Entrepreneurship Development and New Business Start-Ups: Challenges and Prospects for Ghanaian Entrepreneurs’

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Introduction 

The advent of globalisation and neo-liberalism in the 1980s, together with the implementation of liberalisation and 

deregulation policies have led to an accelerated growth in the private sector in most developing countries, and 

Ghana is no exception. Hence in the last three decades, the emergence of globalization and neoliberalism or the 

free market ideology, and the scale and scope of institutional support from governments, international donor 

organisations and private sector financial institutions for entrepreneurs and SMEs development have increased 

significantly. The increasing awareness of the problem of poverty and inequalities in the global system, coupled 

with the success of microfinance initiatives elsewhere such as the Grameen bank concept, has attracted attention 

worldwide and to a greater extent, encouraged entrepreneurial initiatives on a global scale to establish SMEs both 

in the formal and informal sectors. This in turn, has led to considerable increase in entrepreneurship activities both 

on a small, medium and large scale in various countries across the world, promoted by the free market system and 

facilitated by the capitalist ideology.  The increasing drive for new business start-ups is to achieve high performance 

output and competitiveness for profit maximisation and help accelerate national economic growth. These 

entrepreneurship trends have encouraged governments in many countries to support entrepreneurs who take the 

necessary risk to set up SMEs for profit making and to contribute towards the development of the economy.  

A striking difference between entrepreneurship and management is that while entrepreneurs are risk-takers and 

usually more specialised in business start-ups, managers manage the business to grow and expand it. In managerial 

decision making, a manager’s strategic orientation focuses on factors that are inputs in formulation of the firm’s 

strategy, whereas entrepreneurial strategy is a set of decisions, actions, and reactions that generate and exploit an 

opportunity to set up a new business venture. Entrepreneurial orientation toward opportunity is one’s commitment 

to take action on potential opportunities and the ability to access the attractiveness of a new opportunity. 

However, the two concepts and roles are complementary because some entrepreneurs have excellent managerial 

and leadership skills, as some managers could also turn out to be excellent entrepreneurs. Both entrepreneurs and 

managers must be proactive and learn from failures. Despite the risks involved in business start-ups, many reasons 

compel people to become entrepreneurs. People with entrepreneurial mind-set has the ability to rapidly sense, act, 

and mobilize resources to take advantage of opportunities, even under uncertain conditions. A potential 

entrepreneur’s intention to act is based on his/her entrepreneurial intentions or motivational factors that influence 

individuals to pursue entrepreneurial outcomes, coupled with their entrepreneurial self-efficacy or one’s conviction 

that he/she can successfully pursue entrepreneurial outcomes. Some key features of entrepreneurial activities that 

generally motivate people with entrepreneurial mind-set to become self-employed include freedom of owning 

one’s business, profit orientation, working in a hassle-free environment, having financial independence or control 

over compensation, satisfaction gained from the self-esteem as a fulfillment of creating something you can claim 

ownership to, control over working conditions, and job security to improve their livelihoods and lifestyles. In 

Ghana, many entrepreneurs set up SMEs because it creates a sense of practical optimism, since people believe that 

going into business is an effective means of escaping poverty, becoming self-sufficient through financial stability 

and/or prosperity.  

Entrepreneurship simply means firms' risk-taking activities in terms of business start-ups, facility investment, 

businesses expansion, foreign branch opening, and managerial innovation. Unlike the public sector and other 

 

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private sector enterprises such as philanthropic organisations, entrepreneurship is the capacity and willingness to 

take the risk to develop, organise and manage a business venture for the purpose of making profit, by doing things 

differently and/or better. Business start-ups is a significant indicator for measuring entrepreneurship and its 

characteristics. 

Taking entrepreneurial action involves the creation of new products, services or processes and entry into new 

markets. It also involves risk-taking because the risks and uncertainties in business start-ups are numerous and 

varied. An entrepreneur’s cognitive adaptability describes the extent to which he/she is dynamic, flexible, self-

regulating and engages in the process of generating multiple decision frameworks, as well as how he/she is 

focused on sensing and processing changes in their environments and then act on them (Hisrich, Peters & 

Shepherd, 2013). There is a growing body of literature on the different perspectives on entrepreneurship. Many 

studies on entrepreneurship have examined entrepreneurs’ individual characteristics such as personality, 

educational background and attainment, ethnicity, and other relevant characteristics and some studies focus on 

investigating the business factors of entrepreneurship by closely examining entrepreneurs’ business financing, 

venture capital, industrial relationships and organisational mechanisms (Mack & Qain, 2016). Other researchers also 

interested in population, gender, industrial structure, geography (urban and rural), human/social capital, research & 

development (R&D), creativity and regional economic studies have dealt with local environments and regional 

variations that influence entrepreneurship and the relationship between business start-ups and location factors. 

(Acs &Armington, 2006). Whereas in many developed countries, areas with more specialised and educated 

workforce is a crucial location factor for entrepreneurship and venture business set ups (Ki, 2008), in developing 

countries like Ghana, business start-ups could be based on population distribution and the rural/urban dichotomy, 

which is mainly due to factors such as availability of sources of funding and market opportunities. Hence, urban 

areas are more likely to attract more business-start-ups than in the rural communities.  

