When talking about the fail entrepreneurial activity, general public have controversial definitions of failure as some may think of liquidation of company and some suppose the fail investment of a particular area only. Despite polemical definition of failure, at least it states that the company stagnate in the fast changing world. According to the Burns (2010), the success is a survival for the long term in the turbulent business world. It hints that the failure represents the collapse of the business growth, which causes the risk and the worst situation is the personal bankrupt. In the following paragraphs, the dark and bright of fail outcomes would be introduced and discuss whether the failure is a desirable outcome of entrepreneurial activity or not.
The first reason why the failure is not a great outcome is that the sole trader will suffered from the physical loss. If the entrepreneur continuously undergoes the loss in sales, the company may have a risk to go bankrupt (Burns 2010). The assets including the money, facilities, stock and other resources will be taken over by the bank to recover the debts. What’s more, it may also have the management buyout by the other army or company, the value of assets will be underestimated so the entrepreneur still loses under the detrimental context.
More important is that failure can cause the potential loss. Fail entrepreneurial activity negatively affects the reputation, which can be harmful to the company’s sustainability in the long run. For the bankers, considering the credit risk is one of the most critical factors (Burns 2010), it can reflect the past record of the entrepreneurship, such as credibility, financial statement and the previous sale, etc. Since failure is exposed, the undesirable result is that the credit risk definitely increases and thus the bankers will mistrust the company. For the customers, failure will affect the buyer who are doubted about the brand and the products and hence the sales would decline, become a bad result in maintaining the operation of the firms.
Apart from the potential loss, the failure of entrepreneurship can lead to psychological detriment. Failure can diminish self-esteem and be harmful to the decision of entrepreneurial activity. Self-confidence is one of the essential traits of entrepreneur since it can help certain and believe the judgement and ability, especially in facing the uncertainty. In case failure happens, the entrepreneur courage would decrease and may not have the willingness to take greater risks and live with even greater uncertainty. The sole trader may not conquer and recover from the pain of failure and thus cannot make a rational decision making, resulting in another potential hazard in the future.
On the other hand, some people think that failure can be a desirable outcome of entrepreneurship as it can bring an affirmative consequence. Pierre Omidya, the Founder of eBay Inc, stated that the starters need to fail something as a learning...