6. Challenges of entrepreneurship

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6. Challenges of entrepreneurship

Although entrepreneurship offers several opportunities, there are also certain challenges faced by entrepreneurs whilst developing their business. Ramachandran & Gokila, (2012) suggest that the foreign exchange market, tariffs, duties, trade barriers, and taxes can be some of the several factors which affect the entrepreneurial activities. In addition, enterprises doing businesses internationally face several daunting challenges, and some of them are; (a) knowledge gap between the developed, emerging, frontier and under developed markets for conducting business, (b) difference in accounting systems in several countries, (c) variable rates of return, (d) non-convertibility of the currencies, (e) communication gaps, (f) language barriers, (g) political unrest (h) cultural differences, (i) discrepancies in the use of technology, (j) complexity in the markets, (k) supply chain concerns,(l) lack of specific infrastructure in some countries or regions, (m) financial markets and their volatility, and (n) legal concerns. In addition to the above mentioned concerns there are also few challenges which affect entrepreneurial activities. And some of them are mentioned herewith:

Laws and regulations: As every country has their own laws and regulations, it is important to for the entrepreneurs to understand the legal system of a country to conduct profitable business. International laws and laws related to imports and exports can be very crucial for entrepreneurs who are conducting business in international markets. A good knowledge about the rules and regulations related to international trade and business can be very pivotal for entrepreneurial activities (Ramachandran & Gokila, 2012).

Cost: Another important factor which determines the success of the entrepreneurial activities. It becomes highly important for the businesses to understand the costs incurred in all their business process. This involves all the activities concerning procurement to distribution of goods/services. A proper control on expenditures can facilitate the entrepreneurs to monitor their expenses and streamline their business processes in a cost effective way (Ramachandran & Gokila, 2012).

Communication issues and cultural differences: One among the several challenges faced by entrepreneurs is the communication issues and the cultural differences faced in business dealings. Although, some entrepreneurs might be doing business in their home country, however, they might face these challenges when they are importing goods/services for other countries. Similarly, for export or import oriented entrepreneurs, the challenge of communicating in a common language and understanding the cultural differences can be very significant. Therefore, these aspects can offer some challenges for conducting business dealings or negotiations (Ramachandran & Gokila, 2012).

Type of payment methods and currency rates: Entrepreneurs can face certain challenges whilst buying or selling products/services in international markets. The payment methods and currency exchange rates can be very crucial for entrepreneurs who are involved in imports, exports or investing capital in other countries. A small change in exchange rates can affect entrepreneurs who are involved in transactions which are worth millions of dollars. Therefore, any change in exchange rates during buying or selling of goods/services can be crucial for all the entrepreneurial activities (Ramachandran & Gokila, 2012).

Choosing a proper logistical method: Entrepreneurs also face massive challenges when they procure goods from other regions or when they are shipping products to other regions. A good knowledge in logistical networks can crucial for entrepreneurs to offer their goods effectively and efficiently. Some entrepreneurs are considering different means of transportation (air, rail, road & ships) or a proper combination of transportation to develop their logistical networks. In recent decades, some entrepreneurs are making use of the external logistics players for reducing their risk in logistical challenges. However, others simply outsource their entire logistical operations to another company (Ramachandran & Gokila, 2012)