The Global Entrepreneurial Monitor’s (GEM) report 2013-14 findings demonstrate the difficulty entrepreneurs face across the globe. Now in its fifteenth year, the report covers each region in the world encompassing 70 economies be they developing, semi-developed or developed (e.g. termed Factor- Driven; Efficiency-Driven and Innovation-driven in the report) old (Source- Global Entrepreneurship Monitor (GEM) 2014 by Jose Ernesto Amoros, Niels Bosma and Global Entrepreneurship Research Association [GERA].
Over the fifteen years GEM has been going, one finding repeated itself- the vast majority of nascent entrepreneurs (also known as early-stage entrepreneurs) globally – involved in setting up a business – fail. It means they never become owner-manager of a new business (up to 3.5 years old) or advance to become owner-manager of an established business, more than 3.5 years]).
The finding raises a question: What makes it so difficult to start a small business and ensure moving to the owner-manager of an established business stage?
GEM report cites reasons as per comment by the entrepreneurs themselves! Starting and discontinuing a business – in the eyes of business-owner – boils down to an unprofitable business, problems getting finance and personal reasons. Financial issues (unprofitable businesses or problems obtaining finance) remain the most important reason mentioned for business discontinuation in the majority of kwun tong coworking economies, also in other stages of economic development.
Finance – the lack thereof is understandable. The rate of business discontinuance is highest in the factor-driven economies -mainly in Sub-Saharan African economies – where high level poverty is common.
Extrapolating from GEM findings, in some – mainly-innovation-driven economies – a significant share of entrepreneurs who discontinued owning and managing their business did so for reasons such as selling the business as it had value, the opportunity to get a good job; and for some, an improvement in their personal situation.
Many entrepreneurs who managed to stay afloat will tell a prospective small business owner they are still trying as hard as they could – each and every day – to survive; let alone getting into a position to turn their business into something with a high market value ready for selling. They would also agree on the energy needed to manage a business spending many hours early mornings and late evenings.
Seasoned entrepreneurs would warn against learning as you grow along the business life cycle.
It is important to work hard and smart. Few small businesses can afford a team of specialized staff, forcing the business-owner to become multi skilled.