CRITICAL ANALYSIS OF THE STATEMENT

ALTHOUGH OWNING A BUSINESS HAS MANY BENEFITS AND

PROVIDED MANY OPPORTUNITIES, ANYONE PLANNING TO ENTER THE
WORLD OF ENTREPRENEURSHIP SHOULD BE AWARE OF ITS POTENTIAL
DRAWBACKS. (SCARBOROUGH, NM AND ZIMMERER, TW, 2012, P11).

Contents
Introduction ..................................................................................................................................... 1
Literature review ............................................................................................................................. 1
Critical analysis ............................................................................................................................... 3
Benefits of entrepreneurship ....................................................................................................... 3
Making a difference: ............................................................................................................... 3
Testing full potential: .............................................................................................................. 3
Opportunity to make extraordinary revenues: ........................................................................ 3
Getting social recognition: ...................................................................................................... 4
An independent life: ................................................................................................................ 4
Drawbacks of entrepreneurship .................................................................................................. 4
Risk of losing all: .................................................................................................................... 4
Sacrificing good life:............................................................................................................... 4
High level of stress: ................................................................................................................ 4
Complete liability of the business: .......................................................................................... 4
Some other drawbacks: ........................................................................................................... 5
Conclusion ...................................................................................................................................... 5
References ....................................................................................................................................... 5

Introduction
In simple words, entrepreneurs are individuals who actively form or lead their own businesses and
nurture them for growth and prosperity; and the act of doing it is entrepreneurship. It is a process
of creating and expanding businesses that collectively form a force for national development and
societal prosperity. An entrepreneur goes for exploiting any opportunity they think and analyze as
worth trying for. But it cannot be availed or done by anybody. The unique feature of an
entrepreneur is that he/she possesses the ability to see and seek opportunity and the courage to take
risks in transforming the opportunity into a successful venture. Entrepreneurs see opportunities in
problems and seize them. Even in opportunities they see problems, and take calculated risks. An
entrepreneur is not a gambler who leaves much to chance, they calculate their chances and
investigate and then act on going for the venture.
An entrepreneur enjoys many benefits from taking the endeavor of investing and working on risky
propositions. They are paid off by good profit, business wealth and even social recognition in many
cases. They can opt for what the really want to do, enjoy flexibility in their jobs. Most importantly
they are independent. Nothing can match being the boss of your own. It is only them who take
their decisions and get the benefits of it. But they need to be aware of that there are some
drawbacks of being an entrepreneur. They have to leave behind the opportunity of fixed income
from doing a pay job. They may have to sacrifice some time from family and personal life to make
the venture a successful one. But the biggest drawback is that only they are liable for any loss from
taking the risk. It may burden him/her down to losing almost everything involved in the business.
So, before going for an entrepreneurial venture a person may have to go through a lot of thinking
on these factors.
In relevance with the literature, this assignment will build a discussion on justifying the argument
that an entrepreneur should be aware that there are many benefits of being an entrepreneur as well
as many potential drawbacks.

Literature review
To review the literature of this topic, provided reading materials and textbooks are followed
thoroughly. The contents include: definition of entrepreneurship and entrepreneur, functions and
characteristics of an entrepreneur, opportunities as entrepreneurs and disadvantages of
entrepreneurs. The review is given here:
Robert D. Hisrich, M. Peters & D.A Shepherd in their book Entrepreneurship says that
entrepreneurship is a process of creating something new and assuming the risks and rewards. In
this book they focused on three points in making the definition; a) It is an innovative or creative
effort b) done by assessing financial, psychological and social risks c) and receiving rewards like
monetary, personal satisfaction and freedom of doing what you want.
An entrepreneur is a person who creates and manages change by the recognition of
opportunities (needs, wants, opportunities, problems, and challenges) and develops people

