Exiting A Business

Monday, April 20, 2020

Reasons for Ending Involvement in a Business

In any dynamic entrepreneurial society it is inevitable, in order to promote and benefit from entrepreneurship, that some of these ventures will fail. Few or no business exits may therefore indicate low startup activity. Moreover, perceptions about starting a business may also be directly related to how easy it is seen to be to end a business. If ending a business is expensive and difficult, or even socially or culturally unacceptable, this may act as a strong barrier to starting a business in the first place.

It was noted in Chapter 2 that entrepreneurs contribute to or even lead structural change in an economy, since their new ventures reflect changing tastes, disruptions, new technologies and processes as new sectors are born and grow. The converse of this is the closure of businesses that no longer produce or provide what people are prepared to buy, or in the way that they want to buy it. When this happens, startups and closures become important components in the process of structural change, which (eventually) improves productivity and living standards, by releasing resources from the production of goods and services that no longer have a market in favour of those that do. Entrepreneurs may then apply this experience to a new venture or new employment opportunities, while continuing as a stakeholder in entrepreneurship — if not as entrepreneurs then perhaps as advisors, investors or customers. (Read more…).

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