HERE ARE 12 ECONOMIC FACTORS INFLUENCING THE ENTREPRENEURIAL ATTITUDES AND OPPORTUNITIES

1. Economic policy

This defines the market systems established by the government, market structure and the extent to which all the firms compete under fair games rules. An open market system that leaves forces of demand and supply to control the distribution of resources allows entrepreneurship to flourish since it has more rewards for innovators. This allows opportunity identification arising from free entry into national and regional markets.

2. Administrative issues

These include the procedural requirements for registration, licensing, taxes and financial reporting which may either facilitate or hinder entrepreneurial activities.

Excessive number of rules and procedures discourage entrepreneurs from starting businesses, for instance, most small businesses consider paperwork as time consuming or cumbersome.

3. Infrastructure

The availability of infrastructure and utilities such as good roads, power, communication facilities and lack of corruption and bureaucratic delays in obtaining such utilities encourage entrepreneurial development.

However, Ugandan indicators for physical infrastructure are far below levels to provide business opportunities to local and foreign investors and those that are accessible are expensive compared to international standards.

4. Legal requirements

These should not be too stringent to inhibit entrepreneurship, but should be clear and effective enough to provide adequate protection to entrepreneurs against fraud.

An environment that institutes ownership rights and guarantees protectionism to local entrepreneurs provides opportunities for entrepreneurial growth.

5. Resource availability

Societies that are endowed with various resources provide start up opportunities and attract people to undertake business ventures as opposed to those without.

For instance loan availability, venture capital, management assistance, technological assistance, land, natural resources, raw materials, semi-finished goods, waste products and by products.

6. Cost of business

Countries with flexible low cost space, air transportation, overhead costs, inflation, interest rates, tax structure, insurance cost highly influence the level of entrepreneurial development. 

Entrepreneurs (investors) seek opportunities for investment in countries where costs of business operations are low.

7. Economic incentives

These are economic privileges given to investors. In countries where people are given economic support in terms of tax holidays, industrial parks, e.t.c, entrepreneur intentions are higher. 

For instance, in Uganda, the government’s investment policy stipulates that whoever in upcountry regions is to be given 100% tax holiday for 5 years and machinery and equipment are imported free of tax.

 HERE ARE 8 BENEFITS OF INSURANCE

1. It allows individuals and business people to save money that would be used to cover unexpected emergencies.

2. An entrepreneur is assured of business continuity as a result of the compensation after the loss has occurred. This gives the entrepreneur confidence, stable earnings, growing and expansion.

3. Customers increase their trust in the entrepreneur’s business as a result of the assurance in his or her business continuity.

4. The property of the business people are guarded against all risks like fire, theft, e.t.c. This gives confidence to entrepreneurs to undertake business operations.

5. Insurance companies act as trustees and referees to their clients who would like to get loans from commercial banks.

6. Insurance companies also give loans to business men who operate on large scale and have collateral security. The excess premium which is not spent on daily expenses of the company and investments can be lent out to earn interest for the insurance company.

7. Insurance policy (contract/document) is used as security when applying for bank loans. Banks usually prefer security that is insured because they guarantee loan repayment.

8. It promotes international trade because entrepreneurs are able to import and export their goods. The entrepreneurs are also able to insure their goods against numerous risks in foreign trade.

 Going into business is deceptively simple but staying in business and making a success of it is not. Success or failure are not the chance results of a toss of a coin.

Being in the right place at the right time is partly luck but more so to do with good planning.

Therefore setting up a business for the first time or expanding an existing business can be the road to riches and personal fulfillment.

It can also be the road to financial ruin and personal misery. Successful businesses are a result of careful research, planning, enthusiasm, self confidence and commitment.

If an entrepreneur identifies a business opportunity, it is ideal to carry out a feasibility study in order to ascertain whether the opportunity is viable/profitable.

It also acts as a basis upon which financial assistance can be sought from the financial system. It can be broken into 3 categories, i.e market feasibility study, technical feasibility study and financial feasibility study.

1. Market feasibility study

(i) Market study. This focuses on the overall market demand.

(ii) Product description. This involves understanding in detail the product one wishes to produce, identification of users and the standards that it will fulfill.

2. Technical feasibility study

This determines the adequacy of the manufacturing process, plant and machinery to be used for production of a given product within the framework of predetermined quality, raw materials and time used without long or expense breakdown problems.

3. Financial feasibility study

This part reveals how attractive or hopeless the business idea is from the financial point of view. The financial feasibility is divided into six major components, i.e;

- Project costs

- Means of finance

- Capacity utilizations and income estimation

- Expenditure estimates

- Profitability estimates

- Risk analysis

 HERE ARE 6 CHALLENGES OF SELF EMPLOYMENT

1. Long and irregular working hours lead to fatigue and exhaustion.

2. There is uncertainty of income. The person is not sure of his income as it varies with the business performance.

3. It leads to low life style due to too much work.

4. A self-employed person bears all the risks of losses.

5. There is uncertainty of the future. This is because income upon which planning can be done is uncertain.

6. A self-employed person may not have definite tasks and responsibilities i.e incase he/she is alone in business he/she does all the business activities e.g purchasing, selling, accounting e.t.c.

