ECONOMIC FACTORS INFLUENCING THE ENTREPRENEURIAL ATTITUDES AND OPPORTUNITIES
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.
DEMOGRAPHIC FACTORS INFLUENCING ENTREPRENEURIAL ATTITUDES AND OPPORTUNITIES
1. Population size and growth rate
The rate at which the population is growing determines how great the business opportunities in a country emerge. A big population presents opportunities like wide market and cheap labour. Uganda has the third highest growth rate in the world, estimated at 3.5%.
2. Level of education and experience
The entrepreneur’s ability to start and operate a business is influenced by the experience and level of education he/she attained. Education highly influences entrepreneurship development in terms of formal skills, business management skills, negotiation skills and networks.
However, in Uganda the successful and potential entrepreneurs are those with less training and experience. People who are highly educated are analytical and are risk averse yet less educated people tend to be creative and therefore risk taking.
3. Income levels
This defines the differences in social economic status of individuals in the society.
People with lower income levels tend to seek for opportunities to earn a living and are most likely to undertake entrepreneurial career compared to their counterparts.
4. Age structure
Young people at the age of 25 years, single and without many personal assets and dependants find it easy to make career decisions to start a business.
It is a much harder decision when a person is 50 years and married, has teenage children preparing to go to University. Young people usually have the need to
explore and are negative about outcomes as compared to the older. They find fun in idea generation and experimentation and can easily succeed in business as a career.
5. Changing age structure
Changing age structure on the other hand presents entrepreneurial opportunities.
Middle aged people provide market, for instance the aging population in the United States provide opportunities to sectors like health and home developers for retirees. In Uganda, the increasing number of younger people provides cheap labour and market for luxury goods and services.
6. Gender differences
Men are more inclined towards entrepreneurial business than women with similar background because women face more difficulties in the venturing process as compared to men. For instance, in acquiring resources to start and support their businesses.
Similarly, women and men have different needs and wants. This implies that an entrepreneur must provide those different needs to satisfy the market.
7. Family background
Parents act as initial role models and the parents active in a family business influence the future entrepreneurial intentions through changing attitudes and beliefs. For instance, people who have a close family member who is self-employed are more likely to follow an entrepreneurial career.
8. Family size
Individuals who grow up in large extended families exposed to life challenges like inadequate facilities and support and are forced to survive on their own turn to the environment for opportunities in terms of business undertakings thus entrepreneurial career.
9. Family succession/inheritance
Through inheritance people are able to identify opportunities and use family income to exploit those opportunities, for example Madhivan, Mukwano, e.t.c.
10. Changing roles and responsibilities of family
These present opportunities to entrepreneurs, for instance, when single headed families change to marriage, the needs and wants change.
Therefore entrepreneurial focus goes to these changes as opportunities to exploit.
As the family responsibilities increase, people tend to seek for additional income and they are lured into the entrepreneurial career.
10 POLITICAL FACTORS INFLUENCING ENTREPRENEURIAL ATTITUDES AND OPPORTUNITIES
1. Political climate
Political instability has affected different regions in Uganda for the last 40 years.
It robbed Uganda of many entrepreneurs and more entrepreneurs have lost life time savings and business assets while others have been forced to close.
Nowadays, Uganda’s political state has stabilized giving potential entrepreneurs an opportunity.
2. Government policy of taxation and subsidization policies which increase
legitimacy, stimulate demand, or grant subsidies to entrepreneurs increase the organizational founding rate.
On the other hand, very high taxes also serve to discourage potential entrepreneurs.
3. Size of government expenditure
High level of government expenditure in health, education or defense encourages many entrepreneurs to emerge and respond to the opportunity.
However, the bulk of Uganda’s government monetary and fiscal policies are aimed at appeasing donor agencies and multi-lateral financial institutions at the expense
of business in general. These policies have not been in favour of local entrepreneurs.
However, different interventions from the private sector (PSFU) and business associations have been considered and conducive policies are yet to be passed.
4. Government institutions and departments
Government institutions that are insensitive, i.e have little qualification and understanding the importance of business information, limit entrepreneurs’ access to these institutions as support mechanisms or potential clients. Moreover, arbitrary interpretation of regulations by officials has cost many entrepreneurs much time and money.
