SBE 310 Research paper (GRADED A)

SBE 310: Course Project III Entrepreneur Research Paper Devry University Table of Contents I. Introduction The increase in entrepreneurial activity is a significant trend in the US economy. Unfortunately, small business owners often face the reality of failure. The important role of small business suggests that an understanding of why business fail is base on the stability of economy status and the performance. The major concern to any entrepreneurs is the chance of failure of the proposed business. It appears critical for researchers and business owners and managers to better understand the factors contributing to the failure of small business. A failure research benefits entrepreneurs, those who assist to learn the reason why? The small business that wants go to the global market will have high risk to fail. The Snowflake Shave Ice Company goes to the global market without doing a research properly that is the fact that makes this company failed in just 1 year. Snowflake shave ice store close all 10 locations in 5 countries in Europe because they doesn’t do the marketing research or This study so2urce was downloaded by from CourseH on 11-08-2022 09:27:55 GMT -06:00 set the target customers. Snowflake Company had opened their franchises in 5 countries in European. They export product from china that waste a lot of money on the shipping and the quality of the product not meet the standard of Europe life style. Otherwise, they doesn’t do a research on the culture that most people in European prefer go to coffee shop rather than go to Shave ice shop. The vision of Snowflake Company is expanding their franchise in Europe market. They expect that shave ice will attach people in Europe because it is the new dessert shop. Unfortunately, this company closure is due to the fact that economy has been very unstable for a while, and the company has to cut the employees that make the service bad. Most customers complained about the dessert taste and the serves services. Snowflake shave ices are considered dessert shop for family, friend, or group party and they even have express service and drive­thru. This shave ice stores are considered a very reasonably priced that can fit into many family budget, but the culture of people in Europe doesn’t like this kind of shave ice dessert. In 2012 Snowflake shave ice are run out of their capital and they can’t find the partner to corporate with them. They waste half of their revenues on advertising and promotions. They earn revenue less than expend. Furthermore, they are poor in management and choose wrong location. The CEO can’t manage all store locations in difference country. They are not hiring a qualify employees to work for them. The manger in the store doesn’t have ability manage employees or solved the problem in the store like inventory control. Some employees don’t come to work on time and don’t give the best service to the customers. They don’t have a skill at hiring competent people, training them and is able to delegate. The store location of snowflake shave ice is not the right place that has many teenagers or most people like to go because they want to save money 3 This study source was downloaded by from CourseH on 11-08-2022 09:27:55 GMT -06:00 on the store rental. They decide to choose the store that locates in the silent area that has less people across. The last thing that make snowflake Company failed all 10 locations at the same time is overexpansion. The CEO thinks that they will be success base on how fast they can expand their business. They are just a small company and they don’t build a strong brand name yet. Then they decide to open their franchise so quickly in the global market. Expansion Company is the big mistakes that Snowflake shave ice did. They don’t do a market research, planning, and analysis what and whom they need to add in order for develop business. II. Reasons for Failure The reasons that make many small businesses failed. Those reasons are lack of management, no business plan, insufficient capital, competitors, wrong location, and poor marketing. Every entrepreneur has to figure out what is the mains factor or weakness of their business and try to minimize the risks before they start. According to statistic published by the Small Business Administration (SBA), seven out of ten new employer establishments survive at least two years and 51 percent survive at least five years. This is the data from the previous long­ held belief that 50 percent of businesses fail in the first year and 95 percent fail within five years. The reason that makes Snowflake shave Ice Company failed because they are go to the global market without prepare a good business plan and they run out of the capital. They choose the wrong location to open the branch and lost control management. 1. Lace of management This study so4urce was downloaded by from CourseH on 11-08-2022 09:27:55 GMT -06:00 Snowflake Company is poor in management skill that is the reason that makes this company failed so fast. While setting proper goals to manage the business, a management is also needed to measure performance. Checks and metrics help owners manage organizational activities. Poor management is the factors in small business failure. Business survival depends upon management’s ability to generate cash flow and profit. Therefore, poor management of the workers, marketing of the product or service, and poor decision­making represent key reasons small business fail (Clainborn, 2009). A lack of management on internal activity can eventually make business failure. Management can be implementing in several aspect of the business. It can be set in place to measure the quality and quantity of production. Snowflake Company has 10 locations and they don’t have a standard system to make the same service in all location. The managers is hired the person that not qualify to mange employees. 