Need for Institutional Support to Entrepreneurs

Institutional support means the help — financial, technical, managerial, and other — that specially created government and public institutions give to entrepreneurs so that they can start, run, and grow their enterprises successfully. This support is especially important for small, tiny, and micro enterprises and for first-generation entrepreneurs who do not come from a business family.

Why is such support needed? An entrepreneur, particularly a new or small one, faces many difficulties that a single individual cannot easily overcome. Institutional support is needed for the following reasons:

1. Shortage of finance (capital). Most new entrepreneurs have limited savings of their own. Ordinary commercial lenders often hesitate to lend to a brand-new, small, or risky venture that has no track record or security. Special institutions provide loans, refinance, and softer terms so that lack of capital does not kill a good idea.
2. Lack of technical knowledge. Choosing the right machinery, technology, and production process needs technical expertise that a first-time entrepreneur may not have. Institutions supply technical guidance and consultancy.
3. Lack of managerial and business skills. Many entrepreneurs are good at their trade but weak in planning, accounts, marketing, or handling people. Institutions run training and entrepreneurship-development programmes to build these skills.
4. Difficulty in marketing the product. A small unit finds it hard to reach customers, compete with big firms, and sell to large buyers or the government. Institutions provide marketing assistance and help small units sell to government departments.
5. Problem of infrastructure. Land, factory sheds, roads, power, and water — the basic facilities a unit needs — are costly and hard for a small entrepreneur to arrange alone. Institutions develop industrial estates and provide ready sheds and plots.
6. Shortage and high cost of raw materials. Small units often cannot buy raw materials in bulk or on good terms. Institutions arrange scarce and imported raw materials for them.
7. Promotion of balanced regional development and employment. Governments want industries to spread to backward and rural areas and to create jobs. Institutional support channels help and incentives toward such areas and toward weaker sections, women, and educated unemployed youth. …