Challenges Faced by Entrepreneurs in Funding their Business

This report discusses the challenges faced by entrepreneurs while funding their business. It covers the role of entrepreneurs, managing funds, maintaining relationships with stakeholders, and challenges faced by entrepreneurs such as fewer network contacts, no safety net, and research for investors.

Entrepreneurship and Innovation

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Introduction
An entrepreneur is a person who sets up business by taking the financial risk to earn profit. It
has been seen that the starting up a new business is always a challenge for entrepreneurs in
terms of finance (Kuratko, 2016). In this report, the discussion is made on the challenges
which are faced by the entrepreneur while funding the business.
Role of Entrepreneur
The entrepreneurs have to perform many functions in order to develop the business at the
international level.
Managing Funds
The main function of an entrepreneur is to manage the funds before and after starting the
business. There are different sources from which the entrepreneur funding the business such
as shareholders, bank loans, vendors and many others.
Maintain the relationship among stakeholders
Develop a strong relation among the stakeholder is essential for the entrepreneur to earn a
high profit in the business. The entrepreneur has to maintain the relationship with the
stakeholders so that they can help in maintaining the funds for business.
Challenges face by Entrepreneur
Fewer Network Contact
It has been seen that the entrepreneur requires the funds before establishing the business. An
entrepreneur can manage the funds from stakeholders such as shareholders, customers, banks.
This method is beneficial for the old entrepreneurs because they have more contacts in the

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market to bring the money but new entrepreneurs face the challenges as per few contacts. A
new entrepreneur has less contact in the market that is why it is difficult for them to arrange
the money from the stakeholders. New stakeholders accept less number of requests of new
entrepreneurs due to the lack of guarantee and warranty factors.
No Safety Net
As discussed above, new entrepreneurs do not have any items which can be held on a
mortgage as a warranty and guarantee. It is a challenge for an entrepreneur to take the loans
from banks because banks provide loan on mortgage. Entrepreneurs struggling to raise funds
for their start up and at the same time, they require to hold some property or other material
for a mortgage to funding the business. Banks cannot provide loans without any safety to new
entrepreneurs. There are some entrepreneurs have a large amount of debt in their business
and at the same time they require more amount that will be a challenge for them to bring
money in the poor financial condition.
Research for investors
It is the biggest challenge for entrepreneurs to find investors. Entrepreneurs have not enough
funds to start the business that is why it is required to search the investors who can invest in
the business with the no safety requirement. There is less number of investors who can invest
in the new business that is why it is the biggest challenge to find the investors while funding
the business (Vilner, 2018).
Conclusion
From the limelight discussion, it has been seen that the entrepreneur faces the challenges
while funding the business. Funding is the main function of the entrepreneur because it is

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necessary to bring money before and starting the business in order to survive a long time in
the market.

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References
Kuratko, D.F. (2016) Entrepreneurship: Theory, process, and practice. Cengage Learning.
Vilner, Y. (2018) 6 Financial Challenges That Young Entrepreneurs Face. [online]
Available from: https://www.inc.com/yoav-vilner/6-financial-challenges-that-young-
entrepreneurs-face.html [Accessed 27/2/19].

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