Barriers that are and that can be faced by current and potential entrepreneurs.

 

Bitto Benny

Research Scholar, Department of commerce, Christ (Deemed to be University), Bangalore

 

ABSTRACT:

The move towards the startups is increasing day by day since many of the entrepreneurs come together with innovative business ideas at every point of time. The government’s plays a key role in promoting the startups in providing with basic amnetities. Entrepreneurship plays a role in the development of the economy in creating more job opportunities. The study generally focuses on the major barriers and factors that adversely affected the growth of the current and potential entrepreneurs.

 

 

 

INTRODUCTION:

The word entrepreneur is derived from a French word “entrprendre” which means to undertake. From the perspective of business, it means to start a business. The concept of entrepreneurship has a wide range of meanings. On one hand, an entrepreneur is a person with a potential aptitude who pioneers change and has characteristics found in only a small fraction of the population. On the other hand, a person who wants to work for himself or herself is also referred to as an entrepreneur. Thus, entrepreneurs are founders of business who are involved in starting and running of the business. They must wear many hats. They pave towards the formation of capital. Entrepreneurship helps in grabbing new opportunities thereby creating difference. It helps them to reap high profits and also offers a chance to pursue interests. To promote entrepreneurship we need to be aware of the barriers facing entrepreneurship so as to overcome them.

 

It is important to have a proper understanding of the barriers that can be faced by entrepreneurs as an understanding of the hindering factors or obstructions will help the entrepreneurs to build a strategy which would help them to overcome these barriers, A proper study of the barriers will give a clear knowledge of the fields or areas in which these barriers may occur, once these obstructions are clearly listed out, the general public, government and other supporting organizations can create powerful policies and programs to handle the issues in order to provide a favorable entrepreneurial atmosphere and also knowledge into these obstructions will prompt understanding the entrepreneur’s personality which is crucial step in the entrepreneurial process. The barriers are not the same for all the individuals in society. Although some obstacles are common to all people, some groups find specific obstacles, namely, women, young people, people with disabilities, ethnic minorities, unemployed and people living in rural or distressed areas. Hence, this study aims to find out the obstructions or barriers that are and can be faced by current and potential entrepreneurs.

 

 

 

OBJECTIVES:

·         To identify the various obstacles faced by the current entrepreneurs.

·         To understand the external factors that act as hindrances to potential and current entrepreneurs.

·         To explore the areas associated with starting and running a business in which entrepreneurs find difficulties.

 

HYPOTHESIS:

·         H₁ -There is no significant relationship between lack of savings and low interest.

·         H₂ – There is no significant relationship between lack of entrepreneurial support and low interest.

 

SCOPE OF STUDY:

This study aims to identify the different obstacles faced by the current and potential entrepreneurs. The study is entirely focused on entrepreneurs in Bangalore.

 

LITERATURE REVIEW:

(Lougui & Lystrom, 2013)¹ The primary objective of the paper remains identifying the troubles of an entrepreneur; right from its foundation to its full-fledged running.  The issues faced in different sectors, issues that require special attention and the most gruesome ones are studied in detailed. A unique database is approached that holds more than 30,000 observations over four years – 2005 to 2009. The results achieved reflect that –regardless the gender of the entrepreneur- besides the general questions, technical issues like laws, permits and taxes are most sought after. Since the paper studies the problems faced by entrepreneurs, it clearly lines the areas in which counseling and support from public policy agencies are essential for new ventures.

 

(Badulescu, Sebastian Sipos‐Gug, & Borza, 2013)² explains about how Social entrepreneurship is an evolving field on research, lays its primary focus on businesses and activities related to social value creation and social mission. As noticed usually in modern areas, lately researches have focused only on outlining the basic concept and differentiating social entrepreneurship from classical entrepreneurship. The methodological model proposed by the Global Entrepreneurship Monitor was used to distinguish hybrid social enterprises and non‐ governmental organizations. Besides, the innovative dimensions of these were evaluated in order to identify the change agents as opposed to traditional NFP organizations. The social entrepreneurs picked with this method reflected the impact of environmental issues and consequent support factors on achieving the social mission. The perception of the facets by the masses was also studied. Another hypothesis was that the perception of environmental factors would contrast for someone willing to start a business instead of one who already set it up. The highlighting conclusion of the research is the need for changing budding entrepreneurs’ pov about the threats and opportunities to be faced when venturing into a social enterprise.