5. Political and religious refugees
Negative displacements resulting from loss of jobs, wars and closing of firms have been related to increased organizational founding rates. Individuals faced with displacements in their lives sometimes make a change and this change is often to form an organization.
6. Legal environment
Many laws in Uganda are so weak that those existing are almost impossible to implement. Therefore the existing legal system may not favour entrepreneurship development (law on counterfeits not well implemented, copy right, patent right, e.t.c)
1. Culture
2. Social financial support
Availability of capital creates favorable conditions for the entrepreneur. Therefore there will be more company formations when financial resources are available.
3. Social identification
This captures how individuals relate themselves to surrounding environment, particularly to the social environment when they perceive themselves as entrepreneurs.
In an environment where people are proud of entrepreneurship as a career, the chances of success are high.
4. Role models
These are individuals influencing an entrepreneur’s career or styles. When people/potential entrepreneurs come into contact with role models primarily in the home or at work they become inspired and develop motivation for entrepreneurship as opposed to a society where role models are lacking.
5. Religion
The decision of people in some societies to start a business depends on their religion. For instance, in India, religions such as Islam and Christianity are found to be conducive for entrepreneurship while others such as Hinduism inhibit entrepreneurship.
12 BARRIERS TO WOMEN PARTICIPATION IN ENTREPRENEURSHIP
1. The relegation of women to the home following colonization associated with training of men for assistant administration roles and clergy.
2. Discriminatory labour market practices leading to low pay, low status work for women.
3. The masculine image of science projected in text books, media and popular assumptions.
4. The nature of science occupations which are not easily combined with child rearing and care.
5. Poor facilities including teacher supply, quality and equipment.
6. Limited role models and career guidance.
7. The double demand on girls, i.e the traditional and school learning activities.
8. Early marriages
9. Limited access to finance by women.
10. Parent perception of cost/benefit of educating girls, especially low income families.
HERE ARE SOLUTIONS TO BARRIERS HINDERING WOMEN PARTICIPATION IN ENTREPRENEURSHIP:
1. Raising general awareness of issues and modification of socialization patterns.
2. Providing equal educational facilities to both boys and girls.
3. Providing special incentives for girls to study science subjects.
4. Ensuring that job opportunities for women combine flexible work patterns and child care facilities.
5. Developing of career guidance sensitive to girls’ needs and making visible the existing successful women in science to serve as role models.
6. Upgrading science school facilities and adequate training of teachers.
7. Combining all science needs with special needs of rural women and girls.
8. Recognizing abilities/talents of girls by employers to avoid skill shortages.
9. Promoting women entrepreneurs in micro enterprises.
10. Directing and facilitating women entrepreneurs into high growth areas.
11. Reducing the administrative hurdles especially for women entrepreneurs.
12. Providing easy and subsidized financing for women entrepreneur projects.
Characteristics of entrepreneurs
Like any other profession, entrepreneurs have certain features which distinguish them from any other individual in the society these include;
They set clear goals. Every passionate entrepreneur has a clear goals/vision. By setting clear goals it keeps them focused even when things get tough. They set short-term, midterm, and long-term goals which provide rooms for the planning of the activities of the days, weeks, and months with unmatched focus, knowing exactly what he/she wants to achieve without being derailed along the way.
They plan their day in advance; unstoppable entrepreneurs plan their day in advance to avoid wasting time and doing uncoordinated activities e.g. meetings.
Entrepreneurs are unique in nature. That is to say they posses certain traits and behaviour which are rare in other people. Traits like discipline, passion and dedication to their business form part of their behaviour which is unmatched.
Entrepreneurs take calculated risks. Since every business venture involves risks, a successful entrepreneur undertakes business with moderate calculable and manageable risks to prevent or minimize losses in business.
They possess a profound awareness of their strengths and shortcomings; accomplished entrepreneurs are candid with themselves. They are attuned to their own capabilities and limitations, meticulously considering these factors with every business decision they undertake.
They hire a team of players; successful entrepreneurs hire the best employees to work with. They focus on those who fit in whatever gaps that have been identified to create the formidable team that is needed for success.
They are constantly learners; successful entrepreneurs know that they don’t know it all. Because of this, they never stop learning. They never get so busy to stop investing in themselves, and the knowledge that benefits their businesses. Keeping up-to-date is very essential if one is to be successful in business.