2. Insufficient Capital Money is the lifeblood of growing a business whether in the startup phase or in a later stage. Many businesses fail due to lack of proper capital. It is not a matter of unavailability of funding, but the lack of planning for funding to support opportunities for growth. This is the main factor that Snowflake Company failed because they run out of the capital and they don’t prepare money for back up plan. Planning in advance, rather than looking for the money just when needed, is a good practice (kirsch, 2009). The bad issues effects when the entrepreneurs do not have sufficient capital awareness of the cost involved in raising capital. Furthermore, they are not prepared with alternative source in case of rejection from financiers. Many small businesses fail because owners have a difficult time to manage what cash will come in every 5 This study source was downloaded by from CourseH on 11-08-2022 09:27:55 GMT -06:00 month and they can’t maintain the balance of expense and revenues. Snowflake Company can’t manage well in cash flow process because CEO doesn’t have time to look all the transaction of the company. 3. Poor business plan Most of the small businesses failed in the united sate are cause of poor of business planning. Business plan is the first step that entrepreneur have to work well before they jump to run the business. Snowflake Company is the real example that failed because they don’t make a good business plan. They are so rush to open many store locations in different county at the same time. 4. Wrong Location Location is the choice that makes the business success or failed base on entrepreneur decision. Some entrepreneur chooses the wrong location to open the business that may make the business failed faster. For example, the premium quality products that sell in high price but choose location to sell in the rural area. Snowflake Company decided spread the franchise to the Europe market and choose the wrong location that have less people across. It is the facts that make this business failed in the first year. III. Analysis Base on the detail why small business failed it shows that not only Snowflake Company but also other small businesses will fail if they don’t follow the key of business success. To solve the problems that Snowflake Company met like choose wrong location to open the store, the owners have to know what are the target customers and demographics. They have to do more research and choose the right location that meets the consumers’ target. Furthermore, This study so6urce was downloaded by from CourseH on 11-08-2022 09:27:55 GMT -06:00 entrepreneurs have to make sure that the locations are convenient to customers, and near to their suppliers and employees. Otherwise, Business plan is the maps that point the way for entrepreneurs to go. They can’t explore the new city without map. A good business plan can estimate the risk and the success of the business. Some entrepreneur doesn’t think business plan is importance and they just follow their idea. They are so fast jump to start the business because they believe that how fast they start is how success they will get. In fact, poor in business plan is increase the chance of financial crisis. Otherwise, according to the lesson that I learn in my SBE 310 class, I know that cash flow is the other factor that measure of a firm’s ability to maintain sufficient funding to meet its expense for every day activity of the business. Entrepreneur have to understand at least some basic of accounting that will help them control the cash flow and know how to manage money properly. The results indicated that operation in less competitive sectors, participation in training, hours worked in the business, access to credit all have direct and indirect effects on the success of companies (Da silva, 2014). He means that the business success is base on the good operation that work as a team that have to participate in train class in order to understand the scope of work and they will get a good performance to make business success. Snowflake Company wills success in the international market if they follow the success guideline. The CEO should allow the local manager make a decision and have a responsible to maintain the revenue of the store. They have to learn about multi culture and train employees to think globally. Furthermore, they should hired local management to stuff foreign offices and branch. They should prepare money before they run out of capital. For example, they should find the partner to join with them or find the angle 7 This study source was downloaded by from CourseH on 11-08-2022 09:27:55 GMT -06:00 investment. They have to plan a head before they meet the issues. All those things that I describe above are the reasons that small business should awareness and keep track on their plan. IV. Conclusion Success in business is required good planning and flexibility of the entrepreneur. If you wan to be the boss you have to brave enough to fight with the entire problem and the risks. All entrepreneurs think that they should work hard and long hours directly to benefit themselves, rather than increasing profits for someone else. Running a business provides endless challenge and opportunities for learning. References Clainborn, R. (n.d.). Why Poor Management can Lead to Small Business Failure. Insidebusiness. Retrieved June 20, 2014, from