Top 11 Problems/Barriers of Entrepreneurship

What is Entrepreneurship?

Entrepreneurship, at its most basic level, refers to a person or a small group of individuals who engage in a unique course to launch a new firm. An ambitious entrepreneur deliberately seeks out a certain business venture, and it is the entrepreneur who bears most of the project’s risk. As a result, if the idea is successful, this individual will also stand to gain the most.

But it is not always an easy and evergreen job to get into an entrepreneurial activity and let the sweet taste hit your tongue. Follow the article to learn more about the problems one might encounter while trying to be an entrepreneur.

Major determinants of Entrepreneurship

Before diving into the problems of entrepreneurship, you must be aware of some major determinants of entrepreneurship. Following are some of the major determinants of successful entrepreneurship:

1. Leadership qualities
2. Education and family background
3. Risk-bearing personality
4. Confidence in dealing with ambiguity
5. Creativity
6. Expertise in a trade
7. Technical competency and adaptability
8. Total dedication
9. Desire to succeed and develop
10. Effective communication, and more.

Problems/Barriers of Entrepreneurship

In the present-day business scenario, many entrepreneurs and their entrepreneurial traits are unsuccessful. Karl H. Vesper, in his book ‘Entrepreneurship and National Policy,” has identified the following entrepreneurship barriers:

• Lack of viable project
• Lack of market knowledge
• Lack of technical skills
• Lack of initial capital
• Lack of business knowledge
• Lack of motivation
• Lack of social stigma
• Time pressures and distractions
• Legal constraints
• Monopoly and protectionism
• Other problems

1. Lack of a viable project: The enterprises cannot survive without economic feasibility. If the entrepreneur’s assessment of project viability is incorrect, the project started is undoubtedly a failure. Hence, every entrepreneur should be in a position to predict the economic viability of a proposed project that gives the desired results.
2. Lack of market knowledge: Normally, micro and small enterprises do not have sufficient resources to gather market information from time to time. Hence, the entrepreneurs lack knowledge of the changes that are taking place in the markets. They cannot update themselves by providing the required products and services to consumers. Further, they cannot compete with large enterprises and lose their hold on the markets.
3. Lack of technical skills: Most micro, small, and medium enterprises lack technical skills. These enterprises are facing technical problems such as ineffective methods, processes, and procedures in performing activities, performing tasks with poor tools and techniques, not providing common workshops, continuing outdated production operations, etc. These barriers have been disturbing the development of industries:
4. Lack of initial capital: Small entrepreneurs have a problem with initial capital. They lack both long-term and short-term capital, which leads to instability in their profits. They do not have internal resources, and hence, the enterprises cannot survive in the long run.
5. Lack of business knowledge: Some entrepreneurs lack knowledge of business activities such as production, trade, banking, insurance, and warehousing. transportation, finance, distribution, advertising, packaging, etc. This led to the failure of the enterprise in a short period of time.
6. Lack of motivation: Some of the entrepreneurs do not have the quality of enthusiasm within themselves to get the job done in the required manner. They lack self-discipline and self-control, which has become a hurdle for the development of enterprises. If inherent motivation is not exhibited, the business venture is undoubtedly a failure.
7. Lack of social stigma: Entrepreneurs are expected to have a stigma for societal needs. However, some entrepreneurs lack an understanding of the feelings of the people, their faith, and their beliefs. He is also expected to understand the strengths and weaknesses of his subordinates; otherwise, he will lose their cooperation and coordination in attaining the business objectives.
8. Time pressures and distractions: The time factor is the most important aspect of achieving the objectives of the organization. Some entrepreneurs are failing to manage time when executing business operations. This leads to the failure of the enterprise.
9. Legal constraints: Some of the entrepreneurs are unable to adhere to the rules and regulations of different acts relevant to the business operations of the enterprise. They have to understand the government policies, FEMA, and SEBI: tax incentives, export and import policies, stock exchange regulations and controls, the New Companies Act, 2013, etc. A lack of knowledge of legal formalities leads to the failure of ventures undertaken by entrepreneurs.
10. Monopoly and protectionism: To maximize profits and increase their market share, some enterprises are attempting to charge unreasonably high prices, which is making the large enterprises monopolists in the market. However, some enterprises are unable to compete with large enterprises, leading to the failure of business operations.
11. Other problems: Other problems such as inhibitions due to patents, fragmented markets, the costliness of the new product development process, and shorter growth periods for successful products are also contributing to the failure of the enterprises.

Modern economists and social thinkers recognize the urgent need for the emergence of an entrepreneurial society for the faster development of any economy. Therefore, there is an immediate need to analyze the above problems to find a solution for qualitative entrepreneurship.