They are always looking for opportunities; successful entrepreneurs do not rest on their current success. They realize that life changes quickly and that business moves at a faster pace. One needs to always be on the lookout for the next opportunity.
They evaluate their actions and priorities each day. Successful entrepreneurs know that with every day, they are building their future. When you review your accomplishment at the end of each day, you will be able to celebrate the success, as well as address the shortfalls it is a great practice to being with right away.
Systematic planning and monitoring, this is the ability to develop plans that are reused to monitor and evaluate the performance of the business, workers' and customers` satisfaction
They are accountable, this involves proper bookkeeping where every shilling received and spent is properly accounted for so as to meet the set profitability standards.
They always explore opportunities; this is the ability that enables an entrepreneur see and identifies new business opportunities, evaluate them and convert them into achievable goals.
They are always committed to their work – this is the ability to access financial responsibilities for completing the job for customers i.e. an entrepreneur combines both efforts and workers to get work done within a stated period of time.
They are Persistent to work; this is the quality that enables entrepreneurs to develop the determination to do the job well at any cost in terms of personal sacrifice.
They always Demand for efficiency and quality, this is the ability for an entrepreneur to do things that are more excellent or improving performance by starving to do things faster, better and cheaply than the competitors.
They are Self-confidence, which refers to the ability to have a strong belief in one’s self and the ability to complete difficult tasks or meet a challenge at what cost.
They are innovative, this is the ability of an entrepreneur to target the unknown and do things in a new and better way so as to change the old ideas into new ideas.
They are profit-oriented, this very clear that the income earned helps them run the affairs of the business and at same time be able payoff expenses such as interest on loans
They set their own standards; this is in regard to the performance of the business, and workers. This ensures that they are able to do things better and faster without wasting resources.
They always have the ability to cope with failure; this is because all business ventures contain disappointments and failures as well as successes. They recognize their failures and learn from them
10 DIFFERENCES BETWEEN ENTREPRENEUR, INTRAPRENEUR AND ENTERPRISING PERSONS
Entrepreneurs are the ones that conceptualize, implement, maintain and expand business in the face of risks and uncertainty. They achieve and growth by identifying opportunities and marshalling the necessary resources to capitalize on those opportunities.
An entrepreneur can be described as someone who;
i. owns and manages his/her own business.
ii. identifies new products/services or opportunities.
iii. is creative and innovative.
iv. organizes and controls resources to ensure a profit for the business.
v. has the ability and insight to market, produce and finance a service or product.
vi. has financial means or can obtain financing to support the business.
vii. is willing to take calculated risks.
(b)THE INTRAPRENEUR
An intrapreneur is a person who focuses on innovation and creativity and who
transforms a dream or an idea into a profitable venture, by operating within the
organizational environment.
He or she identifies opportunities within an existing business and creates profits
for the business from these opportunities.
An intrapreneur can be described as someone who;
i. works in an existing business.
ii. he/she is hired to manage the business.
iii. identities new products/services or opportunities for an existing business.
iv. he/she is creative and uses ability/insight to market/produce/finance a product /service.
v. organizes and controls resources to ensure profit for the existing business.
vi. prefers benefits of an existing business such as a salary and available resources.
(c) AN ENTERPRISING PERSON
An enterprising person is some who takes on imaginative and risky projects. He/she is skilled enough, ambitious, energetic, confident enough, creative and disciplined enough to seize opportunities that present themselves regardless of the economy.
Enterprising people take initiative in order to be successful.
Being enterprising also means one feeling good about him or herself, having enough self-worth to want to seek advantages and opportunities that will make a difference in one’s future.
In so doing, one will increase his or her confidence, courage, creativity, self-worth and enterprising nature.
REWARDS FOR BEING AN ENTERPRENEUR
1. Self-actualization/personal fulfillment.
2. Feeling of freedom and independence.
3. Providing jobs and benefits others e.g suppliers, bankers, sub-contractors, work force and customers.
4. Creating economic value e.g products/services, incomes for workers, it’s for shareholders.
COSTS OF BEING AN ENTREPRENEUR.
The entrepreneur;
1. works long hours.
2. is always concerned about the business.
3. needs high energy.
4. sacrifices other important aspects of life.
5. has limited social life.
6. does not have much time with family and friends.
7. needs financial investment.
ENTREPRENEURIAL ENVIRONMENT
Entrepreneurial environment refers to a combination of external factors and their organic integration which make an impact in the business startup process by the entrepreneurs.
