OTE2601 Assignment 2 2025 (Answer Guide) - DUE 15 June 2025

OTE2601 Assignment 2 2025 (Answer Guide) - DUE 15 June 2025 QUESTION 1: A famous South African entrepreneur like Patrice Motsepe can mentor young entrepreneurs in running a business. Discuss the reasons why most businesses fail. [20] Introduction In South Africa, entrepreneurship is increasingly being promoted as a solution to unemployment and poverty. Influential entrepreneurs like Patrice Motsepe, who is not only a mining magnate but also a philanthropist, serve as role models for aspiring business owners. Despite this inspiration, many small and medium enterprises (SMEs) in South Africa fail within the first few years of operation. Understanding the causes of these failures is critical for prospective entrepreneurs, policymakers, and mentors like Motsepe who aim to nurture sustainable businesses. 1. Lack of Business and Financial Planning One of the primary reasons businesses fail is poor planning. Many entrepreneurs start businesses without a comprehensive business plan that outlines goals, strategies, financial projections, and market analysis. Financial mismanagement, including poor budgeting and inadequate cash flow management, is a common downfall (Cant & Wiid, 2013). Without clear financial planning, businesses may overspend or run out of capital before becoming profitable. 2. Inadequate Market Research Entrepreneurs often fail to understand the market needs and customer preferences. In South Africa, cultural, regional, and economic differences greatly influence consumer behavior. A business that does not conduct thorough market research may launch products or services that are not aligned with market demands, leading to poor sales and eventual closure (Fatoki, 2014). 3. Poor Leadership and Management Skills