Barriers to Entrepreneurship
India formally embarked on entrepreneurship development programmes (EDPs) in 1970. Since then, there has been no looking back in this front. By now, the EDP in India has become a kind of national movement. It is worth mentioning that India operates the oldest and largest programmes for entrepreneurship development in any developing country. Not only that, the impact of EDP movement is borne out by the fact that the Indian model of entrepreneurship development is being adopted by some of the developing countries of Asia and Africa. However, in spite of such massive EDP in the country for over three and half decades, the progress made in the entrepreneurial front is not upto expectation and far from satisfactory. In fact, the progress made in entrepreneurship development in the country has been slow and tardy. This is because of barriers to entrepreneurship. This section is, accordingly, devoted to highlight the major barriers to entrepreneurship development in our country. For the sake of convenience of presentation, we have classified all these barriers into two broad categories:
1. Internal Barriers
2. External Barriers
We shall discuss these one by one.
1. Internal Barriers
The internal barriers mean those barriers which are relating to the individual or entrepreneur himself or herself. These include:
Lack of Enterprising Spirit
One of the important barriers to entrepreneurship is the lack of entrepreneurial spirit, i.e. risk-taking spirit or low level of need for achievement among the people. This is mainly because of two reasons. One, our country was under the foreigners' rule for more than two centuries during which our ancestors have to work as servants. This created a non-conducive environment for them to think to do something new of their own. Second, working as servants for centuries developed among the people
the psychology inclined to secure income irrespective of its level. In fact, this 'service culture' is very much in existence till today in the Indian society as a whole. People still prefer to a salaried job especially a government job even at a salary not sufficient for one's living than to go for starting one's own business to have an uncertain income. In fact, 'the service culture' has served as inertia for entrepreneurship and entrepreneurial culture in our country.
Ignorance of Entrepreneurship
Many people have still been ignorant of entrepreneurial career especially during career shaping and molding period. Most of you, if not all, might have been ignorant of entrepreneurial career till the other day. Similarly, most of your parents have also been ignorant of entrepreneurship and, therefore, hardly any of your parents would have suggested you to prepare for the career like entrepreneur. It is only recently that some attempts have been made to create awareness among people about entrepreneurship and entrepreneurial career. But what is still lacking in this process is "not striking the iron while it is hot." That is, the awareness about the entrepreneurship is not created during the career planning and shaping period. The introduction of this course on 'entrepreneurship' at the senior secondary level is most possibly the outcome of such realization.
Perception toward Entrepreneurship
In the past, we had class-formation within the society based on tasks performed by the people. The task performed by a social class symbolized its status in the society. Accordingly, people formed their perceptions about the different social classes. The business class was perceived as enjoying lower status and respect in the society than other classes like service class. Such perception still holds true in the Indian society at large. It is due to this perception of the people that a salaried person enjoys higher social status than a self-employed (businessman) person. Even the parents like to marry their daughters to a salaried person, irrespective of his low salary, but not to a self-employed person. Thus, the perception of people toward entrepreneurial career as socially inferior makes the people hesitant of opting for the entrepreneurial career. Yes, this perception has started changing but is still a barrier for many people to think to become an entrepreneur.
Fate-Believer
Many people in our society still believe in fate. They worship for fate not work for fate. They believe that what happens to them is already destined and is not under their control. They consider themselves as pawn to the fate. Such people are called "externals" having 'external locus of control'. Therefore, they do not like to take initiative and do exert efforts to achieve things to better their lives. Such a feeling obviously inhibits people to become enterprising, i.e. entrepreneur.
Inefficient Managerial Ability
Small business is one-man show. The same person is owner, entrepreneur, manager and worker. This means he/she has to look after every thing relating to enterprise. But, in most of the cases, the entrepreneur in small business himself/ herself is not competent enough in managing the business effectively and successfully. He/she may be good at something like finance, but not at all things like management, capital, etc. This leads to inefficient running of business and, in due course, the business falls sick. Inefficient management or mismanagement is considered as the primary cause of business sickness and, in turn, failure. Researchers report that sickness in small enterprises is normally caused by internal factors, in one way or other, related with the mismanagement in various operational areas of the business enterprise.
2. External Barriers
The barriers that are beyond the control of entrepreneur come under the category of external barriers to entrepreneurship. The major ones of these are discussed hereunder:
Infrastructure
It has been well realized that a minimum level of prior-built up infrastructure is required to undertake any economic activity like industry. However, there has often been lack or inadequacy of required infrastructure such as transport and communication more especially in rural and backward areas of the country. And, it is also accepted that financial incentives and subsidies cannot adequately compensate for the lack of infrastructural deficiencies. Very possibly, this is the reason why people are not interested to start industries in spite of various incentives and concessions offered by the Government to establish industries. This is how lack of infrastructural facilities has become a barrier to entrepreneurship in our country.
Capital
Capital, i.e. fund is life-blood for an industry. Small entrepreneurs generally lack in own funds. This is also indicated by their high debt-equity ratio. The Government has made provisions, through the commercial banks and financial institutions, to provide funds to the entrepreneurs to start industries. Nonetheless, the entrepreneurs do not get required funds due to various reasons. One, small entrepreneurs generally lack security and collateral to deposit with the financial institutions against the loan. Two, the fund sanctioned by the financial institutions, in most of the cases, are less than applied for. Three, the sanction of funds by the financial institutions, more often than not, involves inordinate delays leading to cost escalation. Thus, the enterprise suffers from the fund problem, better call it, 'malnutrition' from the day one, falls sick, and in the course of sickness, dies out. That is why, among other things, there is high infant mortality rate among small-scale enterprises. According to a sample study of 1,750 non-existing small-scale enterprises in Andhra Pradesh, Kerala and Karnataka conducted during the period September 1974 and March 1975, it was found that 25 per cent of the units died in the second year and more than 40 per cent of the dead units did not have a life span of more than two years.