CHARACTERISTICS OF ENTREPRENEURIAL ENVIRONMENT
1. Resource scarcity/limited resources
These include inputs like land, capital and labor. The scarcity of these resources affects the ability of new firms to enter into this environment.
2. Opportunity orientation
This is the ability to recognize and analyze market opportunities. Entrepreneurs search for or create opportunities all the time and shape themselves to seize and quickly take advantage of opportunities before they are lost.
3. Uncertainty
This environment is full of unknowns or risks. Entrepreneurs demonstrate an ability to accommodate uncertain situations. This allows them to act without full information and clarity about situations. By tolerating uncertainty, entrepreneur’s perception of risk that may otherwise impede action is decreased allowing them to explore in uncertain environments.
4. Flexibility
Entrepreneurial environment is fluid in nature, presents diverse opportunities which may not remain open for long. To suit this kind of environment, entrepreneurs do not insist on one best solution but adopt successive approximations to solve immediate problems as they occur. This calls for constant improvisation in response to challenges in an ever changing entrepreneurial environment.
9 FACTORS IN THE GLOBAL ENVIRONMENT THAT INFLUENCE ENTREPRENEURIAL INTENTION AND OPPORTUNITIES
1. Global finance
Globalization has brought in new opportunities to entrepreneurs in terms of international finance.
Global finance presents opportunities in the areas of international payment system, current exchange rates and international fiancé bodies like World Bank, IMF,
International Dispute commission and International Insurance policies.
2. Global trade
Increase in trade across national boundaries provides opportunities to different individuals and industries as well as negative impact to other industries. Therefore entrepreneurs have to be alert to global changes in order to take advantage of those opportunities/benefits. These include;
- Accessibility to international markets
- Easier access to information through vast communication networks like
world wide web at minimal costs.
- Strengthened trade agreements among regions, for instance COMESA,
EU, EAC, e.t.c.
3. Government global policy
An economy that is liberalized encourages entrepreneurs. In Uganda most sectors of the economy including investment, foreign exchange and export markets have been liberalized. This policy is endorsed by World Bank, the donor community and private entrepreneurs.
4. Democracy
Democracy implies the freedom of individual initiative and freedom of thought, speech and action. These attributes support innovation and creative recognition of opportunities which is a foundation for entrepreneurship.
5. Market openness
Uganda’s local market is small due to low purchasing power of consumers hence limiting entrepreneurial development.
However, Uganda has made substantial progress to attain impressive and above average international trade openness levels which are in line with global good practice, in countries like Chile, Columbia and Singapore, thus increasing market opportunities.
6. Export policy
A country’s export policy expands market for entrepreneurs especially if the policy is liberal. Uganda offers preferential market access to investors into European Union, U.S.A for a number of exports.
7. Import policy
A conducive import policy helps entrepreneurs to get resources that are not locally available at reduced costs.
MAJOR COMPETENCES REQUIRED FOR SUCCESSFUL ENTREPRENEURSHIP
There are three major competences namely;
(i) A body of knowledge
(ii) A set of skills
(iii) A cluster of traits
KNOWLEDGE
Knowledge is defined as a set or body of information stored, which may be recalled at an appropriate time. In the business context, it may be manifested by information or familiarity with aspects such as;
(i) A business opportunity
(ii) Customers
(iii) Production process
(iv) Business management
(v) The market
(vi) Competitors
(vii) Technical matters
(viii) Sources of assistance
However knowledge of the business is not enough in starting and operating a business without skills.
SKILLS
A skill is defined as the ability to apply knowledge and can be acquired or developed through practice, for instance driving or swimming. Therefore reading or learning about driving or swimming (knowledge) will not enable one to drive a car or swim if he/she doesn’t practice.
Skills may be of technical or managerial nature.
Technical skills include;
(i) Engineering (iii) Financial management (v) Planning
(ii) Time management (iv) Organisation (vi) Leadership
TRAITS
Traits are defined as the aggregate of peculiar qualities/characteristics that constitute personal individuality. Traits take time to develop and are not easily changed or acquired.
It is more likely that a person who does not have all the three competencies in his or her business will encounter difficulties in operating the venture successfully.
A person with only knowledge and skills but without the entrepreneurial traits might exhibit little persistence when faced with obstacles, he or she may not see or act on opportunities and may be unwilling to take the calculated risk of venturing into business.