 

(Per Davidsson, Robinson, Hennie van der Mescht, & Philip Court, 2007)³ deals with how entrepreneurs face ethical challenges in their business arena. Due to the complex business environment such as change in government policies or the constant change in trends creates a situation of dilemma among the entrepreneurs. Entrepreneurs need to critically judge themselves as to what is right. This research paper deals with how the entrepreneurs face and solve the dilemmas. Interview method was used for this study and the interviews were analyzed using Synthetic Star technique. It was found out that the key components of entrepreneurial success were found to be – having specific objectives, energy, promoting something to society and unity. The research revealed that moral choices had a huge impact on the business decisions taken by entrepreurs.

 

(Azmat, 2013)⁴ aims to find out the factors that acts as obstacles and opportunities to migrant women entrepreneurs in particular reference to developing economies. An exploratory research was conducted to understand the relationship between immigration, gender and ethnicity. The findings showed that the obstacles faced by them are multifaceted in terms of human capital especially in developing economies. It also showed that the culture that is also dominant in that economy also plays role either as an enabler or as an obstacle. This research conducted is theoretical viewpoint. An empirical framework needs to be established. This paper helped to contribute towards the understanding of the phenomenon of migrant women entrepreneurs.

 

(Saxena, 2012)⁵ explains about the various obstacles faced by rural entrepreneurs and the possible remedies to overcome these obstacles. The aim of study is to analyze the problems faced by rural entrepreneurs and how to fix these problems. The methodology used in the research consists of a database, consisting of various observations and had a theoretical viewpoint. The research findings showed that there are various obstacles such as lack of interest, lack of technology and illiteracy faced by rural entrepreneurs and the few remedies suggested by the study is proper supply of raw materials and adequate training facilities that boost interest and knowledge for entrepreneurship development in the rural areas.

 

(Kosheek Satish Ramgobind Maharaj, Clever Chisoro, Anis Mahomed Karodia, 2016)⁶ have investigated the challenges faced by the entrepreneurs within the automotive sector in Gauteng and to make recommendations to NAACAM, NAAMSA and Gauteng Provincial Government. The objective of the study was to critically analyse the issues and barriers entrepreneurs and examine the skills shortages and training available within the sector. It also assessed the gaps experienced by entrepreneurs and the impact on competitive advantage within the automotive sector in Gauteng, and also evaluated the barriers hindering entry into the supply chain that entrepreneurs in sector are faced with. The target population consisted of stakeholders covering the broader automotive industry in South Africa and also included representatives from the auto industry associations. The study was conducted on 1200 companies which were divided into sample groups and each sample group had 25 companies in it. The study revealed that Labour was the biggest challenge within the auto sector within Gauteng, followed by Skills, Funding, Economic and Infrastructure challenges, amongst others.

 

(J. Shyla1, S. Natrajan, Hari Priya, Jeethu James, Ancy Varghese, Shiny Vijayan and AliberMarshel, 2014)⁷ have conducted a study to identify the major problems faced by women entrepreneurs in Thiruvananthapuram, Kerala and also find the impact of these problems on the working efficiency of these women entrepreneurs. The information was collected through both primary and secondary sources. The sample unit was 100 and the sampling technique used was random sampling. The study was conducted for a period of four months that is from Dec 2013- March 2014. The statistical tools used in the study are Percentage analysis, stacked cone, Bar of pie, Pie of pie, exploded doughnut. Twenty two places were selected for this purpose. The findings revealed that maximum 42% of the respondents agree lack of investment, 34.5% agree towards high interest ratio, 39% agree about lack of idea on cost benefit, 50% are agreed towards lack of working capital and 48% of the respondents are agreed that constant need of finance are the major financial problems. The personal difficulties identified were lack of education and lack of family support.

