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
Frequent changes of government and its policy
The frequent change of governments with different ideological viewpoints adversely affects the business and investment climate and the development of entrepreneurship. Since the independence of Bangladesh, the governments and their 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 a mixed economy first and then a 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 of 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, a wide gap between policy and implementation measures, showed down the promotion and development of entrepreneurship in the country.
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.
The 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.
Lack of coordination 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 to the needs of specific regions 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.
A limited number of training programs have been developed mostly without any formal assessment of the 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. The curriculum used in the training program with some exceptions does not encompass all essential ingredients of a well-designed program. The methods used in selecting participants are not also scientific and appropriate. The methodology of training is not also up to the mark.
Trainers and motivators in many cases are not well trained and lack the motivation to 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 the effectiveness of the 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 their 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.
Lack of training facilities for trainers
The success of entrepreneurship development is largely dependent on the supply and availability of qualified and skilled trainers/motivators.
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.
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.
The 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 tertiary levels of education.
Lack of adequate credit support
Lack of adequate credit support from financial institutions s a big problem for the 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 loans. The procedure and documentation formalities required for obtaining loans are complex and cumbersome.
Lack of appropriate institutional set up for entrepreneurship development training
There is no institution exclusively engage in 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.
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 appropriates legal framework for the business, maintaining law and order situation, etc.
Financial institutions, on the other hand, help the entrepreneurs 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 the shortcomings of the parties in performing responsibilities.
This has resulted in a crisis of confidence among the parties, which has affected the climate for entrepreneurship development.
Other Content of Entrepreneurship:
- Who is an Entrepreneur?
- Traits / Qualities of an Entrepreneur
- Major Functions of an Entrepreneur
- Importance of Entrepreneurship Development
- Are Entrepreneurs Born or Made?
- Entrepreneurship Development as a Strategy for Industrialization
- Essential of Entrepreneurial Development Assistance
- Entrepreneurship Development Training
- How to Develop Entrepreneurship Business?
1 thought on “9 Constraints and Problems of Entrepreneurship Development”
As an entrepreneur, I will try to solve all of the issues you mention in this article