Tuesday, September 26, 2023

Key challenges and good practices for finding solutions

Entrepreneurship faces various challenges and these can be classified between environment and entrepreneur. In either case, you have to prepare to overcome them, but the first thing to do is to identify each one.

Environmental challenges refer to tasks that require targeting and intervention at the level of authorities, while entrepreneurs are those that may have their own or individual solutions.

One of the challenges that has an environmental but also personal aspect is the generation of business ideas. For example, because it has been found that very few new products and services are created, and this will be part of the personal environment, but the external challenge may be that the motivation to undertake is the urgency to generate income, David Casasola, director of the Global Entrepreneurship Monitor Project-GEM- with the Francisco Marroquin University (UFM), explains the research.

Within the GEM measurement, in 2022, 67% of entrepreneurs believe the product or service they sell is not new and only 5% believe it is. This result suggests that the way business ideas are generated usually begins by copying what a neighbor is selling or copying the letter of another person or business because they heard that ” It did well.”

To this is added another element, which is that most entrepreneurs only sell within their own community, so businesses are practically cannibalized in a small market with many sellers who do not differentiate themselves. And compete on the basis of price, not value.

What is the matter?

With the above in mind, Casasola indicates that there are different ways to compete, but in all of them it is important to focus on the market you want to serve, innovating your product and adding value, among other details. Is. However, this requires a little more elaboration of the business idea.

For this, the previous stages must be attended to, including creation of product prototypes, negotiations, small changes and changes in presentations, designs, packaging, etc.

To improve the generation of his business idea, the entrepreneur must explore, prepare, explore the possibilities of the Ministry of Economy and support programs for entrepreneurship in the municipality of Guatemala and in other communities in which centers of entrepreneurship have been created About who offer these types of tools so that people can refine their business ideas.

There are also organizations that focus on serving women and youth who want to start a business, but need to have a more concrete idea of ​​a product or service before “jumping in.”

However, the need to generate quick or immediate income should also be kept in mind, which can be for many reasons. And in some cases, action by authorities will also be required, such as access to education, services, formal jobs, etc.

Casasola said, “As more formal employment opportunities appear, perhaps the urgency with which one seeks to set up a business to generate income will be different and perhaps there will be time for entrepreneurs to better refine their ideas.” would be a more oxygenated place.”

Some entrepreneurs cite challenges that may be a reflection of the characteristics of their businesses or how they started. For example, problems with finding clients; to make oneself known; to package or display your products in a more attractive way; to manage and organize your finances; to keep good accounts; and many others that are part of the challenges for which aid programs should be sought.

civil insecurity

Insecurity in the environment challenges and this is due to the fact that entrepreneurs are more visible as they attend to their business in a physical location or must make themselves known or promote their business or product, leading to crime. becomes more likely. victim.

An entrepreneur is 1.5 times more likely to be robbed than someone who isn’t, as GEM measures, as 18% of entrepreneurs indicated they’ve been a victim of crime, compared to 12% who do not do so.

Crimes that have a strong connection with commercial activities include extortion and assault. These are issues that require targeted intervention at the level of officers such as prioritization of works, as the crime scene may be geographically located.

In the case of an individual entrepreneur, you should also pay attention to other crimes such as fraud and be careful not to have a reliable payment verification mechanism or receive counterfeit money. In all cases, the relevant complaint should be registered.

Another environmental challenge, Casasola points out, is that the physical infrastructure is not considered to support the new businesses. Most entrepreneurs report that 50% of their customers are located in their community, town or village, and 35% in their municipality.

This suggests that the characteristics of businesses may not allow them to enter large or even overseas markets, but it is also a case of productive infrastructure not being in a position to support new businesses.

According to the Logistics Performance Index prepared by the World Bank, Guatemala ranks 115th out of 167 countries in terms of the quality of productive and logistics infrastructure. In this case, action is also required by the authorities with the intention of facilitating competitiveness so that entrepreneurs can serve other markets or at least not increase costs, but create opportunities.

informality

The third environmental factor is that it remains complex and costly for some business profiles to formalize and remain formal. In this case, GEM found that 60.5% of businesses were not registered and the main reason is that they do not see the benefit of doing so (40%); compliance is costly (20%); Or do not know how to do it, the procedures are complicated and take time.

There may be entrepreneurs who, despite having the capacity to formalize, feel they do not have the incentive, and others who wish to do so do not have the capacity to register because they do not have the people to hire. Guide those who do not have knowledge or wealth.

The point is that formally public sector entities can open the door to funding to be able to provide or sell services. There is an element of public action that is required to participate in the sector so that they are registered, including the facilitation of procedures and mode of operation.

little money

Finally, in order to increase the scale of the enterprise, low accessibility and availability of financing is considered. Casasola points out that there are sources of funding, but the profiles of the businesses it is directed at do not necessarily match those of micro-businesses that do not have a clear value proposition and that are not formal.

Furthermore, those who have the means to finance are probably focused on slightly more sophisticated businesses, aspects that must be analyzed to derive the relationship between supply and demand.

Those who cannot obtain financing typically operate with their own resources or seek credit options in informal markets that charge high interest rates and are not regulated; Or they have collection mechanisms that put the business and even the life of the entrepreneur and his family at risk.

The measures that are needed go in two ways, such as financial education and giving a little perspective to some of the entrepreneurs so that they can do the numbers and analyze what kind of credit they are taking and what the implications could be. , and what actions should be put into practice to get a loan that is less expensive in terms of interest rate. At present, many commercial banks are already betting on the creation of lines for servicing enterprises.

Therefore, it is suggested to find out about the recent legislations approved in the Congress of the Republic, such as the Bankruptcy Law and the Movable Guaranty Law (which helps access to loans with non-property guarantees), instruments that perhaps many Micros are not attractive to businesses, but for a certain profile of small companies they may be, so those options should be explored.

World Nation News Desk
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