Uncertainty and Risks in Entrepreneurship Essay

Uncertainty and Risks in Entrepreneurship - Essay Example When operating a small business enterprise it is imperative to reflect on the factors that influence both the internal and external environments of the business. The failure to observe the internal and external environments will render the functioning of a business system useless. This is because the small business enterprise will occasionally face obstacles in the daily operations and management. This paper discusses how the ability to cope with uncertainty and to take risks affects the operating environment of a small business enterprise. Small business enterprises nowadays are on the rise. Individuals have developed the urge of operating businesses that will bring them extra cash to cater for their ever-increasing needs. However, operation and management of any small business enterprise is not an easy task, as it requires an individual with skills, attributes, determination and disciple. It is imperative for an individual operating a business enterprise, to have the above elements since they will help when the time of facing the internal and external environment comes. In essence, taking risks and coping with uncertainty are matters that are associated with the internal and external environment of a small business enterprise. ... Managers cope with uncertainty in a reactive manner by developing adaptive strategies to counter the effect. This is so since they are beyond the immediate control of the business enterprise. As much as uncertainty is beyond the control of an individual, business enterprise, it still influences the daily operations and management of a business enterprise. Examples of uncertainties are external factors such as the economy, government policies and demographics. In most occasions, uncertainty affects a business enterprise negatively. Individuals who have taken the management role in any small business enterprise should apply a positive management attitude when coping with uncertainties. Uncertainty is unpredictable and unexpected, and that is why only the individuals with management skills and positive attitudes can have the ability to cope with uncertainty. A manager may think that he, or she has everything pertaining to a business enterprise in control, but uncertainties in the form o f government policies, competition, economical shifts and demographical changes can prove wrong a manager’s initial judgment (Gigerenzer 2008: 34). The first factor that can be a great uncertainty is government policy. It is likely that at times, the government can come up with an unexpected policy that will ultimately affect the operations of a business enterprise. A skillful manager is expected to develop coping strategies that will end up minimizing the disadvantages while maximizing the advantages, which are part the uncertainty that has been brought by the government policy. For example, government policy can entail increasing or decreasing taxes on a commodity that the business enterprise in question is selling.