Constraints and Problems of Entrepreneurship Development

The major constraints/ problems of entrepreneurship development that are identified in the field of entrepreneurship and small enterprise development are mentioned below:

Problems of entrepreneurship development

1. Frequent changes of government and its policy: The frequent change of governments with different ideological viewpoints adversely affect the business and investment climate and development of entrepreneurship. Since independence of Bangladesh, the governments and its economic policy were changed several times.

The first government of Bangladesh introduced socialism in the economic policy followed by subsequent governments with the concept of mixed economy first and then free market economy.

Frequent changes of governments and consequently change of economic policy influenced the development of private entrepreneurship of the country.

Moreover, political instability, law and order situation, corruption and deterioration or values during the period under study created major impediments towards the economic growth and development of the country.

The frequent changes in industrial policy and strategy, wide gap between policy and implementation measures, showed down the promotion and development of entrepreneurship in the country.

2. Lack of priority of entrepreneurship development in industrial policy: Entrepreneurship development has not yet been given top priority in all industrial policies.

It appears that while the country has set out a strategy to encourage the process of enterprise devilment the entrepreneur who acts as the catalytic change agent in that process is still neglected.

Government’s emphasis on privatization is not yet matched by adequate complementary human resources development programs. The industrial policy in general emphasized more on increasing the number of enterprises rather than on developing entrepreneurs.

3. Lack of co-ordination among institutions The field of entrepreneurship development is both over-researched and under-researched at the same time.

It is over researched in the sense that too many people look at the same problem oriented and sponsored research that could lead to program development catering the needs of specific region and target groups.

There is still uncertainty about the overall right strategy for entrepreneurship development, with regard to finding the right balance between properly oriented and modern small enterprise promotion prorates, etc.

Problems related to entrepreneurship development training: The demand for training programs within small industries far exceeds supply both for existing as well as emerging potential entrepreneurs.

Limited number of training programs has been developed mostly without any formal assessment of training needs of the target group. Hence the existing training programs are not need based and not effective. The features of such programs are:

  • The duration of the training courses is too often short and inadequate to train entrepreneurs successfully. Curriculum used in the training program with some exception does not encompass all essential ingredients of well-designed program. The methods used in selecting participants are not also scientific and appropriate. Methodology of training is not also up to the mark.
  • Trainer s and motivators in many cases are not well trained and lack motivation offer need-based training to the participants.
  • Entrepreneurship development training programs are not evaluated on a regular basis using well-developed or appropriate instruments. Most of the training programs are evaluated at eh trainee reaction level but effectiveness of training program needs to be determined at the results level. That is how many of the trainees have become entrepreneurs after completing training and how many of them are doing well.
  • Beyond the level of income generation activities no entrepreneurship development program is linked with financial institutions so that trainees are assured of credit supply to start and run his venture.
  • With the exception of some schemes of pilot character (notable those implemented by MIDAS) most training programs for advanced entrepreneurship development are not integrated in the sense of identification of opportunities, selection of trainees with entrepreneurial qualities, preparation of business plans, understanding management techniques and follow up services for both new and existing entrepreneurs. The continued follow-up support is considered to be vitally important for ht promotion of entrepreneurship and small enterprise development.

5. Lack of training facilities for trainers: The success of entrepreneurship development is largely dependent on the supply and availability of qualified and skilled trainer/motivator.

There is a dearth of well experienced bank executives and personnel or promotional agencies involved in the promotion and development of entrepreneurship in the country.

Problems of Entrepreneurship Development

6.Lack of awareness about facilities and support services: Entrepreneurs are not generally aware of the source of various types of assistance and the procedures of getting this assistance from the concerned institute.

Mechanism for dissemination information on investment opportunities, types and sources of assistance available, are not appropriate and adequate.

Awareness creation and orientation for entrepreneurship and self employment opportunities have not yet fully become a part of primary, secondary and tertary level of education.

7. Lack of adequate credit support: Lack of adequate credit support form financial institutions s a big problem for healthy growth of entrepreneurship development in the country.

This problem is particularly crucial for evening educated young entrepreneurs, as they are not capable of providing collateral demanded by the bank for sanctioning loan. The procedure and documentation formalities required for obtaining loan are complex and cumbersome.

8. Lack of appropriate institutional set up for entrepreneurship development training: There is no institution exclusively engage in the entrepreneurship development training in the country. The entrepreneurship development training given by different organizations is not complete and lacks comprehensiveness in the approach.

The training program is not supported by support assistance like finance, infrastructural facilities and supervision. There is no institute in the country to conduct research on the problems of entrepreneurship and small enterprise development.

So, there is an immediate necessity for establishing an institution to provide entrepreneurship development triaging and give counseling services to financial institutions as well as undertake research on the problems.

9. Crisis of confidence among the parties involved in entrepreneurship development: The responsibility for promoting entrepreneurship development lies mainly with three parties viz. the government, financial institutions and the entrepreneur. Each group has specific functions and responsibilities to perform towards the promotion of entrepreneurship.

The role of government is to create a congenial business climate by formulating and implementing sound industrial policy, decision appropriate legal framework for the business, maintaining law and order situation etc.

Financial institutions on the other hand, help the entrepreneurs y selecting a viable project and supporting loan capital in setting up and running the enterprises.

The entrepreneur, the key person behind the enterprise, is required to submit a viable project to the bank for assistance and demonstrate his honesty and commitment to operate the enterprise properly and re-pay the loan according to the schedule of repayment.

In the course of their operation, however, mutual distrust and lack of confidence have developed over the years due to shortcomings of the parties in performing responsibilities.

This has resulted into a crisis of confidence among the parties, which has affected the climate for entrepreneurship development.

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