and manages resources to take advantage of the resources to take the opportunity and
creates a venture (profitable business). (Eston Kimani, MIT )
Different outcomes of entrepreneurship are:
Innovation or newness product or service.
Organizing resources finance, people, physical and information resource.
Creating new product or service.
Generating wealth
Taking risk in a business venture.
Prepared to face uncertainty.
Create job opportunity
Increase the abundance of wealth generation for the nation. (Hirsch, 2009) (Stokes,
2010)
In context with the discussion, it is necessary to study on the role of entrepreneurship in economic
growth. An entrepreneur has the role playing in increasing the per capita output and income of the
people of the country, initiating and creating change in the structure of business and society. For a
venture like this further growth and increased output arises, thus it enables more wealth to be
divided among the various participants (stakeholders). An entrepreneur create a generation of
innovation that leads to the creation of new product and service. (Hirsch, 2009)
A new capital is generating new revenue and that increases the national output which in turn lead
to greater and stronger economic growth. An entrepreneur act as a catalyst to nurture intrapreneurs
and corporate entrepreneurs in a business organization. Some benefits of entrepreneurship are:
Opportunity to create your own destiny: Owning a business provides an entrepreneurs the
independence and the opportunity to achieve what is important to them. Entrepreneurs want to
decide what they want in their lives, and they use their businesses to make their desire a reality
(come true).
Opportunity to make a Difference: More and more entrepreneurs are starting businesses because
they see this as an opportunity to make a difference in a route or way that is personally important
to them.
Opportunity to reach your full potential: Many people find their work not challenging and not
exciting. For entrepreneurs there is little difference between work and play.
Opportunity to reap extraordinary profits: The profit earned by an entrepreneur are an important
motivation and indication factor for further increased performance. Thus these could spur them to
greater achievement and success.
Societal Responsibility and Recognition: Small business owners are among the most admired,
respected and trusted individuals of society.
There are some disadvantages of entrepreneurship as well. They are:
Uncertainty of Income: Opening and a running a business provides no guarantee that an
entrepreneur will earn enough money and survive. Engaging in the wrong business and not able
gain an advantage in the short run and eventually in the long run can be disastrous.

Risk of losing your entire Investment: Small business have a high failure rate. Though is successful
initially it faces financial difficulty within the next five years. Entrepreneurs must be prepared to
face the consequence of failure. (Stokes, 2010)
Lower Quality of Life until the business get established: In order for the business to be successful
the entrepreneur must engage himself to produce the kind of result he expects.
So, an entrepreneur have to consider all these factors and then decide on going for the venture.
Even though he/she decides to go for venture he/she must work hard on avoiding the failure
chances by taking right measures. (Stokes, 2010)

Critical analysis
Benefits of entrepreneurship
From the literature review it is quite evident that entrepreneurship activity helps in making
economic growth of a country. As an entrepreneur is an innovator, new products and services are
introduced by him/her. Revenue of a country is increased by entrepreneur and thus lifting up the
standard of living of him/her and other people as well. These are social benefits of
entrepreneurship. But there are many personal benefits of an entrepreneur. An entrepreneur should
be aware of its benefits. The next parts of the analysis will be explained through this example of
entrepreneurship:
Mr.X wants to leave his job which pays him $5000 a month. He wants to start his own handicraft
product business which he has dreamt to do from a long time ago and he knows he can do well.
Initially it has some start-up cost but he calculated that it is going to pay him approximately
$15000/ month after six months of operation. And there is good chance of increasing the revenue
from the business. But he also found that the market of his product is led by big shot firms and this
firms have some great offerings. He understands if he can put all effort and resources and lead the
business in planned way he can get some success with his very innovative products.
Making a difference: Now, in this case it is clear that Mr.X, an entrepreneur, can make a difference
by utilizing the opportunity of offering new and innovative product to the market. Thus makinga-difference thing can be enjoyed only by an entrepreneur. It is a benefit of enjoying the glory to
deliver an innovative thing that will make a name for it and for him.
Testing full potential: A person can test his/her full potential only in the work he/she loves to do.
An entrepreneur should be aware that only this entrepreneurial venture can provide him/her the
opportunity to utilize full potential in the work he/she would do with all heart. For entrepreneurs
there is little difference between work and play. Entrepreneurs see their business as a vehicle of
self-expression of personal desire and eventual self-actualization of their personal goals the
pinnacle of their career success. In the example, Mr.X wants to go for the business as he thinks
this is what he should do.
Opportunity to make extraordinary revenues: Using all resources properly and by hard work and
determination entrepreneurs become successful in delivering the special service or product to
society. As the offering is unique or not conventional it takes a substantial amount of market share.

This way entrepreneurs can earn extraordinary profit from the business when they are successful.
This benefit is also enjoyed only by the entrepreneurs.
Getting social recognition: Entrepreneurs do something out of mind of people, something unique
which benefit the society. Inevitably an entrepreneurs are bound to getting some social recognition.
An invaluable idea to make computer for masses made Apple the largest computer brand of the
world. If the product stands out recognition will come by naturally.
An independent life: The most important benefit of being an entrepreneur is independence. Like
in example, Mr.X does not have to stay in the job he is doing now. He can become the boss of his
own. He can do the work of his choice. Even though he has to work a long time to make it a success
he can be satisfied for doing a job he likes to do. Entrepreneurs are aware of this benefit. In most
cases this freedom is the reason many people go for entrepreneurship.