 

(Sumaira Aslam, Madiha Latif and Muhammad Wasim Aslam, 2013)⁸ identified the major problems faced by women entrepreneurs in Pakistan and also studied the impact of these problems on the working efficiency of these women entrepreneurs. The data collected was subjected to quantitative analysis to find the major problematic factors and test is applied to find the significance of the hypotheses for possible acceptance or rejection. The data used in this study is primary in nature for which a structured questionnaire is adapted. The technique used for this study is snowball sampling and 120 women entrepreneurs from Bahawalpur have been covered under this study during the year 2011. The analysis indicate that women entrepreneurs in Pakistan generally face three types of problems like entrepreneurial/business problems, social/personal problems and technical problems. And all these three types of problems have negative relation with the working efficiency of women entrepreneurs. It is the first study of its own type in case of Pakistan which has categorized the problems faced by women entrepreneurs in entrepreneurial/business problems, social/personal problems and technical problems.

 

(Muhammad Asif Tanveer, Usman Ali Gillani, Shaheer Rizvi, MoaazLatif, HashaamMaqbool, Muhammad Rizwan, 2010)⁹ aims to study barriers and hurdles in choosing entrepreneurship. Using data from 114 undergraduates and graduates of management sciences and getting responses with 21 items on Likert scale. Data analysis is mainly executed through descriptive statistics, T test, correlation, Cronbach Alpha, and component factor analysis. The data was collected through a structured questionnaire and each question was measured through Likert scale moving from strongly disagree to strongly. There were 21 items dedicated in order to identify barriers and hurdles in becoming an entrepreneur.  In the study, 51% males and 49% females participated and the average age of these respondents was 23. Similarly, more than 70% also pointed out that they have studied Entrepreneurship as course subject helping to anticipate that they have complete understanding and knowledge about entrepreneurial environment. The findings suggest that lack of skills, lack of assistance, lack of capital, lack of awareness, and fear of future are major hurdles to starting a business. This study suggests that Government, Non-profit organizations, Universities and other influential institutions and sectors should endeavour for providing better training, skills and knowledge as well as good environment to feel some comfort in launching a new business. 

 

(Aristidis Bitzenis, Ersanja Nito, 2005)¹⁰ critically evaluate the obstacles and problems encountered by entrepreneurs while doing business in Albania, which is an economy in a transition. The applied methodology is based on a survey using interview and questionnaire techniques. The sample was determined on a stratified basis (probability-random sampling) involving the random selection of respondents from various strata of the larger population (growth areas/cities in Albania) in order to obtain a greater degree of representativeness. Feedback was received from 226 out of the 350 companies contacted out of which only 226 questionnaires were usable. The study found that the most important obstacles faced by entrepreneurs in Albania include unfair competition, changes in taxation procedures, lack of financial resources and problems related to public order. Bureaucracy and corruption do not appear to represent significant barriers to entrepreneurship. The limitation of the study was that responses from the selected strata was not distributed proportionally among the targeted sample. To conclude the researchers said that legislative amendments and new legislation which focus specifically upon small business and enterprise development should be implemented by the Albanian government in order to achieve a transparent fiscal reform and create a more favorable business environment.

 

METHODOLOGY:

This is a descriptive study on the barriers to entrepreneurship faced by entrepreneurs in Bangalore and the study is based on a quantitative research. The target population comprises existing entrepreneurs and also people who are aspiring to become an entrepreneur.

 

Sampling:

The study concentrated on entrepreneurs who have already entered the market and also the people who are in the aspiration of becoming entrepreneurs. Two reasons influenced this choice. Firstly, it is generally accepted that the existing entrepreneurs who have already entered the market will have a better idea of the problems that are prevailing in the market and naturally, are more exposed to entrepreneurship and entrepreneurial processes and hence should exhibit more knowledge about the challenges in entrepreneurship. Secondly, people aspiring to become entrepreneurs can help us to know about the personal barriers that they are facing in their entrepreneurial process. Questionnaires were handed out and participants were encouraged to complete the questionnaires immediately after receiving it and hand it over.

