Introduction
There are two types of entrepreneurs: those who start their businesses and take on the risk of doing so. Each country has difficulty promoting an entrepreneurial culture and developing new businesses sustainably and competitively differs. It’s exhilarating and scary to start a firm and become an entrepreneur. It’s not easy to get off the ground when you’re beginning a new company; many obstacles are to overcome (Vanevenhoven, 2013). These include the inability to get a business off the ground, stress, a lack of support from others, overpowering sentiments, and the desire to quit. An entrepreneur must overcome obstacles to run a successful firm. The study’s primary goals are to identify new entrepreneurs’ difficulties and analyze the solutions that might help them overcome them. The study will also use the six domains of entrepreneurship to be able to address the contemporary challenges and opportunities I expect to face as an entrepreneur setting up a new SME in Hong Kong.
Expected challenges
For many budding entrepreneurs, starting a small firm is the way. These enterprises might be quite different depending on the nation and the sector. These are enterprises based on the size of the workforce, the amount of cash, and the goods and services they provide to customers. The benefits of small firms far outweigh the disadvantages (Baba, 2013). Internet marketing is a good fit since it can readily cater to specific niches. In addition, they are flexible enough to deal with any situation that arises, and they can do it with minimal effort and price. Small company owners across the world face a variety of obstacles.
Particularly concerning the availability of financial resources. As an entrepreneur, you are expected to handle a wide range of tasks and obligations at once. Overestimation of success, misplaced purpose, negative mindset, poor organization, jack of all trades, motivation of employees, and lack of support are frequent problems for entrepreneurs (Finkle et al., 2013). According to the World Bank’s research, a survey of Georgia’s micro, small, and medium-sized businesses reveal constraints that limit the country’s expansion of entrepreneurial and creative activity. Access to capital seems to be a problem, particularly for start-up enterprises, as does a lack of knowledge and technology transfer, a scarcity of skilled workers, and the absence of a government program to encourage entrepreneurship and innovation.
Small and medium-sized businesses are more likely to develop their management techniques via a trial-and-error process than large corporations. Only operational plans, not strategic ones, are considered in these methods. The methods used by this management differ from those used by other worldwide leaders. As a result, managers at small and medium-sized businesses are ill-equipped to deal with their organizations’ problems (Ofili, 2014). When it comes to financial institutions like commercial banks, many small and medium-sized businesses (SMEs) cannot get financing and credit. As a result of the lending restrictions placed on them, such as the need for collateral, this has happened. Small businesses cannot offer collateral such as real estate with little assets.
Consequently, most of these businesses rely on personal loans from family and friends to stay afloat. However, this form of financing is insufficient for medium and small businesses. Consequently, the company’s management is forced to rely on low-cost and indigenous technology that is sometimes ineffective.
Small and medium-sized businesses have a major challenge in the face of technological progress. Due to the high start-up and installation expenses, many of these businesses cannot implement modern technologies. Furthermore, this new technology is often incompatible with the requirements of these businesses (Short et al., 2010). Due to a lack of rural electricity, a small business situated in a rural region cannot fully profit from an internet connection. New rules are being imposed on Hong Kong’s businesses and sectors daily. New legislation is being implemented to govern business activities. These regulations are also designed to help the country’s economy expand more steadily over time. However, these restrictions might represent a danger to the expansion of Hong Kong’s small and medium-sized firms (SMEs). The reason for this is that some of these laws are too harsh.
Policy
The policy domain is one of the major factors that will ensure that I can address the major challenges and opportunities expected to be witnessed as an entrepreneurship journey. A policy is a collection of ideas or plans that a group of individuals, institutions, or the government has all decided to implement. Entrepreneurs’ actions are influenced by government policy in one way or another, regardless of their individual qualities, talents, and capacities (Ghane & Kharde 2013). A company’s operations are directly impacted by the current tax and tariff policy and the monetary and fiscal policy. Every national government places a high value on economic development because it improves the number of people who can find work and the amount of money they have to spend. Entrepreneurship is the only way to generate economic progress in a specific nation.
It’s believed that the Hong Kong government would give favourable policies for business, taxes, law, and education in a business plan. An entrepreneur’s education in the business assures that they will be able to improve their firm’s efficiency. Short et al. (2010) believes that promoting entrepreneurship and fostering good governance are essential if these activities positively impact economic progress. Based on a wide range of theoretical and empirical research, it is now widely agreed that the government may use legal and non-legal means to address impediments to entrepreneurship relating to skills, information, the market, and infrastructure.
