Entrepreneurial Resilience; What Causes Entrepreneurs to Start Up Another Business After Failure: The Case of SMEs in The Buea
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Entrepreneurship analysis focuses on performance and ignores the high incidence of new ventures failure. In the world now-a-days there are many new startups who start the business and run it in a very successful way.
But in that startups there are many resilient entrepreneurs who can’t continue their business because of some loss or critical situations faced by them. The current study examined the causes of entrepreneurial resilience among selected SMEs business owners in Buea Municipality.
Specifically, the study sought to know the causes of entrepreneurial failure among SMEs owners in Buea Municipality, to examine the extent to which failure affects the entrepreneur in Buea Municipality and to know the strategies or methods used by the entrepreneur to start up another business after failure in Buea Municipality.
The study employed a survey research design using a random sampling techniques to sampled 50 operators of business ventures using a structured-questionnaire. Collected data was analysed using SPSS (Statistical Package for Social Science, 21.0) where descriptive statistics of item were obtained.
The study findings revealed that lack of motivations, lack of skills, lack of capabilities, inappropriate characteristics (e.g. family problems psychological pressures) were major personal factors responsible for business failure among entrepreneurs in the Buea Municipality.
External factors of business failure included customers’ issues, suppliers’ issues, changing technology, partnership issues and the intensity of competition of other similar ventures within the same municipality.
The study also revealed that aspect of the life of entrepreneurs that are affected as a result of business failure includes unemployed after venture failure, most faced extreme difficulties getting employment post-failure, others are forced to give up assets and/or property, others suffered from lost your capital, rejection, dissolution of marriage, depression and the loss of self-esteem.
It was concluded that entrepreneurs developed some coping strategies to start a new business after failure such as selling assets to pay debts, borrowing money from lenders, selling the existing business, fundraising from investors and changing executive manager(s).
The study recommended that training programs and entrepreneurship courses should be developed by higher education programs that may be benefited by incorporating entrepreneurial resilience into their course design to teach students the nature of traumatic events in entrepreneurship and how to overcome them.
Each year, thousands of new ventures are founded (Simon et al., 2000), yet many of these ventures do not make it beyond the first couple of years of operations (Audretsch, 1991). While research has shown that new ventures and small businesses have been largely responsible for creating most of the net new jobs in the global economy over the last several decades (Wilson & Zimmerer, 2009), the rate of job creation from new business establishments appears to be on a steady decline as entrepreneurship and economic dynamism has declined in recent years (Pethokoukis, 2014).
An entrepreneur is an individual who, rather than working as an employee, runs a small business and assumes all the risks and rewards of a given business venture, idea, or good or service offered for sale (Saranya and Manisha, 2017).
The entrepreneur is commonly seen as a business leader and innovator of new ideas and business processes. Entrepreneurs play a key role in any economy. These are the people who have the skills and initiative necessary to take good new ideas to the market and to make the right decisions that lead to profitability. The reward for taking the risk is the potential economic profits the entrepreneur could earn (Saranya and Manisha, 2017).
The effects of venture failure on the entrepreneur are much more complicated and doubtfully paradoxical. Venture failure may guidance to a potentially precious learning opportunity for the entrepreneur who founded the failed venture and also may be an emotional, disturbing, stressful and painful experience that blocks learning (Cope, 2011).
The entrepreneur who established the failed venture should spread the outcome of new knowledge for learning benefits to materialize even if learning has taken place. (Shepherd,
2003). If the costs of failure in terms of economic, psychological, and socially are very high compared to the advantages of learning from failure, entrepreneurs might decide to exit their entrepreneurial occupations then both the entrepreneur and society may lose out in this situation. However, despite the negative consequences and concerns, failure can present vast learning opportunities for entrepreneurs.
It is important to understand how entrepreneurs survive during uncertainty and what drives entrepreneurship during challenging times. The pursuit of entrepreneurship often comes with high stress, multiple obstacles, and high levels of uncertainty regarding outcomes (Ligthelm, 2020).
Decision-making by entrepreneurs often comes with errors and misjudgments because the information available is either ambiguous or incomplete. Entrepreneurs have to continually keep up with changing contingencies by adjusting their goals and strategies (Adeniran and Johnston, 2012; Bullough and Renko, 2013).
Entrepreneurial resilience, which can be described as the ability to withstand and quickly overcome adversity, is an important personal characteristic in the pursuit of entrepreneurship. Resilience may be one of the drivers of entrepreneurial success.
However, the ﬁndings of previous empirical studies on the effect of entrepreneurial resilience on ﬁrm success have been inconclusive (Adeniran and Johnston, 2012; Ayala and Manzano, 2014).
Also, entrepreneurial success is about achievement not only at the organisational level but also at the individual level. Choosing only the organisational level is restrictive. Including both micro (individual) and macro (organisational) indicators shows the recognition of the relationship between the entrepreneur and their venture. The entrepreneur is at the heart of his/her organisation (Branicki et al., 2016; Corner et al., 2017).
Businesses failed as a result of wars, recessions, high taxation, high-interest rates, excessive regulations, poor management decisions, insufficient marketing, inability to compete with other similar businesses, or a lack of interest from the public in the business’s offerings.
Some businesses may choose to shut down before an expected failure. Others may continue to operate until they are forced out by a court order. New start-ups are budding with new problems to solve now and then. The globalization has widened the horizon of exchange of information, has increased the awareness about the growing problems and has created so many platforms to initiate an enterprise. But not all startups and entrepreneurs survive through the cut-throat competition. Sometimes the venture failure pushes entrepreneurs from their current business.
The venture failure for entrepreneurs is due to various internal and external variables. Sometimes these variables are out of control which becomes the reason for them to abandon their current business and move to another one. Not just internal and external factors existing affects the entrepreneurs but also his/her mindset while carrying out the business and after its failure.
To the best of the researcher knowledge, no study has been conducted yet on entrepreneur’s resilience among SMEs in Buea Municipality. It’s in this regards that the researcher seeks to examine the causes of business owners’ business failure, their resilience, and what strategy do they developed to enable them to get back to business or start a new venture after failure.
The main objective of this study is to examine the causes of entrepreneurial resilience among selected SMEs business owners in Buea Municipality.
- To know the causes of entrepreneurial failure among SMEs owners in Buea Municipality
- To examine the extent to which failure affects the entrepreneur in Buea Municipality
- To know the strategies or methods used by the entrepreneur to start up another business after failure in Buea Municipality
1.4.2 Specific Research Questions
- What are the causes of entrepreneurial failure among owners of SMEs in Buea Municipality?
- To what extend does failure affect the entrepreneur of SMEs in Buea Municipality?
- What are the strategies or methods used by the entrepreneur to start up another business after failure in Buea Municipality?