 

Data Collection and Questionnaire Design:

 A self-completion questionnaire was developed for primary data collection. Questionnaires can easily organise answers, it intensifies the comparability of answers and it also makes showcasing the relationship between variables easier. The questionnaire was composed of two parts and a total of 23 items. The first part was about the demographic characters of the respondents. The second part emphasized on 18 items which were assigned to identify the barriers and challenges faced in becoming an entrepreneur. The statements for this scale are based on previous studies on entrepreneurial process (Choo & Wong, 2009; Benzing et al, 2009; Fatoki & Chindoga, 2011). The questions are measured on the basis of a Likert scale moving from strongly disagree to strongly agree (1. Strongly agree, 2. Agree, 3.Neutral, 4. Disagree, 5. Strongly disagree).  

Data analysis:

The data collected is coded, classified and tabulated in order to provide a clearer view of analysis. Coding is used to analyze the data efficiently. All the questions were measured by using a five-point Likert-type response scales, assigning numerals to question responses with 1 coded for strongly agree, 2 for agree, 3 for neutral, 4 for disagree and 5 for strongly disagree. There are many tools and techniques which will be appropriate for analyzing the data. In this study, for the purpose of analysis, the tool chosen is correlation done through SPSS as it is probably one of the most widely used computer software for analysis of quantitative data. Descriptive statistics has been used to describe the data and the sample and correlation has been used to examine the relationships between barriers to entrepreneurship and other variables.

 

For the purpose of analysis, the questionnaires were forwarded to 50 entrepreneurs, out of which 45 respondents gave a feedback.  The tools that were used for data analysis were descriptive statistics and Pearson’s correlation test carried out by SPSS. Out of the 45 respondents, 22 were males and 23 were females. 53.3% respondents were in the age group of 20-25. Almost 48.9%of the respondents were post graduates and 40% of the respondents were undergraduates. The significant value of Pearson correlation test is 0.515

 

Correlations

	Lack of savings	Low interest
Lack of savings          Person Correlation                                    Sig. (2 – tailed)                                    N	1   45	0.100 0.515 45
Low interest               Person Correlation                                    Sig. (2 – tailed)                                    N	0.100 0.515 45	1   45

 

This test was conducted to examine the relationship between significant relationship between lack of savings and low interest. The significant value of Pearson’s correlation is 0.515 which falls above 0.5- 0.7 so thus there exists a moderate correlation. 

 

Correlations

	Low interest	Lack of entrepreneurial support
Low interest           Person Correlation                                Sig. (2 – tailed)                                N	1   45	0.630 0.000 45
Lack of entrepreneurial support                  Person Correlation                               Sig. (2 – tailed)                               N	0.630 0.000 45	1   45

**. Correlations is significant at the 0.01 level (2-tailed)

 

 

 

This test was used to find out any relationship exists between lack of entrepreneurial support and low interest. The significant value of Pearson’s correlation is 0.0 which falls between 0-0.2 so thus there exists a very weak correlation.

 

DESCRIPTIVE STATISTICS:

Almost 48.9% of the respondents agree that lack of previous savings act as a barrier to entrepreneurship. Another 48.9% also agree to the difficulty in obtaining the bank finance acts as a barrier to entrepreneurship. 31.1% of the respondents disagree that lack of business skills acts as a hindrance to entrepreneurs. 35.6% of the respondents agree that lack of information about how to start a business acts as barriers to entrepreneurship. With respect to lack of business experience, 40% of the respondents agreed that lack of business experience acts as barriers to entrepreneurship. 55.6% of the respondents agreed in regard whether lack of information about any government agency that can assist in funding a business. 60% of the respondents agree that the risks associated in a business serve as barriers to entrepreneurship. Respondents also felt a weak economic environment can act as a barrier to entrepreneurship. 45.5% of the respondents agreed that a weak economic environment creates barriers. 26.7% of the respondents agreed that lack of support from family created barriers to entrepreneurship.

 

 

Table 1 showing the lack of savings as a barrier to entrepreneurship

 

This table shows the responses regarding lack of savings, whether or not they serve as a barrier. Almost 48.9% of the respondents agree the above. 22.2% of the respondents are neutral. 8% of the respondents strongly agree and 24.4% the respondents disagree.

