production, and marketing problems. These
problems are still major handicaps to their development. Lack of adequate finance and credit
has always been a major problem of Ethiopian small business.
Small-scale units do not have easy access to the capital market because they mostly organized on
proprietary partnership basis and are of very small size. They do not have access to industrial
sources of finance partly because of their size and partly because of the fact that their surpluses
which can be utilized to repay loans are negligible. Because of their size and partly because of
the fact limited profit, they search for funds for investment purposes. Consequently, the'
approach money lenders who charge high rate of interest hence small enterprise continue to be
financially weak.

Small scale enterprises find it difficult to get raw materials of good quality and at cheaper rates
in the field of production. Furthermore, the techniques of production, which these enterprises
have adopted, are usually outdated. Because of their poor financial position they are not able to
buy new equipment consequently their productivity suffers.

Small business owner can avoid some of the common pitfalls that lead to business failure by:

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  Knowing your business in depth
 Developing a solid business plan
 Managing financial resources
 Understanding financial statements
 Learning to manage people effectively
 Etc……

2.8. Entrepreneurship and Business Enterprise Creation

What do you understand by terms opportunity scouting, environmental scanning, and SWOT
analysis as entrepreneurship process of setting new business venture? What small business
opportunity does this country have?

In the first chapter we have learnt that the entrepreneur is at the center of this phenomenon of
entrepreneurship. He/ she is the one who makes things happen by perceiving an opportunity
and organizing the resources needed to exploit this opportunity. He creates a new business in
face of risk and uncertainty for the purpose of achieving profit and growth. Entrepreneurs look
ahead to see what can be done in future rather than concentrating on the past. Where others see
problems and shortcomings they see opportunities for starting a business.

Once an individual decides to take up entrepreneurship as a career path, to be a job provider

instead of a job seeker, he/she has to establish an enterprise. However, Setting up of a small new
enterprise is a very challenging and rewarding task. Several problems are involved in this task. It
is extremely important to take utmost care in identifying the product or service to be launched
by the entrepreneur otherwise it might prove to be a very costly mistake. He/ she must develop
sensitivity to changes around him/her, which can provide business opportunities and then
carefully scan his/her environment to generate ideas. After tentatively identifying four to five
ideas he/ she should go in for detailed assessment and feasibility study. This will help the
entrepreneur to crystallize one idea in an objective and systematic manner, which will greatly
enhance his/ her chances of success.

The following points show the entrepreneurial process to set up a business. And then the detail
of each process is herewith.

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 1. Opportunity scouting/ sensing
The entrepreneurial process begins with identifying an opportunity and evaluating it through an
initial screening process. If it appears reasonable a detailed business plan can be made. If not it
can be discarded.

Clearly, except in very rare cases, opportunities just do not ‘occur’ to the individual. These have
to be actively searched/ scouted for. Hence, the startup process for a new venture creation
begins with scouting for opportunities.

The process may start from an arm’s length, that is, one may just look around one’s immediate
context- family, community, and job and build up a case for business from the bottom-up. Else,
one may take a top-down approach, starting from the scanning of the international and
macroeconomic environment and conducting/using industrial/consumer surveys and
identifying appropriate business ideas. An entrepreneur can sense and intelligently seize
opportunities, which exist in the environment. Often it is said that necessity is the mother of all
inventions. However, in the context of entrepreneurship, opportunities besides existing in the
environment in the form of needs and problems of people around might have to be ‘created.’
Thus, the entrepreneurs meet not only the existing needs; but they also create the new needs as
well.

2. Opportunity scanning
Once the entrepreneur perceives opportunities, it becomes important for him/ her to scan the
environment. It is quite possible that many of the promising opportunities might not make
commercial sense. Scanning involves close examination of the environmental conditions and
their impact upon the business idea. It is not a superficial exercise but rather an attempt to look
beyond the immediate opportunities to the emerging trends. An attempt can be made to modify,
adapt, rearrange, substitute, combine, reverse etc. What to be scanned by an entrepreneur are
shown as follows.
I. Environmental analysis
As the economies are getting internationally integrated, for an analysis of the environment of
entrepreneurship you would be required to develop an understanding of macroeconomic, and
industry/sector specific factors.

