challenges facing entrepreneurs in emerging markets
table of contents:
introduction
lack of funding and investment
regulatory and legal complexities
lack of infrastructure
lack of skills and training
limited access to markets
weak entrepreneurial culture
technology and innovation challenges
introduction:
emerging markets are an environment full of both challenges and opportunities. despite their great potential for economic growth and expansion, entrepreneurs in these environments face many obstacles that may hinder the success of their ventures. these challenges range from lack of funding, regulatory complexity, poor infrastructure, and lack of access to markets. these markets are also characterised by many constraints that affect the ability to innovate and grow, necessitating the need for innovative strategies and solutions to overcome these barriers. in this article, we explore the challenges faced by entrepreneurs in emerging markets and how to deal with them to achieve success and sustainable growth.
1. lack of funding and investment
a) Difficulty in obtaining seed funding
– Due to the weak financial infrastructure in emerging markets, entrepreneurs face challenges in obtaining the necessary funding to start their ventures.
– Example: lack of microcredit or venture capital programmes to support startups.
b) high cost of finance
– In many emerging markets, interest rates are high, making loans expensive and unfeasible for some small businesses.
– Example: high cost of borrowing may lead to postponement or cancellation of business launches.
c) lack of diversity of funding sources
– Entrepreneurs in emerging markets rely primarily on bank loans, with no alternative financing options such as crowdfunding or venture capital investors.
– Example: the absence of local crowdfunding platforms makes it difficult for entrepreneurs to raise the funds needed to develop their projects.
2. regulatory and legal complexities
long bureaucratic procedures
– Emerging markets suffer from lengthy government procedures required to register companies or obtain licences.
– Example: it can take months to finalise administrative procedures compared to countries with developed markets.
b) constant legal changes
– Unstable legislation makes long-term planning difficult for entrepreneurs.
– Example: sudden changes in tax laws may affect the profits of startups.
c) lack of transparency and uneven application of laws
– In some emerging markets, the lack of transparency and uneven application of laws by government agencies creates an unstable business environment.
– Example: lack of clarity on licensing requirements in some sectors makes it difficult for entrepreneurs to comply with procedures and increases the risk of business closure.
3. lack of infrastructure
a) Poor transport networks and services
– Poor infrastructure hinders the delivery of products to markets and increases operating costs.
– Example: unpaved roads in rural areas make product distribution more difficult.
b) poor communications and technology
– Lack of access to high-speed internet and cutting-edge technology hinders the development of startups.
– Example: the launch of digital ventures is delayed due to poor internet networks in some regions.
c) lack of storage and distribution facilities
– The lack of modern storage facilities and efficient distribution networks makes it difficult to store and deliver high-quality products.
– Example: the lack of refrigerated warehouses affects companies working in the field of food products and increases spoilage rates.
4. lack of skills and training
a) Scarcity of skilled labour
– Emerging markets suffer from a shortage of technical and managerial skills needed by startups.
– Example: it is difficult to find specialists in programming or design in some regions.
b) lack of training and support programmes
– Lack of training programmes that help entrepreneurs acquire the skills needed to run their businesses.
– Example: there are no specialised training centres in areas such as project management or digital marketing.
c) brain drain
– Emerging markets face the issue of skilled talent migrating to developed countries in search of better job opportunities, creating a large gap in available skills.
– Example: local programmers and engineers leave to work abroad, reducing the availability of talent to support local startups.
5. limited access to markets
weak marketing channels
– Entrepreneurs find it difficult to reach customers due to poor marketing channels and digital infrastructure.
– Example: relying on traditional marketing methods in the absence of effective digital platforms.
b) unfair competition
– The presence of big players in the market makes it difficult for startups to compete due to lack of resources.
– Example: large companies offer significant price reductions, which hurts competition.
c) trade barriers and customs procedures
– Emerging markets impose trade restrictions and complex customs procedures that hinder the export or import of products, limiting the ability of entrepreneurs to expand beyond local markets.
– Example: high tariffs on the import of raw materials make the cost of production higher for startups compared to international competitors.
6. weak entrepreneurial culture
a) Fear of risk-taking
– Emerging markets suffer from a culture that favours job stability over taking the risk of starting a new venture.
– Example: young people are reluctant to start their own businesses due to lack of support or fear of failure.
b) lack of entrepreneurial awareness
– Lack of sufficient sources of information on how to successfully start and run a business.
– Example: lack of educational campaigns to familiarise youth with entrepreneurship as a career choice.
c) lack of role models
– Entrepreneurs in emerging markets face a lack of inspiring role models or role models that they can learn from or benefit from their experiences.
– Example: the absence of prominent local success stories makes young people sceptical about the possibility of achieving success through entrepreneurship in their local environment.
7. technology and Innovation Challenges
a) Lack of investment in innovation
– Lack of financial and technical resources hinders the development of innovative products and services.
– Example: lack of sufficient funding for research and development within startups.
b) lack of access to technology
– Lack of access to advanced technologies that can support business growth.
– Example: lack of access to artificial intelligence or cloud computing due to its high cost.
c) lack of infrastructure to support innovation
– Emerging markets lack incubators and innovation centres that provide technical and financial support to entrepreneurs to develop their ideas.
– Example: the lack of co-working spaces or tech incubators makes it difficult to network and develop innovative products.
valeo’s role in feasibility studies and business solutions
feasibility studies and business solutions are key factors that can help address the challenges faced by entrepreneurs in emerging markets. in this context, Valeo Feasibility and Business Solutions plays an important role in providing accurate, data-driven advice to support informed decision-making. by providing innovative solutions and a deep understanding of the local and global market, Valeo helps entrepreneurs identify opportunities and avoid potential risks, optimising the chances of success in complex business environments.
valeo provides comprehensive feasibility studies that highlight aspects such as finance, infrastructure, and legal requirements, as well as propose practical solutions that can help entrepreneurs overcome challenges such as lack of resources, lack of transparency, and innovation. by providing comprehensive solutions based on deep analysis, Valeo contributes to sustainable expansion and growth in emerging markets.
in conclusion, the challenges faced by entrepreneurs in emerging markets are significant barriers that may limit the growth of their ventures. however, these challenges can be overcome through thoughtful strategies and rigorous feasibility studies that help in making impactful decisions based on science and practicality. this is where Valeo Feasibility Studies and Business Solutions comes in to provide the necessary support to entrepreneurs, through in-depth studies and innovative solutions that meet the needs of the market. don’t hesitate to contact us via WhatsApp or call us for specialised consultations to help you build successful and sustainable businesses in emerging markets.
read more: the role of technological innovation in economic growth