 

 

TABLE 2 showing difficulty in obtaining bank finance as a barrier to entrepreneurship

This table shows the responses regarding difficulty in obtaining bank finance, whether or not they serve as a barrier. Almost 48.9% of the respondents agree for the above. 22.2% of the respondents are neutral. 8.9% of the respondents strongly agree and 24.4% the respondents disagree.

 

 

Table 3 showing Lack of entrepreneurial support as a barrier to entrepreneurship.

 

This table shows the responses regarding lack of entrepreneurial support, whether they serve as a barrier. Almost 35.6% of the respondents neither agree nor disagree. 22.2% of the respondents disagree. 26.7% of the respondents agree and 15.6% the respondents strongly disagree.

 

 

Table 4 showing Low interest as a barrier to entrepreneurship.

 

This table shows the responses regarding low interest, whether they serve as a barrier. Almost 59.1% of the respondents agree for the above. 20.5% of the respondents neither agree nor disagree and 18.2% of the respondents disagree to the above.

 

 

Table 5 showing Fear of failure as a barrier to entrepreneurship.

 

 

This table shows the responses regarding fear of failure, whether they serve as a barrier. There was an almost equal proportion of responses for fear of failure.

 

 

Table 6 showing Weak economic environment as a barrier to entrepreneurship.

 

This table shows the responses regarding weak economic environment, whether they serve as a barrier. Almost 45.5% of the respondents neither agree nor disagree. 29.5% of the respondents are neutral. 11.4% of the respondents disagree and 13.6% the respondents strongly agree.

 

CONCLUSION:

In this modern era entrepreneurship plays an important role in the development of the society. It is the duty of each and every persons should support and promote the entrepreneurial activities. The major factors that influences the entrepreneurial environment is that the lack of savings and the insufficient government support.

 

Through this study it helps to analyse the major internal and external barriers that are faced by the current and the potential entrepreneurs. So, the barriers should be removed everyone should support the entrepreneurial activities which helps to development of the society through employment opportunities and innovative business ideas.

 

REFERENCES:

1.        Nougoi and Nystrom (2013) Study on what are the obstacles faced by entrepreneurs. Emerald Insights.

2.        Badulescu, Sebastian Sipos‐Gug, &Borza (2013) Environmental obstacles and Support factors affecting social entrepreneurship. European convention of Innovation.

3.        Per Davidsson, Robinson, D. A., Hennie van der Mescht, & Philip Court. (2007). How Entrepreneurs Deal with Ethical Challenges – An Application of the Business Ethics Synergy Star Technique. Journal of Business Ethics.

4.        Azmat, F. (2013). Opportunities or obstacles?: Understanding the challenges faced by migrant women entrepreneurs. International Journal of Gender and Entrepreneurship.

5.        Saxena, S. (2012). Problems Faced By Rural Entrepreneurs and Remedies to Solve it. Journal of Business and Management.

6.        Kosheek Satish Ramgobind Maharaj, C. C. (2016). The challenges faced by entrepreneurs within the automotive sector in gauteng . Kuwait Chapter of Arabian Journal of Business and Management Review .

7.        J. Shyla, S. N. (2014). A Study on Problems of Women Entrepreneurs in Urban Area with Special Reference to Thiruvananthapuram in Kerala . Journal of Research in Business and Management .

8.        Sumaira Aslam, M. L. (2013). Problems Faced by Women Entrepreneurs and Their Impact on Working Efficiency of Women in Pakistan. Middle-East Journal of Scientific Research.

9.        Muhammad Asif Tanveer, U. A. (2010). Barriers for Business Students in Becoming an Entrepreneur in Pakistan . Journal of Business and Management .

10.     Aristidis Bitzenis, E. N. (2005). Obstacles to entrepreneurship in a transition business environment: the case of Albania . Journal of Small Busness and Enterprise Development.

 

 

 

 

Received on 06.03.2018          Modified on 15.04.2018

Accepted on 26.04.2018           ©A&V Publications All right reserved