Challenges for Entrepreneurs

Namrata K
 Challenges to Entrepreneurs

The failure ratio is relatively too large

with nearly ten percent businesses sustain
for more than three years and just about
five percent businesses last for more than
seven years.

The economic and business system is

handicapped by the rigid institutional set
up, political instability, market
imperfections, economic challenges or
financial limitations faced by the
entrepreneurs.
Challenges to Entrepreneurs
Internal problems comes within the enterprise
and can be controlled or managed.

On the other hand, External problems, arise as an

outcome of change in external factors like
socioeconomic, geographical and cultural
diversities that are beyond limit to be controlled.

The non-availability or scarcity of power,

communication problems and other infrastructure
bottleneck etc. are examples of external problems
while problems relating to organisational
structure, production, distribution, management,
training etc are internal problems (Desai, 2006).
Registration
Capital and
Administration
Regulatory or government
policies
Management Problems
Marketing Problems
Registration of business
 Registration of business

Incorporate Your Business:

Sole Proprietorship,
Partnership,
Limited Liability Partnership or
A Company- Private or Public

Startup India Registration

When the business comes under the definition of a Startup as per the DIPP Notification,
it can get its Startup India registration done. A business registered as a Private Limited
Company under the Companies Act, 2013, as a Partnership Firm under Section 59 of the
Partnership Act, 1932 or as a Limited Liability Partnership under the Limited Liability
Partnership Act, 2008 can get Startup India Registration if it fulfils the following
criteria: 
It has not been more than 10 years from the date of business registration and annual
turnover for any financial year since its registration has not exceeded Rs. 100 crores.
The business is working towards innovation, development or improvement of products
or processes or services, or if it is a scalable business model with a high potential for
 Registration of business

These businesses should also register under:

DPIIT (Department for promotion of Industry and Internal
Trade) for recognition to avail tax benefits in case of
Partnership, LLP, and Private Limited Company.
Registration under the Shop and Establishment Act– as
required by the prevailing local laws or state body.
Registration under the MSMED (Micro, Small and Medium
Enterprises Development) Act
Registration under GST (Goods and Service Tax) if turnover
exceeds a certain limit.
Trademark Registration– exclusive trading of product brand. 
 Registration of business

MSME Registration
It can be obtained by micro, small and medium enterprises in India to enjoy various
subsidies and benefits in terms of loans, taxation, and other schemes. There are multiple
benefits laid down by the MSMED Act for micro, small and medium enterprises for
their machinery and raw material which can be purchased at a subsidised rate.

GST Registration
All manufacturers, sellers, service providers, exporters, etc. need to get their GST
Registration in India. All kinds of business Startups need to get GST Registration in the
following cases:
When the aggregate turnover is more than Rs 20 or 10 lakhs in Special category states.
If the business supplies goods intra-state.
When the business sells goods or provides services online.
When the business held tax registration under the previous tax regime.
GST registration must be obtained within 30 days of business incorporation, otherwise,
the business will be subject to heavy penalties.
 Registration of business

Udyog Aadhar Registration

It is the new initiative of the Government to support small-scale
businesses. Indeed the process of Udyog Aadhaar Registration
has come as a replacement to the SSI Registration or/and MSME
Registration. Once, Udyog Aadhaar registration is obtained for a
business, it can enjoy various subsidies and schemes specially
provided by the Government for helping small businesses in
India.
 Licenses for Startup

required to be obtained for specific kinds of Startups such as shops & establishments,
food business, Import Export business, Financial institutions etc. which are as follows: 

Shop And Establishment License for Startup Registration

Every state has its own Shop and Establishment Act which provides for the rules to be
followed by every business in the state. The Act also provides for shop and
establishment license or trade license. A business that comes under the definition must
obtain the Shop and Establishment Certificate without fail to avoid penalty and fine.

Import Export Code Registration

All importers who wish to import or export of goods / services from India need to have
a valid IE Code. IE Code must be mentioned in all relevant customs documents.
Bankers would require you to have valid IEC registration for making payments abroad.
To obtain Import Export Code, it is mandatory to have a PAN and a current Account in
a bank.
 
Apart from this certain businesses for non-banking financial institutions or fin-tech
companies NBFC registration is required while for multimedia broadcasting platforms
Broadcasting licenses are required to be obtained.
Other challenges and legal formalities
Limited or no knowledge of regulatory compliances and filling
online application registrations, inability to enter accurate online
data entry.
Duped with agents or chargeable services both physically or online
(websites, freelancers etc) who charge hefty sums for simple
process.
Inability to produce complete and correct information in registration
form, tax filling, balance sheets or so on due to lack of knowledge,
training or proficiency.
Failure to furnish documents like aadhaar Card , PAN, licenses,
registrations or voter id for online verification, registration
compliances and so on.
Lastly, keeping up with the prescribed procedures, time limits and
online deposition of charges or documents also pose a problem with
many having lack of expertise or system issues.
 Lack of Capital

Capital is one of the most strategic and significant

requirement for capitalizing all his ideas into realities.

Capital is required for all business operations not only

to start a business, procure the raw materials,
acquisition of land and machinery but to run,
administer or manage all it’s operations smoothly on
day to day basis.
Shortage of seed money or start-up capital to
start a business enterprise.
Insufficiency of capital for expansion,
diversification, promoting or branding the
product.
Allocation of capital in a judicious manner as
idle excess capital if not invested in right
sources or avenues result in future liability and
reduction in rate of return on capital.
Strict adherence to financial plans
Matching the rate of return or investment with rate of
interest and keeping a check on rate of interest which shall
not be too high which adversely impact the profitability of
business enterprise.
Efficient management of working capital.
Seeking professional advice of a financial expert, advisor
or consultant
Estimating the revenues and expenses accurately through
financial planning and budgeting under proper guidance
of experienced industry and market experts.
Efficient and effective use of financial resources, allocation
of capital and strict adhere to financial budgets and plans.
Spend money wisely on talent pool and material resources
buying local or building good supplier relationship.
Administrative Problems
An enterprise have to take permissions and
licences from the regulatory institutions like DIC
(District Industries Centre), PCB(Pollution
Control Board), Electricity department,
Municipal Corporation, Food & Drugs
Administration, etc and get his work done.
Some of the problems can be enlisted as:
Bureaucratic nature of the various administrative
bodies.
Underestimation of the potential of young and
new entrepreneurs.
Unnecessary conservative and obstructive
attitude of administrators hindering the new start-
ups.
Selecting the Product , Marketing and Branding

Failure in creating a strong market appeal

and brand in a cost effective manner
leading to failure of business
organization.
Building Inspired Team
Creating a motivated and inspired team

Hiring people which is time consuming and

complicated as interviewing them does not
guarantee the results, training people and
sharing our vision and organizational goals.

Organizing resources and delegating

Tasks
skills and managerial effectiveness to use
the resources in optimum and most efficient
manner to ensure operational performance .
• Problem of power/electricity/ infrastructure

• Decision Making (strategic/ routine decisions) and Time Management

• Low Negotiating / Bargaining Power – suppliers, customers or

employees