Market
There is a saying: "If the proof of pudding lies in eating, then the proof of production lies in consumption, i.e. marketing." In other words, production has no value unless it is sold. But, the small-scale entrepreneurs due to their small size face problems in marketing their products. Small entrepreneurs find it difficult to face competition with their medium and large-scale counterparts, on the one hand, and lack of required resources to apply the modern marketing practices and sales promotional measures, on the other. Thus, many small-scale enterprises fail because of their inability to sell their products.
Procedural Complexities and Delays
Establishment of small-scale enterprises involves a complex procedure claiming long period of time. An entrepreneur needs to approach various agencies located at different locations to complete the procedural formalities. It is said that when a thief does theft, he has to face one inspector. But, when a person establishes an industry, he has to face some 20 inspectors. As such, long time is involved in completing the promotional formalities and getting the things done. Following is one such case of procedural delays.
Infosys Technologies Ltd. of N. R. Narayana Murthy took a year to get a telephone installed in his office at Bangalore, it took two years for him to get a licence to import a computer, and it took yet another year to modify that licence, because by the time he got the licence, he had a new model with double capacity of disc drive for half the price.
Delays in promotional formalities leads to cost overruns and time overruns and, thus, makes the proposal non-viable. Here is one such example.
M/s Saraswati Woollen Mills, Ranikhet (Uttaranchal) was registered in 1973 and it got an industrial licence two years later; it took about 9 years for it to build the factory shed, install the machinery and go into production. The evil effects of the procedural delays were seen in the cost escalation of the project from Rs. 32 lakh in 1973 to Rs. 56 lakh in 1981.
The Government has notified various incentives and subsides to attract people to start industries and also broad-base the entrepreneurship development in the country. But, the irony of the fact is that entrepreneurs do not seem interested to avail of these concessions and subsidies. The reason is that the procedural formalities are very cumbersome. The entrepreneurs get very small assistance for concessions and subsidies. Hence, they do not find the assistance the worth trouble and give up the idea of applying for the concessions and subsidies.
Social Barrier
History is witness that society serves as both facilitator and barrier to occupations including business/ entrepreneurship. Society assigns varying respect and status to various occupations held by the people. For example, people involved in business are regarded as less respectable than those in service. Such a manifestation is very much in prevalent in its various shades and shapes in the society. Most of the parents wish that their children should opt for careers like engineering, medical, research, defense, etc. Parents hardly wish business or entrepreneurship as a career option for their children. So much so, parents also prefer to marry their daughters to one who is serving, not to one running business. Yes, the social perception has started changing, but albeit slowly and slightly.
There might be yet more barriers to entrepreneurship development. However, the above mentioned are some of the major illustrative ones. Be that as it may, the barriers to entrepreneurship constitute non-conducive environment for entrepreneurship development in the country. Such an environment displays discouraging signals for prospective entrepreneurs to opt for entrepreneurial career.
Funding and Capital Investment
You will need to have initial capital to invest in CRM software, dialers, calling workstations and basic infrastructure. You will also need a working capital for at least three months, as typically required by any business in its initial months. The capital to be invested can also come from a client who wants invest in your call center (by having direct shareholdings) or by a 100 percent Foreign Direct Investment (which is permitted in call centers). Similarly, for operations, you could have a client who wants to sell his product or service through your call center.
Registration
This is probably the most important stage. Register your business under the Other Service Provider (OSP) category. The validity for this registration is for a period of 20 years. Also, register with NDNC (National Do Not Call Registry) and with Dot (Department of Telecommunications). Interconnectivity of two domestic call centers, within same city or in any part of the country, is also permissible - subject to further approvals.
Infrastructure
Typically, the size of a workstation should be between 30 to 60 square feet (super buildup area), connected with LAN, your chosen dialer, CRM, and centrally air-conditioned. Also, a small pantry area for recreational activities can be added.
Deploy a Dialer
You can choose from four different dialers:
1. Predictive Dialer: Dials automatically, but requires large amounts of data or good, contactable data-points
2. Progressive Dialer: Dials automatically with defined timelines to dial, good for response based dialing.
3. Preview Dialer: Dials at the discretion of the Telecaller.
4. Manual Dialer: Dials through a hard phone. Once that's done, you will have to develop and integrate the CRM with the dialer.
Service Level Agreements
It is important to define a set of service level agreements necessary for business efficacy, profitability, renewal of agreements from clients and scalability. You could also try and sell or cross-sell various products/services.
Outbound call centers are categorized further, based on the nature of operations being carried out in the facility:
Telesales
• Telemarketing
• Tele-renewals and response telesales
Of these, telesales and telemarketing are the most popular. However, the most profitable outbound domestic call center business line is telemarketing. If the customer is interested, the telecallers will generate an appointment for the field executive with the customer. In this model, the revenue targets per workstation can be fixed, variable or combination of both.
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