A country’s government may encourage entrepreneurship by enacting broad-based or targeted measures. Tax, labour, and market policy are just a few examples of general policies that help keep a healthy entrepreneurial climate (Audretsch & Belitski 2017. Policies produced by a specific institution for a specific organization for a specific purpose are known as “specific policies.” Promoting economic development via entrepreneurship is a tool that policymakers may use. An increase in entrepreneurship and the creation of small and medium-sized businesses results from changes and upgrades in economic development policies.
Finance
When it comes to launching a business, one of the biggest concerns is whether or not the company will be able to weather the storms of financial instability. This means that the availability of capital is critical to the emergence and development of new businesses. When money is available, ideas can be put into action, and opportunities can be taken advantage of. External finance, which includes bank loans, investment from individuals or investment companies, selling shares, or obtaining grants, is a need for many small business owners. Østergaard & Marinova (2018) proposed many rounds of venture capital funding for entrepreneurship. In order to prove the concept, seed financing is used, followed by start-up financing, which is used to develop a product and begin marketing it. The remaining stages of financing are used for commercialization, managing working capital, expansion, and eventually investing in the companies that are going public soon.
Finance plays a critical part in the growth of micro, small, and medium-sized businesses. Molina & Maya (2017) findings on the link between entrepreneurship and finance are based on 30 years of time series data. They show that for entrepreneurship to flourish, a country’s citizens must have easy access to credit. Enough research shows that supporting entrepreneurship with financial resources may boost job creation and productivity, positively influencing the economy.
Liguori et al., (2019) has addressed processes through which financial systems affect long-term economic development. Financial systems impact the design of entrepreneurship that improves productivity in four ways. Financial institutions evaluate an entrepreneur’s chances of getting a loan for an optimistic project. It uses its resources to pay for these kinds of endeavours (Liguori et al., 2019). As an incentive for investors to innovate, it reveals the potential advantages of doing so rather than continuing to sell the same old products. Better financial systems increase the likelihood of successful innovation and, as a result, economic development. Even though money is the lifeblood of every commercial endeavour, it is not the only source of life. Different variables may aid entrepreneurship development and growth in a nation. Entrepreneurial success can only be achieved if a person has access to cash or financing.
Culture
When launching a small business, it’s critical to think about a company’s culture in order to identify which products and services would appeal to its target audience. An organization must have a well-established culture that its members will accept. Many studies have been done on the impact of culture on entrepreneurship (Isenberg, 2011). Several academics have made the connection between culture and entrepreneurship. When it comes to defining what it means to have a “culture,” it’s important to remember that it encompasses more than just a group of people. Even inside a business, all employees are expected to adhere to a set sort of behaviour known as corporate culture. Studying numerous articles published in publications that publish entrepreneurial material and cultural behaviour and the effect of culture on entrepreneurship, Liguori et al., (2019) analyzed the link between culture and entrepreneurship empirically.
When formulating policies to encourage entrepreneurship, policymakers should consider society’s culture. Cultural elements beyond policymakers’ control may restrict the efficacy of policies. An alternative strategy for stimulating long-term entrepreneurial activity would be to design regulations that consider certain cultural biases in a given culture (Duan et al., 2020). Entrepreneurship and an entrepreneurial attitude can only flourish in an environment where the government is actively working to foster a business-friendly and supportive culture at all levels, from national to regional. Across national and regional borders, cultural variations seem to impact entrepreneurial potential. A “supportive” national culture may, in theory, lead to an increase in a country’s entrepreneurial capacity.
A person’s cultural background significantly impacts their proclivity towards self-employment. Certain cultures seem to be more encouraging to entrepreneurs than others, notably those less risk-averse and individualistic. Entrepreneurship was more prevalent among those with an internal locus of control than those with an external locus of control. Further study on the impact of culture on entrepreneurship has a long way. As a result, we feel that many unknown aspects of culture and its effect on entrepreneurial success may be studied.
Supports
This encourages new businesses to grow and succeed by providing the necessary resources to do so successfully. According to Liguori et al., (2019), institutions have a critical role in encouraging domestic entrepreneurship. According to their study report, in developing nations, changes in the quality of institutions seem to have a greater influence on entrepreneurial quality and quantity than in developed ones (Liguori & Bendickson, 2020). There has been a lot of research done on the influence of social networks on entrepreneurship. Entrepreneurship will flourish and develop more rapidly if more people are encouraged. Maysami & Elyasi (2020) remarked that the success of entrepreneurship is based on the sort of support systems received, regardless of whether it is about coming up with new ideas or about the survival or expansion of an existing business. Mubarak et al. (2019) also argued that the lack of institutional assistance in communist nations has led to a lack of entrepreneurial development.