Drawbacks of entrepreneurship
Entrepreneurship has many benefits no doubt but an entrepreneur should be aware that it has some
potential drawbacks. In making critical analysis of the statement made by the Scarborough, NM
and Zimmerer (TW, 2012, p11) this is the vital part of the analysis. These are analyzed below:
Risk of losing all: According to a report of Bloomberg1 8 out of 10 start-up fails within the first 18
months; a whopping 80% crash and burn. (Wagner, 2013) So, there is a big risk failures for
entrepreneurs. Like in example if Mr.X fails to manipulate all resources properly or cannot make
a good marketable product he is going to lose the capital involved there and the opportunity loss
of having his secured job. Entrepreneurship naturally comes with this big risk.
Uncertain Income: A very potential drawback of entrepreneurship is enormous uncertainty of
income from the initiative. Some may say it is the beauty of the work but it surely knocks a person
in the head. There can be no assurance there will be enough money to run a business and survive.
If entrepreneurs gets involved in the wrong business and not able gain an advantage in the short
run and eventually in the long run it can be disastrous.
Sacrificing good life: Entrepreneurs may have to go through a risk of having a life with long
working hours and immense pressure of work. There will be sacrifices of having little time for
their personal life and family time. Because of the uncertainty of income and initial financial
crunching and distress they may have to lead a low quality of life. Like. From the example, Mr. X
could go with the stable income job but he chooses to go with starting up his own business. Before
reaching a success point, he cannot enjoy a life of security and stable flow of money what he could
get from his previous job.
High level of stress: A drawback of being an entrepreneur is to maintain high level of stress. It is
the stress of workload, stress of uncertainty of income, stress of being a failure. This stress can
lead a business into loss as only the entrepreneurs are solely liable for the risk they have taken or
planned to take. Increasing financial burden may put the entrepreneurs into immense difficulty to
sustain the business and it may lead to total disaster.
Complete liability of the business: Entrepreneurs have to take full responsibility of the decision
they make. They may have to make decisions that are bitter for them, some decision are to be taken

when entirely new situation arises; which are unfamiliar for the owner. And also there is mammoth
pressure of performing well with the venture as they have left their stable jobs behind.
Some other drawbacks: Entrepreneurs should be aware of the fact that this innovative yet risky
effort may become a discouragement towards the act due to intense stress, uncertainty, fear of loss.
Due to market competition, social obligations and other related factors the business may face many
obstacles to march forward. Time to time it may become difficult to stay optimistic and the mental
stability of an entrepreneur may become vulnerable.
So, there are many drawbacks of entrepreneurship which may tune down the enthusiasm of an
entrepreneur. Like a person has to know about the benefits of the entrepreneurship, he/she also has
to be aware of the fact that there are many potential drawbacks of entrepreneurship.

Conclusion
It is quite evident that entrepreneurs are necessary for developing a society, an economy and a
country overall. Thus, successful entrepreneurs are bestowed with some personal gains that they
cannot earn from doing a fixed job. Being entrepreneurs they should be aware of what they can
achieve through a good, innovative and neatly developed business plan and its proper execution.
The benefits of this can take them to the highest echelon of success and recognition. But at the
same time, for the sake of conquering the peak, they have to be aware of the potential drawbacks
of entrepreneurship; as these drawbacks can draw them down to nadir and even wipe out them
completely. If someone wants to go for entrepreneurship he/she has to build a knowledge about
the disadvantages and plan for the obstacles as much as he/she become aware of the good things
in here. To eliminate the chances of failure they have to look on the things like knowing ones
business in depth, developing a feasible, effective and right-on-the-money business plan,
managing financial resources effectively and hire and manage people effectively. And also they
have to avoid mistakes like, weak management decision making, lack of experience, failure to
formulate a proper strategic plan, failing to figure out the risk factors and mistakes timely,
disastrous human resource management and most importantly losing the uniqueness of service or
the innovativeness of the product due to unwanted before-time success and uncontrollable profits.
The objective of this analysis was not to discourage a person to go for entrepreneurship. To clearly
analyze the statement, entrepreneurs have good sides and bad sides and bad sides must be taken
care of to make the struggle provide a fruitful output. With effective planning, putting extra efforts
and hard work, guaranteeing proper utilization of all the resources and finally being aware of the
drawbacks of it, entrepreneurship is going to bring ultimate success.

References
Hirsch, R. P. M. a. S. D., 2009. Entrepreneurship. s.l.:Erwin Mc Graw-Hill.
Stokes, D. a. W. N., 2010. Small Business Management and Entrepreneurship. sixth edition ed.
s.l.:Cengage Learning Business Press.
Wagner, E. T., 2013. Forbes. [Online]
Available at: http://www.forbes.com/sites/ericwagner/2013/09/12/five-reasons-8-out-of-105

businesses-fail/
[Accessed 02 1 2015].