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 Macro environment
The macro environment of an entrepreneur consists of the political, technological, social, legal
and economic segments. All of these are not an immediate part of the entrepreneur’s venture yet
they have an impact on his enterprise. Let us now examine the elements of the macro
environment of the entrepreneur one by one.

a. Political Environment
Entrepreneurship can flourish under a stable and conducive political climate. Government
policies which give priority to growth of trade and industry, provide infrastructural facilities,
Institutional support can give a stimulus to entrepreneurship. Considering the employment and
export potential, the short gestation period and the fact that small industries act as a seedbed for
nurturing and developing entrepreneurship, the Government is very supportive of the small-
scale sector. It has created an extensive institutional framework for provision of finance,
technology as well as help in marketing is made available by government institutions.

b. Technological Environment
The level of technology, the trends and the rate of change in technology existing in a society all
have a direct impact on enterprise creation. Changes in technology, both innovation and
invention change industry structures by altering costs, quality requirements and volume
capabilities. In the advanced countries of the West more pure invention takes place which can
create new industries for example Automobile, Aeronautical, Computer Hardware,
Telecommunications, Pharmaceuticals etc. In developing economies there is usually an imitation
of the above through greater process innovation.

It has been observed that many small units use obsolete technologies and do not invest in R&D.
As a result their goods are of poor quality and lack standardization. A direct consequence of this
is their inability to face competition. In many industries the technological threshold is low and as
a result the success of an entrepreneur promotes many others to start similar businesses and he
loses the initial competitive advantage. On the other hand if he/she uses certain costly
technology chances of others quickly becoming his competitors are less.

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 c. Socio-Cultural Environment
The customs, norms and traditions of the society also play an important role in either hindering
or promoting enterprise. For example, we sometimes say that the Guragesocites are very
enterprising. In certain traditional communities of our country working of females out of the
home environment is frowning upon. Many times the choice of occupation is also dictated by the
family traditions. Socio-cultural factors are crucial for the operations of multinational companies
also. It is very important for multi-national company to understand the socio-cultural
background of their customers in the host country. Socio-cultural environment is also concerned
with attitudes about work or quality concerns, ethics, values, religion etc.

d. Legal Environment
The laws of the country can make the process of setting up business very lengthy and difficult or
vice-versa. The labor laws and legal redressal system also have a bearing on business
operations. Patents, Agreements on trade and tariffs and environmental laws also need to be
studied. Copyright, trademark infringement, dumping and unfair competition can create legal
problems in the shape of long drawn out court battles. Simpler legal procedures can facilitate the
process of new venture creation and its smooth functioning including setting up of ancillaries,
foreign tie-ups and joint ventures.

e. Economic Environment
Ethiopia has today achieved a double digit economic growth and aspiring for more than this in
the near future. Liberalization, globalization and opening of economy in Ethiopia, has increased
the space for business operations. It has also opened channels for foreign investors, banks,
insurance and infrastructure companies to start operations. The resultant competition, rapid
and complex changes have generated uncertainties, which have to be handled by the
entrepreneurs.

f. Sectoral Analysis
After having understood the general environment in which the business has to take birth, it is
important to study the sector or industry conditions in which the entrepreneur proposes to
launch a venture. This will help to put the proposed venture in the proper context. The purpose
of industry analysis is to determine what makes an industry attractive- this is usually indicated
by either above normal profits or high growth. For such analysis one should study the history of
the industry, the future trends, new products developed in the industry, forecasts made by the

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government or the industry. It is also advisable to study the existing or potential competition,
threat of substitutes and entry barriers. Sometimes there might be bilateral agreements between
countries regarding some sectors or government policy that is sector specific or some event that
throw up challenges.

There might be certain constraints regarding availability of technology, manpower or raw

materials, which are industry specific. Similarly there might be certain strengths of a particular
sector, which might outweigh some negative general trends. Currently the cement and steel
sector are on an upward swing with a favorable climate in the housing sector as well as
government’s thrust on building roads and flyovers.
II. SWOT analysis
At this stage, conducting a SWOT analysis will help the entrepreneur to clearly identify his/her
own strengths and weaknesses as well as the opportunities and threats in the environment.
Threats in the environment can arise from competition, technological breakthroughs, change in
government policies etc. He / she might posses certain unique skills or abilities, which along
with his/ her knowledge and experience can provide him/ her at given cutting edge.

Strengths are positive internal factors that contribute to an individual’s ability to accomplish
his/her mission, goals and objectives. Weaknesses are negative internal factors that inhibit an
individual’s ability to accomplish his/her mission, goals and objectives. An entrepreneur should
try to magnify his strengths and overcome or compensate for his/her weaknesses.

Opportunities are positive external options that an individual could exploit to accomplish
his/her mission, goals and objectives. Threats are negative external forces that an individual
could exploit to accomplish his/her mission, goals and objectives. These could arise due to
competition, change in government policy, economic recession, technological advances etc. An
analysis of the above can give the entrepreneur a more realistic perspective of the business,
pointing out foundations on which they can build future strengths and the obstacles they must
remove for business progress.

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