Other studies on entrepreneurship and entrepreneurial orientation tend to focus on business processes in terms of 

combining the factors of production (capital, machinery/equipment, labour), and on business start-ups, risk-taking, 

and the ability to effectively manage a business by seeking investment and market opportunities for profit-making 

or financial independence.  Griffin, Ebert and Starke (2013) for example, define entrepreneurship as “the act of 

assuming the risk of business ownership with the primary goal of making profit through growth and expansion. 

This view implies assuming risk and responsibility in taking the initiative to design and implement a strategic 

business plan to take advantage of a business opportunity to create value”. The idea of creating value is a process 

through which entrepreneurs identify opportunities, allocate resources to create value for customers, and is often 

through the identification of unmet customers/public needs or opportunities for change in customer demands and 

wealth creation.  

Zimmerer, Scarborough and Wilson (2008), also define an entrepreneur as “one who creates a new business in the 

face of risk and uncertainty for the purpose of achieving profit and growth by identifying significant opportunities 

and assembling the necessary resources to capitalise on them.”  Suleiman (2006) on the one hand, argues that 

entrepreneurship is “the willingness and ability of an individual to seek opportunities for investment to create and 

run a business successfully,” while Drucker (2006) on the other hand, states that entrepreneurship is a distinct 

feature, whereby an entrepreneur is a person who understands business opportunities and its benefits, by 

 

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harnessing scarce resources and utilising them profitably. He/she makes progress in the productivity of resources by 

searching changes (or risks), responding to, and employing opportunities. This study adds that the concept of 

entrepreneurship also entails the dynamism, capacity and willingness to organise social and economic mechanisms 

to turn resources and situations into incremental wealth creation by operating and managing a business venture, 

and assuming all its attendant risks to create value, while seeking profit as the ultimate reward. Furthermore, it 

involves various aspects of an entrepreneur’s social, economic and spatial activity patterns, and denotes companies’ 

risk-taking tendency in terms of business start-ups, facility investment, and expansion of new and existing 

businesses and managerial innovation.  

In the modern global economic system, entrepreneurs creatively exploit changes in the world to put their dexterity 

and ingenuity into practice for economic gains. Where others see problems, entrepreneurs recognise opportunities. 

Opportunity is situational, since there are no rules regarding where and when an opportunity might appear, so it is 

dependent on variable circumstances, in that a problem is one example of an opportunity that entrepreneurs need 

to be able to recognise. Another opportunity is a changing situation or trend. As Mariotti and  Glackin (2010) 

noted, the five roots of opportunity in the marketplace that entrepreneurs can exploit are: problems that a business 

can solve; changes in laws, situations or trends; inventions of totally new products and services; competition in 

terms of ways to beat the competitor on price, location, quality, reputation, reliability, or speed through which one 

can create a very successful business with an existing product or service; and finally technological advances 

(scientists may invent technology, but entrepreneurs figure out how to use and sell it). SMEs involve both registered 

formal enterprises and informal unregistered enterprises, and are defined in varying terms because of the diverse 

nature of the sector.  

Generally, the three criteria employed in the classification of SMEs in this study are the firm’s asset base, its 

employee size and annual turnover. The National Board for Small Scale Industries (NBSSI) for example, applies both 

the ‘fixed asset and employee size criteria, and regards an SME as one employing 29 or fewer employees (NBSSI 

Report, 2011).

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The objective of this studyis therefore to discuss the challenges that hinder entrepreneurship and SMEs 

development and how governments in frontier and emerging economies could increase their financial and logistics 

support for new entrepreneurs and SMEs in order to help empower them in their business start-up strategies to 

develop and transform their business ideas into an opportunity. This could be achieved through state agencies’ role 

in facilitating initiatives to help entrepreneurs gain the necessary competencies (knowledge, values, and managerial 

skills) essential for understanding business start-ups and SMEs management for productivity, sustainability and 

profitability leading to wealth creation and economic growth. To this end, the questions to be addressed in this 

study is, what challenges face Ghanaian entrepreneurs and SMEs and how could they be addressed appropriately? 

How could new entrepreneurs and existing SMEs be supported by governments to make the private sector the 

engine of growth in developing countries’ economies? Following from the above questions, the study argues that 

                                                           

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  The  United  Nations  Industrial  Development  Organisation’s  (UNIDO)  standards  for  classifying  large  firms  in 

developing countries are those with more than 100  employees, medium firms in the range of  20-99 employees, small 

firms  as  having  5  to  19  employees,  and  micro  firms  with  less  than  5  staff.  The  NBSSI’s  criterion  is  in  line  with  the 

UNIDO criteria and Steel and Webster’s (1990) definition of SMEs in Ghana as one with 30 or less employees. 

 

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regardless of the financial assistance for business start-ups and training new entrepreneurs receive from 

governments in some developing countries, the support is woefully inadequate to enable them compete with SMEs 

and large firms in developed countries. As a result, many entrepreneurs and SMEs face a myriad of challenges such 

as lack of financial support and the necessary training to manage their enterprises successfully. The 

recommendation section in the study discusses the uniqueness of the relationship between business start-ups and 

business management on how to start, grow/expand the business, and how governments in developing countries 

could support private sector capacity building for new entrepreneurs and existing SMEs, which is the engine of 

growth for every economy, and some key tips on how potential entrepreneurs could transform their business ideas 

into reality. 

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