HERE ARE 14 WAYS OF OVERCOMING THE CHALLENGES FACED BY SMALL AND MEDIUM ENTERPRISES IN UGANDA

 1. Locating the business in areas where they can easily access support services, markets as well as raw materials.

2. Undertaking research and development to come up with new products that meet the customers’ needs and beats off competition.

3. Ensuring good business management. This is done through creating a work environment that encourages productivity, hiring competitive people and training them, being able to think strategically, e.t.c.

4. Establishing good relationship with customers and ensuring that they are always satisfied with the products and cannot be taken away by competitors.

5. Conducting thorough market surveys before starting businesses to ensure that businesses went into are the ones whose output (goods and services) will be competitive, have a fair sized market and profitable prices.

6. Avoid over expansion. Expansion should only be done after careful review, research and analysis as well as identifying what one needs to add in order for one’s business to grow.

7. By saving and reinvesting business profits back to the business to ensure that adequate working capital is maintained to run business operations.

8. Keeping and using up-to-date information and data on suppliers, consumer tastes and their buying habits to ensure that businesses are not left behind by the changes taking place.

9. Formation and being active members of relevant business associations like Uganda Manufacturers Association, Uganda Small Scale Industries Association, through which businesses can access a range of services and assistance.

10. Monitoring and keeping abreast with what the competitors are doing and learning from their experiences.

11. Advertising and promoting products so that new customers are attracted as well as keeping old ones.

12. Regularly training stall to ensure that they are skilled enough to manage business operations.

 1. Unsuitable location of the business. Even if a business is properly managed, a bad location leads to its failure. For instance, locating the business far from the market (customers) or source of raw materials.

2. Limited market for the business products. This normally results from competition, changing customer tastes, uncompetitive prices, e.t.c.

3. Poor management of the business. Businesses which are poorly managed, for instance when they are inefficient in the use of resources, do not keep proper records, use wrong costing and pricing methods, inevitably make big loses and in the end fail and close up.

4. Poor handling of customers. No business can afford to survive with dissatisfied customers. A business whose owner or employees are rude to customers and do not bother to attend to their individual needs cannot take long before it collapses.

5. Limited market research. This leads to failure to clearly define and understand one’s market, one’s customers and one’s customer’s buying habits.

6. Over expansion. This often happens when business owners confuse success with how fast they can expand their business. Many bankruptcies have been due to rapidly expanding companies.

7. Inadequate financing. Some businesses may be having insufficient funds to buy the required technologies to improve their operations.

8. Choosing a business that is not profitable. In this case if one generates lots of activity, the profits never materialize to the extent necessary to sustain an on-going business.

9. Low quality of products for sale. This reduces the number of customers as they withdraw and go to other businesses which are producing better quality products. Faced with a declining number of customers and increasing competition, the business will inevitably fail and close up.

10. Inadequate credit services to provide entrepreneurs with facilities to enable them finance their business operations.

11. Inadequate support services like roads, telephones, water and electricity which make it difficult and expensive to operate these businesses.

12. Inadequate skilled man power to operate some production technologies, which forces businesses to hire expensive foreign experts. This increases cost of production, low profits and lead to business failure.

13. Use of inappropriate technology which does not optimize productivity and profitability.

14. Competition from imported manufactured products which are produced by well established businesses often of low prices.

15. Unreliable sources of raw materials which forces businesses to operate seasonally especially agro-processing businesses.

16. Improper product pricing. Small and medium enterprises at times fail to clearly define their pricing strategy. This results into over pricing of their products and eventually makes them fail.

17. Unconducive government policies relating to taxes which most businesses complain that it is high.

18. Unfavourable economic and monetary policies which make credit scarce, keep interest rates high and make it difficult for businesses to operate with borrowed capital.

19. Failure to anticipate or react to competition, technology or other changes in the market place. At times these businesses assume that what they have done in the past will always work. They tend to do things in the same way despite new market demands and changing times.

20. Mistakes made by the entrepreneur/founder’s inability. At times entrepreneurs lose interest in business because it does not suit their personal characteristics and as such they slacken/loosen their commitment to it in terms of supervision, funding, initiatives, creativity, e.t.c. As a result, the business loses direction and collapses.

21. Industrial unrests. These are in form of strikes at the work place which make operation of business difficult.

 Below are some of the strategies for handling negotiation challenges.

1. If the work load is increasing, one can look for tasks to eliminate, review the work he or she would hand him or herself, review the way to combine similar jobs or consider the use of temporary or part time help.

2. If the work load is declining, one can work on improving efficiency, do house keeping that has been postponed or start projects that could generate new work.

3. If there are problems of turnover, help employees identify with their group, try to develop stable work groups or review status implications in jobs.

4. If there is a group of employees who are controlling production, remove misunderstandings if there are any, find out if it is to the group’s advantage to slow down or find out and deal with the real problem.

5. If employees are dissatisfied with their pay, review bench mark jobs, i.e compare with similar jobs in other enterprises, compare with comparable jobs in the area, adjust assignments or communicate on the broad pay issue.

6. If workers are spending much time on one job, review management objectives and standards for this job, clarify the degree of perfection needed and why, ask the group for ideas on cost reduction, set specific targets and follow up on them.

7. If one goes over the budget, one should identify sources of increased cost or expense, ask for suggestions on cost reduction.