Factors Influencing Entrepreneurship Development
When studying the most successful entrepreneurs, we see that they come from various educational backgrounds and walks of life. However, there are some qualities and skills that many of these successful entrepreneurs display or acquire before becoming successful.
What can we do to help our children develop the skills and characteristics necessary to become successful entrepreneurs? There are many factors that can contribute to the development of these traits in young future entrepreneurs, so it’s important to consider the environment and factors in your child’s upbringing if you want them to be prepared for an entrepreneurial path.
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The economic situation that someone is raised in can play a role in whether or not they become an entrepreneur. For example, someone who is raised in a more desperate situation, with less access to capital and fewer opportunities to achieve financial success, might be more likely to become an entrepreneur because they see it as a way to improve their situation. This was the case for Daymond John, who has said that his financial struggles growing up led him to become the successful entrepreneur he is today.
This is why venture capitalists, angel investors, entrepreneurial incubators, and accelerators exist – to help entrepreneurs who need capital connect with investors who have the capital and believe in the ideas they’re funding.
Although it has become easier to start and build a company without funding from venture capitalists, many people still pursue this route. New technology has made it more affordable and efficient to create products, making it easier for people to enter the world of entrepreneurship. These days, you can even start following your dreams while you’re still in high school.
Finding qualified employees can be difficult for new startups, however sites like UpWork and Fiverr have made this much less problematic.
There are now many websites which allow companies to connect with freelancers from all over the world. This has made it much easier, faster and cheaper to find employees with the right skills for the job. No matter where you are located, you can probably find someone to do the work you need at a reasonable price.
The one factor that hasn’t changed is that you need to find the ideal target market for your idea, service, or product to make money. However, finding and accessing that market has become easier in recent years.
The existence of social networks, digital publications, and online groups and forums makes it easy and cheap to find and reach a target market. However, the target market must be large enough to ensure the profitability of the idea. Reaching the target market is easier today than it would have been ten years ago.
Social factors play a significant role in the likelihood of a person’s success in entrepreneurship, but they are not the only factor. The family background of the person and the encouragement from family can also play a big role in guiding a teen towards an entrepreneurial future.
A family background in entrepreneurship is one of the best ways to show a child the benefits of starting and running their own business. If a child has a positive experience with their own family business, they may be more likely to pursue their own ventures in the future. They may see the entrepreneurial route as less unconventional or risky.
Although having a family background in entrepreneurship can be helpful, it is not the only way to encourage a child to pursue their own business ventures. Education and encouragement are also important factors.
The U.S. education system has been training students for specific occupations for many decades, producing those with aspirations of becoming corporate employees, rather than entrepreneurs. However, that has changed drastically in the past decade.
More universities are teaching entrepreneurship to try and keep up with the demand for the topic.
The cultural views and values of entrepreneurship indirectly impact the prevalence of an entrepreneurial focus among the youth. The culture in the U.S. has come to highlight and reward entrepreneurship, especially in the past two decades which is good news.
We’ve seen a significant increase in entrepreneurship over the past few decades, with accompanying financial rewards for those involved. The “dot com boom,” the rise of billion-dollar startup companies (‘unicorns’), and the growth of social media influencers have all contributed to this trend.
This uptick in the popularity of entrepreneurship has led to universities paying more attention to it, and society as a whole having more respect for it. Our culture now values entrepreneurship, which is great news for young people who want to become entrepreneurs when they grow up.
The psychological factors that impact a person’s likelihood to become a successful entrepreneur are mostly inherited traits or instincts. While factors in a person’s upbringing, like creativity, risk tolerance, drive, and leadership, can influence these psychological factors, they are mostly deep-rooted personality traits that a person has no control over. Parents can try to help their children develop the skills and traits that would be beneficial, but ultimately it is up to the individual to decide which skills and traits they want to master and embrace.
Creativity and Ideas
Encouraging creativity in children and teenagers is important for foster entrepreneurship. To do this, brainstorming ways to improve current products or services is a good method. This could involve making them better, faster, cheaper, or in some other way.
By encouraging your child to use their imagination to come up with new products or services, or how to improve current ones, you’re helping them develop their entrepreneurial skills. This is a great way to get them into an entrepreneurial mindset, and by the time they’re an adolescent or teen, they may be coming up with ideas that could turn into real businesses.
My husband is from northern Europe and something that really struck him when moving to the US is our tolerance for failure. Growing up in his culture, security is highly valued. Coming here, where failure is seen as just one important step on the road to success opened his eyes to a different way of thinking. We both encourage our kids to think outside traditional school and work norms to find something they will love – and to be willing to change when you no longer love something. Encourage your children to take on new challenges so they can get used to unfamiliar situations and don’t fear of failing. Also, have conversations with them about business opportunities and the idea of taking calculated risks.
Leadership and Inspiring Others
An entrepreneur is someone who is in charge of turning an idea into a business. This means that they have to be able to lead and manage a team in order to be successful. Many entrepreneurs don’t have any formal leadership training, but this doesn’t mean that they can’t be successful leaders. It’s never too early to start learning about leadership and preparing to be a leader in your own business.
There are various ways you can help your high school student develop leadership skills. One way is by encouraging them to take on roles such as project leader in school, team captain in sports, or club president in their after-school clubs. Additionally, you can encourage them to pursue independent projects outside of school, in which they would be responsible for heading up the entire operation and learning real-life leadership skills. Here are some other leadership activities high school students can pursue.
(Be sure to check out our fun and accessible finance course for teens, pre-teens, and young adults at Learning Financial Independence. We devote many lessons to helping kids understand business finance and structure and encouraging them to start their own entrepreneurial journey.)
