Last updated on September 20th, 2023 at 10:38 am

Are you looking for the factors affecting entrepreneurship? AAMcourses has the answer for you. We are here to share the 7 factors that affect entrepreneurship.

The concept of entrepreneurship is vital for every nation. Several new businesses are launched every year, and most have successful innovative ideas. Not only does it bring in new ways of thinking, but it also contributes to the country’s economy. As a result, even the central government promotes the ideology of entrepreneurship.

Even with the support of the government, there are a total of 7 factors affecting entrepreneurship. These seven are broadly categorized as economical and non-economical factors.

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Let’s dive deeper and learn about the 7 factors affecting entrepreneurship.

Economical Factors 

Economical factors are responsible for the growth of the business and the country. Ensuring strong economic factors helps maintain a strong economic environment for the business. Economical factors consist of capital, labor, raw material, and markets. Let’s study each economic factors affecting entrepreneurship in detail.

Capital

The very first and most important factor for any business is the capital. It is the factor that affects every business activity and decision regarding them. Capital is the main source that helps to acquire assets such as machinery, land, building, employees, etc. Procuring all these assets can help the business work smoothly with all the required technology. Capital is a crucial factor affecting entrepreneurship growth.

Labors

Another one of the factors affecting entrepreneurship is labor. The availability of 4 types of labor – skilled, unskilled, semi-skilled, and professional is important for the business. All these labors are to be hired according to the operational requirement. Every labor contributes towards making the business a successful venture. The presence of labors in the organization is crucial for business and entrepreneurial growth.

Raw material

For every business, raw material is the core of the operation. The process of procurement, processing, and producing the outcome, everything revolves around this core.

It is important for an organization to ensure that it procures raw materials at a cost-effective price. The organization must ensure they procure raw materials according to their business motive. Suppose the business promises to deliver quality goods. In that case, the raw material should be of the best quality, even at the cost of expensive raw materials and pricing. If the business promises cheaper goods, cheaper quality is expected to be acquired.

Raw material availability is also on the list of factors affecting entrepreneurship. The organization has to ensure sufficient raw material is stored for regular operations. The business must ensure that they have a strong supply chain so they have enough raw materials. The organization must also ensure they constantly update the inventory to be informed about the inventory stock. This helps to plan the operational process for the next day and so.

The Market

Market refers to the place where the buyers and sellers come together to trade. As an organization, it is important to select a market that suits your product.

While selecting a market, businesses must ensure that this market will increase sales. For that, the organization must conduct market research to learn about several markets for its product. Based on the market research, the organization can develop and employ new design on their designs to ensure more sales. The research also helps the marketing department to develop more effective promotion tactics to attract consumers.

Non-Economical Factors 

Non-economical refers to factors that aren’t based on capital. These factors have their origin and are influenced by their own factors. Non-economical factors include social, psychological, and political factors affecting entrepreneurship. Let’s study these factors in detail.

Social Factors

Social factors refer to both social and cultural factors. These factors include religion, values, ethics, and society’s attitude. These factors can be extremely important and must be considered while planning a sales strategy.

Take McDonald’s, for example. When they first started their operation overseas in India, their product failed. The reason for its failure was the social and cultural values of the country. In India, most people don’t eat beef as per their culture. To expand in India, Mcdonald’s had to change their strategy and plan according to the culture of the country.

Psychological Factors

Another crucial factor in the list of factors affecting entrepreneurship is psychological factors. Psychological factors include status, choices, motivation, etc.

Many people unsatisfied with the product and service decide to opt for different products available. This creates the window for entrepreneurial development. Entrepreneurs analyze the market and understand the needs of the market with their perspective. They evaluate the research data and develop a product that will satisfy the market demand.

While developing the product, the entrepreneur has to decide on what market they have targeted and how to capture that particular market.

Political Factors

Every factor is directly or indirectly affected by the government. The rules and regulations formed by the government are specific and already established. As an entrepreneur, we have to plan the subgenus around these policies to ensure a working business.

With increasing entrepreneurship, the government has also considered its importance and started to develop policies to support entrepreneurship.

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FAQs

Closing Statement

Entrepreneur has many challenges they must counter to survive. We have discussed the most crucial factors affecting entrepreneurship and its future growth. Entrepreneurs must understand and counter these factors and take advantage of them for their ventures. Suppose the business is able to take advantage of these 7 factors successfully. In that case, it will surely flourish in every market it enters.

I hope this article about the 7 factors affecting entrepreneurship is informative. If you have any doubts or suggestions, deploy them in the comment box.