Entrepreneurship: Issues and Problem face by Entrepreneurs

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Issues and Problem Face by Entrepreneurs

Image of the Issues and Problem face by Entrepreneurs

Issues and Problem Face by Entrepreneurs

Image of the Issues and Problem face by Entrepreneurs

Selection of business

  • The entrepreneur might be having a very good business idea.

  • Successful implementation of the idea into business activity involves a painstaking exercise.

  • To study the market to know whether the idea of products or services could be accepted by the market.

  • The entrepreneur has to determine the market demands of the intended products/services and carry out exercises to find out the projected costs of the product or services.

  • Entrepreneur shall be able to know as to whether the venture is profitable or not.

  • This systematic exercise is known as a ‘feasibility study’ and presented in the form of a report known as ‘Feasibility Report’ or ‘Project Report’.

  • Entrepreneur may conceive a number of ideas and identify many new business opportunities.

Choice of form of business enterprise

  • There are various options available to the entrepreneur as far as the choice of form is concerned.

  • She/he may go in for sole proprietorship, a partnership or a joint stock company.

  • The choice is rather difficult issue

  • There are certain lines of business where one has no choice.

    • For example, take the case of banking and insurance. These can only be taken up by the joint stock companies.

  • The size of the business will determine the form of organisation.

    • Company form of organisation is suitable in case of large-scale operations

    • Sole proprietorship or partnership is considered more suitable for small scale and medium scale operations.


  • The problem of arranging finance always troubles the entrepreneur.

  • Without capital no business activity can be started.

  • Capital is needed for the entrepreneur to buy fixed assets like

    • land and building

    • Machinery

    • Equipment

  • Finance is needed to meet day-to-day expenses of the business.

  • Estimate of the amount of capital required, the entrepreneur may have to arrange finance from various sources.

  • Many financial institutions like IFCI, IDBI etc.

  • Financial institutions providing ‘seed capital fund’ or ‘venture capital fund’ for the financing of good entrepreneurial ventures.

  • The entrepreneur shall have to approach these financial institutions and bankers for the purpose, provide some funds on his own and plan for a public issue of capital at the appropriate time.


  • The problem of locating the business unit is another issue for consideration that should be carefully handled by entrepreneur.

  • Location of a business unit depends upon many factors like

    • Availability of raw material

    • Availability of transport, power, water

    • Nearness to market etc.

  • The government also provides many incentives in the form of tax holidays, rebate in power and water bills etc.

  • The unit located in a backward area or underdeveloped area.

  • The entrepreneurs need to look at all these factors before setting up a business unit.

Size of the unit

  • Size of the business is influenced by several factors like t

    • Technical

    • Financial

    • Market considerations.

  • The entrepreneurs may start their operations on small scale and expand gradually.

    • For example, the owner of Nirma Limited, Dr. Karsanbhai Patel used to sell washing powders taking rounds in bicycles in 1980s and with increase in operation it has now become Nirma Limited.

Machines and equipment’s

  • The choice of machines, equipment’s and processes is a delicate problem before starting a new venture.

  • This depends on various factors like

    • Availability of funds

    • Size of production

    • The nature of production process.

    • The emphasis should be placed on productivity.

    • Availability of facilities of repairs and maintenance

    • Availability of spare parts and after sale service

Suitable manpower

  • If the size of business is large, the entrepreneur has to find suitable competent persons for various functional areas.

  • She/he has to identify the right persons for each area and motivate them to join the set up.

  • Involves a lot of patience and persuasion.

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