A person with only knowledge and traits might find nothing of value to which these might be applied without technical skills. One may find that he or she is too dependent on outsiders (ones which required skills) and possibly too vulnerable.
Again one with skills and entrepreneurial traits but lacks knowledge might be able to start a business. In a competitive environment, lack of knowledge/familiarity with, for instance, customers, market trends could lead to failure.
HERE ARE 8 CHARACTERISTICS OF SOCIAL ENTREPRENEURS
1. Personal leadership.
Social entrepreneurs lead by example. They have an ability to influence other people.
2. Ethical and principle centred
Social entrepreneurs are principle centred in the sense that they make decisions on rules and values.
3. Goal oriented and visionary
Social entrepreneurs start with a positive vision and then set attainable goals to reach that vision.
4. Good listeners
Social entrepreneurs listen to people’s ideas and comments to learn from their mistakes. This allows them to improve their performance.
5. Risk takers
Social entrepreneurs take moderate risks that have a reasonable chance of success. They try to lessen risk by involving many other people.
6. Empowering
Social entrepreneurs believe in an use the potential of the people they help.
7. Advocators
Social entrepreneurs speak up and take action for what they believe is right even if there is opposition.
8. Optimistic and flexible
Social entrepreneurs tolerate uncertainty. Despite changes, they are positive and determined to succeed.
OBJECTIVES OF SOCIAL ENTREPRENEURSHIP
1. To improve living standards of people by creating new jobs.
2. To generate new goods and services.
3. To activate citizens’ participation at all levels.
4. To nurture democratic processes.
5. To integrate new-comers, marginal groups, immigrants and vulnerable groups of the population.
6. To develop intercultural competence.
7. To create wealth through investments.
8. To improve the image of the local areas.
9. To use regional resources in a creative and effective manner.
10. To empower to change their lives and to get motivated.
The role of entrepreneurs in the development
In growing economies like Uganda entrepreneurs are contributing greatly to economic development given the fact that the country is emphasizing the private sector as an engine for growth the roles include:
Creation of employment opportunities, entrepreneurs establish business enterprises that need people to work in different departments e.g. accountants, managers etc.
The creation of wealth, this is done through mobilizing capital and turning capital into business providing an accumulative resource base that helps the country to add value to the growth domestic products.
They provide linkage between sectors i.e. entrepreneurs establish business e.g. industries that use raw materials from the agricultural sector and at the same time, the agricultural sector provides a market for industrial output.
They are a source of government tax revenue e.g. they pay income tax, and corporate tax, among others which help the country to realize the revenue required for the development.
Provision of infrastructures, before any venture is established, there is need for good roads, telecommunication services and utilities etc. these are established by entrepreneurs which help to serve even surrounding communities.
Promotes Balanced Regional Development: Entrepreneurs help to remove regional disparities through the setting up of industries in less developed and backward areas. The growth of industries and businesses in these areas lead to a large number of public benefits like road transport, health, education, entertainment, etc.
Increasing Gross National Product and Per Capita Income: Entrepreneurs are always on the lookout for opportunities. They explore and exploit opportunities and encourage effective resource mobilization of capital and skill, bring in new products and services and develop markets for the growth of the economy which lead to economic growth
Promotes Country's Export Trade: Entrepreneurs help in promoting a country's export trade. They produce goods and services on large scale for the purpose of earning huge amount of foreign exchange from export in order to combat the import dues requirement.
Improvement in the Standard of Living: Entrepreneurs play a key role in increasing the standard of living of the people by adopting the latest innovations in the production of a wide variety of goods and services in a large scale that too at a lower cost. This enables people to be availed with better quality goods at lower prices which results in the improvement of their standard of living.
Community Development: Economic development doesn’t always translate into community development. Community development requires infrastructure for education and training, healthcare, and other public services. For example, there is need for highly educated and skilled workers in a community to attract new businesses. If there are educational institutions, technical training schools, and internship opportunities, that will help build the pool of educated and skilled workers.
Effective Utilization of Resources: Entrepreneurship is all about putting to better use the resources which are considered to be of low value with an aim of earning income. Entrepreneurs come up with ideas of how to use what others may consider waste. This improves the economy of a country through taxes and creation of jobs which improves the standard of living of the beneficiaries
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