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Lecture 3

The document discusses common mistakes that entrepreneurs make including poor management, lack of experience, poor financial control, weak marketing efforts, failure to develop a strategic plan, uncontrolled growth, poor location selection, improper inventory control, incorrect pricing, and inability to transition the business appropriately. Experience is important to avoid these mistakes and gain knowledge about what causes businesses to fail or succeed. Developing a clear strategy and maintaining financial control are also essential to avoid common entrepreneurial mistakes.

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Raheel Mansoor
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27 views

Lecture 3

The document discusses common mistakes that entrepreneurs make including poor management, lack of experience, poor financial control, weak marketing efforts, failure to develop a strategic plan, uncontrolled growth, poor location selection, improper inventory control, incorrect pricing, and inability to transition the business appropriately. Experience is important to avoid these mistakes and gain knowledge about what causes businesses to fail or succeed. Developing a clear strategy and maintaining financial control are also essential to avoid common entrepreneurial mistakes.

Uploaded by

Raheel Mansoor
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Mistakes in Entrepreneurship

 Management mistakes
 In small businesses poor management is the primary cause of
business failure.
 Owner lacks the leadership ability, sound judgment and knowledge
necessary to make business work.
 Lack Of Experience
 It is preferred that small business managers need to have
experience in the field they want to enter.
 For example if an entrepreneur wants to open a retail clothing
business she would first work in a retail clothing store.
 Experience provides knowledge about the nature of the business.
 With experience entrepreneur can figure out the causes of failure
and success in the business.
Mistakes in Entrepreneurship
 Poor Financial control
 Sound management is the key to a small company’s success
 Effective managers realize that any successful business venture requires
proper financial control.
 Business success also requires having a sufficient amount of capital on hand
at start-up.
 Undercapitalization is a common cause of business failure.
 Weak Marketing Effort
 Creative entrepreneurs find innovative ways to market their businesses
effectively to their target customers.
 They need to sustain their customers by providing them value, quality,
convenience, service and fun.
 Failure To Develop a Strategic plan
 Some times business managers neglect the process of strategic planning.
 Failure in plan results in failure to survive.
 Without a clearly defined strategy a business has no sustainable basis for
creating and maintaining a competitive edge in the market place.
Mistakes of Entrepreneurship

 Uncontrolled Growth
 Growth is a natural, healthy and desirable part of any business

enterprise, it must be planned and controlled.


 Expansion usually requires major changes in organizational structure,

business practices such as inventory and financial control procedures,


personal assignments and other areas.
 The major change occur in managerial expertise.

 If business increases in size and complexity problem increases in

magnitude.
 Poor Location
 For business choosing the right location is partly an art and partly a science.
 Location should not be chosen on the basis of vacant property as it has to play
an important role to attract the attention of the customer.
Mistakes of Entrepreneurship

 Improper Inventory Control


 Usually a small business entrepreneur does large investment in inventory control.
 Insufficient inventory levels results in shortages and stock outs , causing
customers to disillusioned and leave.
 Computerized point of sale systems are nor priced low enough to be affordable
for small businesses and they can track items as they come in and go out
allowing business owners to avoid inventory problems.
 Incorrect pricing
 Establishing prices that will generate the necessary profits means that business
owners must understand how much it costs to make, market and deliver their
products and services.
 Some times entrepreneur charge what their competitors charge
 Prices need to be according to the product or service cost to manufacture.
Mistakes of Entrepreneurship

 Inabiilty to Make the “Entrpeneual Transition”


 Putting Failure in to perspective

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