Factors that influence entrepreneurship practices

Business studies study module

There are many conditions or factors which may encourage or discourage entrepreneurship. Some of these factors are:

  1. Government policy-Some government policies are favorable to the operations of the business and thus encourage people to go into business while other policies may be unfavorable and will discourage people from going into business. E.g. higher taxes are unfavorable hence discouraging.
  2. Infrastructure-infrastructure includes transport and communication networks, water, security e.t.c. Availability of good infrastructure in an area tends to encourage people to set up businesses while poor infrastructure tends to discourage them
  3. Levels of education and skills-Relevant and appropriate knowledge and skills are necessary if the business has to succeed. These are acquired through education, training or experience.
  4. Availability of markets-Adequate markets encourages existing entrepreneurs to continue producing and also encourage/attract new ones to venture into business.
  5. Availability of resources-Appropriate resources are necessary for starting and smooth running of a business. These resources include physical, human, capital and technology.
  6. Cultural and social beliefs and attitudes-These are norms, values and beliefs of a given community. Culture helps determine the kind of goods and services that people consume. this in turn, dictates the type of businesses to be established in such communities.e.g Muslims do not take pork therefore businesses selling pork will not do well in such communities.
  7. Competition-Businesses will do well if they are able to complete favorably. Others will avoid competition establishing businesses where there is no competition.
  8. Political stability-political stability gives conducive atmosphere for businesses to start and thrive on the other hands, where there is no political instability, businesses may not do well and entrepreneurs may close down businesses or new ones may not come up.
  9. Natural factors-natural factors such as rainfall, temperatures, earthquakes, pests, drought e.t.c. may influence the type of businesses that are carried out in an area, especially agricultural businesses.
  10. Presence of role models in the society-The presence of successful entrepreneurs acts as an encouragement to aspiring entrepreneurs.

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