problems of entrepreneurship

PROBLEMS OF

ENTREPRENEURSHIPName-

BADM Dept.

Problems of Entrepreneurship

•Traditional Society• Indian society is, by and large, in the group of

traditions, conservatism and blind faith. Traditionally,

certain jobs are not considered good, even today.

• Due to caste system, people hesitate to leave their

traditional occupations

• Hence people lack business interest, as also the risk

bearing capacity and constructive thinking.


• Hereditary Work

The selection of work, occupation and business in

India is not in accordance with interest, capacity and

feelings.

Rather, it is on the basis of hereditary adaption, caste

system, religion and gender difference, etc.

As a result the entrepreneurs are not able to select

the business and industry, according to their capacity,

interest and motivations.


• Unproductive Expenditure

People keep their savings, hidden with themselves or

go on spending it on marriages, birthday parties,

religious rituals, ornaments, immovable property and

luxury goods, etc.


• Lack of Infrastructure Facility

Infrastructure facilities, required for development of

entrepreneurship, like: means of transportation and

communications, banks, insurance, electricity, water,

raw materials, roads, stock market services capital

market, organized product marketing, etc. have

lacked in our country and hence the new

entrepreneurs have to face difficulty in setting up the

industries and the development of industries has

been slow.


• Lack of Enterprising Mentality

Development of entrepreneurship depends upon the nature ofhuman resources. However, several changes have taken place inthe mentality of these resources, which have become obstructionsin the development of entrepreneurship, like:

(i) People do not have high aspirations for gaining achievements.

(ii) They take no interest in innovations.

(iii) Most of the young people prefer to do some service, in place ofgoing towards establishing and operating any business orindustry

(iv) The risk bearing capacity and ability to face contingencies ofpeople have reduced.

(v) People lack high business and technical abilities.

(vi) Initially, people participate in entrepreneurship developmentprogrammes which complete devotion. But after some time, theirmentality goes on changing and they leave that sometimes theyleave the idea of adopting entrepreneurship, after completingthat programme.


• Cultural Values

Religion has deep effect on Indians. Our ideal has

been, “Simple living, high thinking”. In Indian culture,

much importance has not been given to material

gains, personal property, economic pursuits and high

standard of living.


• Lack of Favorable Environment

Every section of the society like workers, consumers,

investors, government, etc. has its contribution, in

operation of an industry.

However, unfortunately, enthusiasm towards work

lacks in our country. The consumers view the

entrepreneurs, with sense of suspicion, capital is

always scarce, policies of the government are also

not very practical, competition is not healthy and has

become cut throat.


• Competition with Big Industrial Houses

Business activities in India are substantially

controlled by some industrial house. They have

monopoly on business.

Besides, priority is also being to public sector

industries. Hence the new entrepreneurs do not think

of setting up the industry, due to the reason that he is

not in the position to compete with these houses and

public sector industries.

Hence the entry of new entrepreneurs is very limited.


• Lack of Educational and Training Facilities

Educational and training facilities related to

entrepreneurship are available in India, but these have

several deficiencies:

(i) Institutions making the entrepreneurs are not

adequate.

(ii) Education and training imparted in the institutions

are not much practical in respect of

entrepreneurship.

(iii) Trained trainers are also not sufficient.


• Inadequacy of Capital

As compared to western countries, it is becoming

difficult in India to maintain standard of living of its

people, due to rising prices.


• Socio- Cultural Factors

Socio-cultural factors also attributed to slow progress

of entrepreneurship in India, reason being that

several caste-systems, social evils, religious blind

faiths and fatalism exist in the country.


• Opposition of Innovations and Changes

In our country, traditional ideas are quite dominant.

Scientific and logical approach towards problems is

lacking.


• Resource related Obstacles

Several resource related obstacles are faced by

entrepreneurship development programmes. Hence

these programmes are not much successful. These

obstacles are as follows:

(i) Adequate resources lack in the country.

(ii) Physical and human resources do not become

available to the entrepreneurs, in time.

(iii) Some times, the cost of required resources being

high, the entrepreneurs take less interest.

(iv) The cost of imparting training to entrepreneurs

being high, programmes do not get success.


• Lack of Technical Structure

Professional managers, specialists and trained

employees and required for efficient operation of

companies and public sector enterprises. It has been

termed ‘techno structure’ by J.K. Gailbraith. Due to

lack of techno structure in India, the entrepreneurs

hesitate to bear the risk of large business.


• Inadequate Government Facilities and Incentives

Infrastructure facilities have not adequately

developed in backward areas of India. Due to lack of

allotment of land for development of industries,

sources of energy an various infrastructure facilities

and other incentives by the government, the

entrepreneurs are unable to establish industries in

backward areas.


• Bureaucracy and Red Tapism

On one side, very few facilities are being provided by

the governments to the entrepreneurs and on another

side the benefit of these facilities becomes available

to very entrepreneurs, due to bureaucracy and red

tapism. Several types the entrepreneurs feel unhappy,

since in government officers, the officers and the

employees do not pay attention on viability and still

follow old traditional working style.


• Concentration of Economic Power

Most of the industries of the country are dominated

by few big industrialists, which has obstructed the

development of entrepreneurship, like:

(i) Small entrepreneurs do not get the chance to make

progress.

(ii) Big industrialists get success in twisting the

government policies and rules in their favor.

(iii) Big industrialists run parallel industrial role, along

with the government.


• Less Expenditure on Research and Development

Government and private entrepreneur spend too less

on research and development. The entrepreneurs

consider expenditure on research and development,

to be unnecessary. Hence, it not possible to

encourage innovations.


• Heavy Taxation and Corruption

Taxation and corruption in India is such a mechanism,

in which, whatever is done, is directly or indirectly at

the cost to the public. In this situation, whether a

person should bear this burden or should set up the

industry. In such situation, rapid development of

entrepreneurship is not possible.


• Risk of Losing Invested Capital

• Starting a business is all about risk. And the small

business failure rate is relatively high. According to a

study by the National Federation of Independent

Businesses (NFIB), 35% of businesses fail within two

years, 54% fail within four years and 64% of new

businesses fail after six years. When a business fails

it can be financially and emotionally devastating.

People contemplating entrepreneurship should

decide how much they are willing to risk.


• Lower Quality of Life Until the Business is

Established

• Long hours and hard work can effect the

entrepreneur's outside life. Business owners often

put their role as company founder ahead of their role

as husband, wife, or parent. Marriages and

friendships are some unfortunate casualties of

entrepreneurship. Part of the problem is that most

people launch new businesses between the ages of

25 and 34, just when they start their families.


• Complete Responsibility

• Entrepreneurship is highly rewarding, but many

entrepreneurs find that they must make decisions on

issues they are not very knowledgeable about. When

there is no one to ask for answers, the pressure can

build quickly. The knowledge that these decisions

could decide the success or failure of a business can

have a devastating effect on the business owner.

problems of entrepreneurship

Small Business & Entrepreneurship