Environmental Factors Affecting Entrepreneurship
There are many factors that can affect whether or not someone becomes an entrepreneur, and these factors can have both positive and negative influences.
facilitative conditions = positive influences inhibiting conditions = negative influences
Factors of Environment that Affect Entrepreneurship
Entrepreneurship does not grow without environmental support.
People in every society have an environment that they live within. Because of this, entrepreneurship emerges in every society in the world.
There is debate among experts about what specific external elements of the environment affect entrepreneurial growth and development.
Many authors have written about the different factors that make up the environment for entrepreneurship.
According to William Naums, there are four conditions that must be met in order for a new business to be successful: financial backing, cutting-edge technology, strong management, and the ability to produce large quantities of whatever product or service they are offering.
Draheim (1972) identifies similar factors in the entrepreneurial environment.
Vesper and Albaum identify environmental factors that are responsible for entrepreneurial growth.
- Presence of local market contacts
- Presence of incubator industries
- Technical manpower resources
- Universities with the doctoral programs, funded research in engineering and physical sciences, and affiliated research laboratories.
- Research laboratories of major companies and government.
- Sources of venture capital.
- Favorable government policies (tax incentives, government, research contracts, industrial parks, and incubator facilities).
a. Opportunity recognition b. High level of energy and determination c. Self-confidence d. Innovativeness e. Risk-taking Cooper (1973) outlines the following environmental factors as important in entrepreneurial decisions; recognition of opportunity, high level of energy and determination, self-confidence, innovativeness, and willingness to take risks.
- example of entrepreneurial action,
- knowledge about entrepreneurship,
- societal attitudes toward entrepreneurship,
- salary and taxation levels,
- availability of venture capital,
- availability of personnel and support services,
- accessibility of customers,
- accessibility to universities,
- opportunities for interim consulting, and
- general economic conditions.
Danilov (1972) discusses how research parks and regional development contribute to entrepreneurship development.
The factors identified as most important are;
- availability of adequate above-average schools,
- availability of adequate land,
- availability of air transportation,
- proximity to universities,
- availability of technical manpower,
- proximity to corporate headquarters,
- cost of lump,
- cost of taxes,
- proximity to other research activities,
- proximity to recreational opportunities,
- proximity to new markets,
- availability of skilled labor and
- availability of a technical library.
The classical approaches categorize environmental elements into;
- Business environment.
- Political environment.
- Economic environment.
- Legal environment.
- Technical environment.
There are 12 common essential factors of environment which have been drawn by different experts. These key factors are summarized as follows: -There is a need for air, water, food, and shelter -There must be a proper balance of population and resources -The environment must be able to support the species that live there -There must be a variety of ecological niches present -There must be genetic diversity present -There must be a functioning ecosystem – humans must be able to adapt to the environment -The environment must provide for human needs -The environment must be stable -Humans must be able to conserve and manage resources
Tips for Entrepreneurial Success
Here are a few tips to ensure your child’s entrepreneurial success:
1 Embrace their uniqueness
It’s not a great idea to go into business exactly like someone else, but it’s okay to go into a similar business. Encourage your child to love what makes them unique and bring that perspective to their business.
2 Consider what makes them happy
What are your child’s passions? What makes them happy or inspires them? What problems in the world could they solve with their passions?
3 Find mentors
Encourage your child to find successful people in their chosen field and study their habits. If they can’t find a mentor in person, have them follow them online instead. Help them understand that success comes from taking specific actions and not just from talent.
4 Read, Read, Read
If your child isn’t already a reader, encourage them to become one. Audio books are fine, too! When I find a business book I love, I usually have a hard copy, and audio copy, and maybe even the ebook version. My brain processes them all in different ways. There are plenty of books out there on business knowledge and success that they can read to increase their proficiency in the area of their choosing and develop expertise far beyond their years.
5 Increase their knowledge
This is not about increasing their knowledge through formal schooling, but rather through various methods such as providing magazines, podcasts, apps, blogs, courses, and any other means you can imagine. Assist them in this by providing magazines, podcasts, apps, blogs, courses, and any other means you can imagine.
6 Boost their self-confidence
Help your child to recognize their strengths and encourage them to use them to be successful and make a positive impact.
7 Become action-takers
Once they have ideas for their business and are gathering information, they will need to take action to make their dream a reality. It takes more than dreaming to have business success. Your child will need to become an action-taker.
8 Make a business plan
Creating a written plan is key to ensuring your child’s success as an entrepreneur. Help them to articulate their vision for the business by writing it down, and encourage them to set SMART goals. Keep the plan straightforward by using bullet points.
9 Create value
Make sure your child knows that their business is about providing value to customers, not just selling products or services. This will help them to focus on customer needs and create a successful business.
10 Tell them to ask questions
As a business owner, you need to be constantly asking yourself questions about your business – who your customers are, what your product is, why you’re selling it, where you’re selling it, when you’re selling it, and how you’re selling it. Constantly reassessing the possibilities and threats to your business is essential to keeping it afloat.
11 Guide them to be patient
Encourage your child to be patient when growing their business. It will have its ups and downs, but it will be an adventure.
12 Develop a positive outlook
Although it may not seem like it at first, most businesses take quite a while to become successful, if they ever do. It won’t be a smooth process, and there are likely to be losses along the way. Try to stay positive throughout and help your child not to be discouraged by the inevitable unpleasant surprises.
There are many factors that play a role in a child’s entrepreneurial development and if society, culture, economy, and technology continue to change, entrepreneurship will become more accessible to people of all ages, socioeconomic statuses, and educational backgrounds.
If you want your child to be an entrepreneur, there are many programs available to help them learn the necessary skills. Check out our long-running program Learning Financial Independence