Entrepreneurship can be defined as the willingness and capacity to build, organize and run a business along with its risks. The end objective is, of course, reaping a profit. However, before it even reaches there, the business environment can make or break the venture.
Entrepreneurs need access to knowledge as much as they require competitive markets, intellectual capital protection, human capital, and sources of finance. All of these play a pivotal role in shaping the future of a business. However, to gain a deeper understanding of what affects an average youngpreneur, give a thought to these factors:
Factor 1: Economic Environment
The success of any business enterprise is closely linked to economic growth. Economic environment includes inter-dependent factors such as capital, market demand, and availability of raw material.
Preferential treatment to a small-scale sector, restrictions on large industrial houses and the current trend of simplification and rationalization of industrial policy affect young entrepreneurs to a large extent.
In fact, the economic environment is critical to the aim of the business. In a free economy, the primary objective is to mine profit, while in a closed economy, efficiency of a business is judged on the basis of its social responsibility and social benefit.
Factor 2: Political Environment
The policies of a country directly affect the growth of most ventures. Positive government actions can directly facilitate entrepreneurship, whereas negative actions can prove to be an adverse influence. There are three facets to the political environment:
Political philosophy: The government’s concepts and arguments and its political opinion.
Political atmosphere: Can be labeled as the end product of philosophy and leadership.
Quality of leadership: It is often said that strong political leadership is necessary for economic growth. Different studies have found a correlation between the quality of political leadership and economic growth.
Hence, an entrepreneurial venture will be heavily influenced by the political environment of a country.
Factor 3: Legal Environment
Laws and State policies have a strong effect on entrepreneurial growth. Entrepreneurs have to operate within the limits and concessions enacted by the law. From labour laws to policies that prohibit large houses to compete with small or new ventures, entrepreneurial emergence is vastly affected by the existing law.
Factor 4: Socio-Cultural Environment
Often, societal views shape a country’s economy and its expansion. Socio-cultural stigma linked with entrepreneurship can influence the work-environment of an aspiring entrepreneur. If the social views conform to the idea of innovation, then the aspirant feels encouraged. On the other hand, frowning upon the same can lead to suppression of innovative ideas and, consequently, a stagnant economy. Depressing social conditions and a conservative attitude hamper innovations.
Factor 5: Psychological Factors
Psychology can be labeled as an entrepreneurial game-changer. Psychological factors aren’t only environmental; they are individual-specific too.
- Support: Peer and familial support plays a great role in uplifting and motivating an individual. Lack of support and familial pressure can easily lead him to quit.
- Family background: It can both encourage and discourage an aspiring entrepreneur
- Dream/desire: An aspirant’s goals are the thrust behind his ideas and can help in overcoming various challenges. If these aren’t fuelled regularly, they can burn out easily.
Psychological factors drive an entrepreneur. If his personal environment does not offer the required support, it will adversely affect his work environment.
Factor 6: Assistance and Facilitation
Assistance, financial or otherwise, influences the moral of up and coming innovators. Availability of loans, willing investors and government grants, subsidies, and concessions can help develop an entrepreneur-friendly work environment, which will boost the economy as a result.
Facilities in the form of subsidized or free consultancy services, finance, assistance during land acquisition, liberalized hire-purchase installment, etc. can help in aiding various up and coming ventures and smoothen their commercial ascent.
Factor 7: Availability of Right Labour
Entrepreneurship is also affected by the availability of the right type of workers. The quality of the talent pool, rather than the quantity, influences the ascent of a venture. However, the availability of quality labour, or lack thereof, is affected by a number of factors. Here they are:
Education: The skill-set of the employees, their knowledge and experience have a profound effect on the business itself. Education is fundamental to sustainable development of both lifestyle and business.
Transportation: Economic hubs around the world have one thing in common – well-organised transportation system. From logistics to supply chain, transportation controls everything. Needless to say, transportation is a major contributor to the economy and a competitive force in business.
Infrastructure: Even though a high cost investment, infrastructure is what fuels the economy both literally and figuratively. Infrastructure denotes the basic physical systems of a business or nation, such as sewage, communication, water and electric systems etc.
Provision of quality education, transportation and infrastructure is what makes and retains quality employees. Right labour has a direct positive effect on any entrepreneurial venture, thus influencing the work environs of a youngpreneur.
Why understand these factors at all?
Understanding what is there to come can be the extra edge a businessman always looks for, especially when it comes to upcoming challenges. Entrepreneurial ventures are essentially in their formative years and must know the hurdles early on. Understanding these factors will offer the following benefits:
- Provides information about all phases of work environment, which is essential for successful operations
- Opens up new avenues for the expansion of entrepreneurial operations. Whenever the environment is suitable, entrepreneurs can cash in the opportunity.
- Enables businessmen to adopt a dynamic approach and find a suitable solution
- By understanding the prevalent situation, they can deduce if they can garner popular support.
An entrepreneur is a catalytic agent for change, which results in an economic chain reaction. Further, the work environment isn’t only limited to employees; it extends to businesses as well. However, the challenges faced by an enterprise are broader and more diverse. In order to boost an economy, entrepreneurship has to be given a leg-up. This cannot happen if youngpreneurs are not trained to rise up to the challenges that lay ahead.