What are the factors affecting entrepreneurial growth?

Entrepreneurship is a long journey, what are the factors affecting the life of an entrepreneur and entrepreneurial growth?

Anne Aquino


1 Response

Wilson Twoon

Content Coordinator at Beamstart

There are many factors affecting an entrepreneur's growth trajectory. 

Here are some economic factors :

  • Raw Materials 
    Raw materials are the source of putting innovation into practice. With inadequate capital, it could potentially disrupt business processes, especially in the manufacturing sector.
One such example which can be seen is from the semiconductors shortage in the past years. The main cause of the semiconductor shortage is the supply chain issue. Shipping containers and ships are being held in ports unable to ship out semiconductors. 
With this issue, it has disrupted production across car manufacturing companies like Tesla and chip manufacturing companies like Nvidia. 

  • Capital 
    Capital mostly refers to machines, land, and funding from investors. With capital, it could allow businesses to grow exponentially from achieving economies of scale, investing in future projects, pursuing more environmentally friendly options. 
One of the examples is the rise in the flow of capital into US unicorn startups between 2020 and 2021. The startup industry experienced three times of growth in deal values from US$20 Billion in 2020 to US$70 Billion in 2021, increasing the new formation of startups from 100 new startups in 2020 to 340 new startups in 2021.

  • Labor 
    Labor is the physical manpower to operate machines and ensure business processes are run smoothly. With an unstable labor market, companies would have to increase their spending to recruit laborers into their businesses. 
One such phenomenon is the Great Resignation in the US. 4 million people, or 2.7% of US workers, quit their jobs in April. The Great Resignation mostly revolves around the service industry where workers would resign to find more flexible work options, especially when over 40 percent of the global workforce considering leaving their employer in 2021. Therefore, it has pushed companies to spend more to hire workers.

  • Market 
    Market refers to the market as the place where the future course of the business rests. If the entrepreneur’s product is able to serve the purpose and solve potential problems in the future, this means that the demand for the product is present in the market. This will increase sales of the business and promote funding, which will lead to entrepreneurial growth.
An example is the climate tech industry in 2021. According to PWC, the first half of 2021 saw over $60 billion flow to climate-tech startups, compared to $28.4 billion invested in all of 2020. With such funding, it could potentially lower the cost of deployment of climate techs such as solar panels.

Political Factors 

As of 2022, through the conflict between Russia and Ukraine, we can see numerous examples of how political factors can affect entrepreneurial growth on a macro scale. The examples include: 

  • Economic sanctions imposed on Russia by various countries, potentially disrupting businesses-based in Russia
  • The depreciation of Russia's currency, the ruble, potentially affecting the trade balance of Russia as they would need to spend more on imports 
  • Companies pulling out of Russia amidst sanctions imposed and uncertain surrounding the conflict 

To summarise...

These are only the external factors that could affect entrepreneurial growth. These factors may vary depending on the location of your business and the industry developments within your business. 

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