There are vastly different settings and institutional systems for entrepreneurial activity in developing nations compared to rich ones, according to Malecki (2018). This suggests that entrepreneurship has less support in developing countries and a less favourable climate. Evidence of China’s economic catching-up may be seen in creating entrepreneurial-friendly institutions. China has outpaced India in the entrepreneurial arena because it has more institutional support. Entrepreneurs’ self-confidence and motivation are bolstered when various resources are available. Corruption, credit availability, social integration, social standing, meaningful democracy, free trade with low tariffs, enterprise zones, readily available technology, and strong telecommunications and distribution networks are essential factors in fostering entrepreneurial spirit and entrepreneurship.
Human capital
Human capital is the whole total of an entrepreneur’s education and experience and the abilities they may put to use in the context of a certain venture. To calculate a company’s or country’s overall financial health, the phrase “human capital” is used in the Oxford English Dictionary. When it comes to business, human capital is equally as important as physical capital: it’s a company’s stock of human resources, such as its workforce’s skills and abilities (Cho et al., 2021). Since the success of an organization generally relies on having access to talented people resources, these definitions demonstrate the relevance of human capital in an entrepreneurial environment. An entrepreneur’s success is based on their capacity to think outside the box and social skills. According to Cho et al., 2021), if you are interested in starting your own business, you may utilize human capital to forecast whether or not you’ll succeed.
There can be no sustainable expansion and development of entrepreneurial activity without effective training and development of human capital. Entrepreneurial endeavours, therefore, are dependent on human capital for their success (Spigel & Harrison, 2018). Simply because entrepreneurs and professionals are both included in human capital, it is not appropriate to see it only through the lens of entrepreneurship. Entrepreneurs and professionals contribute to an economy’s human capital pool. In contrast to entrepreneurs, professionals have gained a wealth of information and use it to assist commercial transactions. For a thriving economy, both talents are essential.
To develop competent and motivated entrepreneurs, entrepreneurship and entrepreneurship education directly impact. For example, much entrepreneurial human capital and outcomes have been linked to entrepreneurship education and training books. We found that entrepreneurship-specific education positively affects the establishment of entrepreneurship-specific human capital. There is greater tolerance for risk and failure and a greater willingness to accept the creation of new riches because of the success tales of those who have gone before.
Markets
According to the definition above, “market” refers to a client base, distribution channels, and business networks in a certain area. First-time buyers are essential for entrepreneurs because they provide valuable feedback on the product or service quality; they also act as a good source of referrals for future clients (Colombo et al., 2019). For every company, we need consumers who support us, especially in entrepreneurship, where a new product or service can be readily disseminated in the market if pioneer clients give it a positive review. When a new product has its first successful reference, other pioneers in the industry begin to form their own opinions about it. Start-ups must have delighted customers who will spread the word about their new product. In industrial marketing, customer references have played a key role.
According to Ofili (2014), around half of the money we spend on a product is related to distribution. Distribution is the other half of marketing. The distribution channel plays a vital role in getting things from manufacture to consumption. Due to digital marketing, the distribution routes and methods for digital items such as books, newspapers, magazines, movies, music, and visually created material have been fundamentally transformed. Due to innovation, greater technological sophistication, and other environmental changes. Among these developments are Short et al. (2010) private labels, internet marketplaces, and the arranging of multiples.
Business networking on a local level is critical, especially for start-ups that lack local expertise and experience and need to establish connections with existing networks. Through the growth of commercial partnerships with various network partners, embedding into an existing network occurs Østergaard & Marinova, (2018). Market acceptability is critical to the smooth running of a new firm in a given location. The first step in starting a new company with others is to gain the trust and respect of some people in the network. As a result of their research, the authors concluded that a new firm must establish crucial commercial contacts, be approved by its partners, and gain a name and reputation to join the relevant network.
There are numerous advantages for new businesses that can build strong networks, including saving money by combining resources; gaining access to additional customers; having associates who act as advocates for their new product or service, and reducing the start-up’s dependence on other sources of financing. Tiny businesses require strong business networks to be mobile and competitive. Small extrovert organizations may acquire access to long-term affiliations and business connections by specializing in local content, according to Molina & Maya (2017 initial remark in his study paper. When it comes to a person’s power, information, expertise, and money, a network is one of the most potent assets that someone can own.
Conclusion
When a country’s entrepreneurial activities expand and develop, they are heavily influenced by the surrounding environment. Isenberg’s model of the entrepreneurial ecosystem was used to illustrate the relationship between entrepreneurship and its development and that of other entrepreneurial areas in this article. Entrepreneurial development and success are linked to many entrepreneurial ecosystem components, but there is currently a paucity of data on how strongly these components are linked. The entrepreneurial ecosystem itself is interconnected and interrelated. Still, there are no clear directions or intensity of their connectivity for example, how and in what ways culture impacts human capital, or how policy avails the access to finance. Still, it paves the way for future research direction.
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