What are the Factors affecting Entrepreneurship?
No matter how appealing the idea of entrepreneurship may seem from the outside, few factors kept in mind before choosing when and where to start a business. Some of the factors that affect entrepreneurship are discussed below:
Political Factors: A market is a place that can be capitalistic, communistic or a mixture of both. Capitalism requires innovation, while communism requires entrepreneurs and the political class to be well connected. Ideally, a country should be capitalistic for entrepreneurship to flourish in the region.
Legal Factors: The strength and fairness of the judicial system in a country have a significant role in the quality of entrepreneurship. In many cases, it's because entrepreneurs might require the courts to enforce the contracts agreed between two parties. But in many countries, such agreements are not implemented properly. This risk prevents the development of entrepreneurship in those countries.
Taxation: Governments sometimes resort to excessive taxation as they adopt the policy of taking from the rich and giving it to the poor. However, the basic principle of entrepreneurship believes in the survival of the fittest, and the excessive taxation rule contradicts it. Hence, entrepreneurs want to set up businesses in places where there is very little government interference on taxation.
Capital Availability: Capital is the first requirement to start risky ventures. They might also require instant capital to scale up the business once an idea becomes successful. Therefore, entrepreneurship helps the economies grow in those countries where there is a well-developed system of providing capital at every stage, i.e. seed capital, venture capital, private equity, and stock and bond markets.
Labour and raw materials: Availability of skilled labour and required raw materials at reasonable prices is an essential factor for launching a business venture in a region. Countries like India, Bangladesh, and China have witnessed a considerable rise in entrepreneurial activities because of the favourable labour markets. So, proper planning is required to set up a startup business to make it a sustainable one.