Problems Faced by Rural Enterpreneurs
Rural entrepreneurs face large number of problems like illiteracy, risk factor,
improper training and experience, limited purchasing power and tough
competition from urban entrepreneurs. Various problems faced by rural
entrepreneurs are following.
1. Scarcity of funds: Rural entrepreneurs find it difficult to get external
funds due to the risk involved in the rural industries. Moreover, the
procedure to avail loan facility is too long and cumbersome that its
postponement often disappoints the rural entrepreneurs.
2. Competition: Rural entrepreneurs face tough competition from large
scale industries and the urban entrepreneurs as their cost of production
is high due to high input cost.
3. Middlemen: As there is small market available for the rural
entrepreneurs so they are heavily dependent on the middlemen for
marketing of their products and thus Middlemen exploit rural
entrepreneurs.
4. Legal formalities: As Rural entrepreneurs are illiterate and ignorant so
they find it extremely difficult to comply with various legal formalities in
obtaining licenses. Moreover, the legal formalities are so complex and
time consuming that it become tough for the entrepreneurs.
5. Procurement of raw materials: Arranging raw material is really a
tough task for rural entrepreneur. They may finish with poor quality raw
materials and can also face the problem of storage and warehousing.
6. Risk element: Rural entrepreneurs face tough competition from large
scale industries and do not have large market available for them.
Therefore, have much less risk taking capacity due to shortage of
financial resources and external support.
, 7. Lack of technical knowledge: Rural entrepreneurs suffer a problem of
lack of technical knowledge because rural people are illiterate and lack
of training facilities which acts as hurdle for the rural development.
8. Lack of infrastructural facilities: Though government is putting its
best efforts but the growth of the rural entrepreneurs is not very healthy
due to lack of proper and adequate infrastructural facilities.
9. Poor quality of products: Rural entrepreneurs produce inferior quality
of products due to lack of availability of standard tools and equipment
and the availability of poor quality raw materials.
10. Negative attitude: The environment in the family and society is not
favorable to support rural people to take up entrepreneurship as a
career. It may be due to lack of awareness and knowledge of
entrepreneurial opportunities.
Advantages of Rural entrepreneurship:
● Abundance of Resources: Rural areas have abundant natural
resources including land, water minerals and solar power and also wind
power. Moreover land is easily available at cheap rates.
● Easy availability of labour: Semi skilled and unskilled labour is easily
available and low wage rates increases the vulnerability of rural areas
for industrialization.
● Tax advantage: Tax burden in rural areas is low, which increases
competitive strength of rural industry.
● Low investment: Rural industries can be started with low investment
and Production can be done at a less cost due to easy availability of
resources.
● Employment: Rural Industries generate jobs in the developing
countries like India where the unemployment is the main problem.
● Slow down urban migration: As rural industries create jobs, therefore
it slows down the rural- urban migration which creates problems in
urban areas.
Rural entrepreneurs face large number of problems like illiteracy, risk factor,
improper training and experience, limited purchasing power and tough
competition from urban entrepreneurs. Various problems faced by rural
entrepreneurs are following.
1. Scarcity of funds: Rural entrepreneurs find it difficult to get external
funds due to the risk involved in the rural industries. Moreover, the
procedure to avail loan facility is too long and cumbersome that its
postponement often disappoints the rural entrepreneurs.
2. Competition: Rural entrepreneurs face tough competition from large
scale industries and the urban entrepreneurs as their cost of production
is high due to high input cost.
3. Middlemen: As there is small market available for the rural
entrepreneurs so they are heavily dependent on the middlemen for
marketing of their products and thus Middlemen exploit rural
entrepreneurs.
4. Legal formalities: As Rural entrepreneurs are illiterate and ignorant so
they find it extremely difficult to comply with various legal formalities in
obtaining licenses. Moreover, the legal formalities are so complex and
time consuming that it become tough for the entrepreneurs.
5. Procurement of raw materials: Arranging raw material is really a
tough task for rural entrepreneur. They may finish with poor quality raw
materials and can also face the problem of storage and warehousing.
6. Risk element: Rural entrepreneurs face tough competition from large
scale industries and do not have large market available for them.
Therefore, have much less risk taking capacity due to shortage of
financial resources and external support.
, 7. Lack of technical knowledge: Rural entrepreneurs suffer a problem of
lack of technical knowledge because rural people are illiterate and lack
of training facilities which acts as hurdle for the rural development.
8. Lack of infrastructural facilities: Though government is putting its
best efforts but the growth of the rural entrepreneurs is not very healthy
due to lack of proper and adequate infrastructural facilities.
9. Poor quality of products: Rural entrepreneurs produce inferior quality
of products due to lack of availability of standard tools and equipment
and the availability of poor quality raw materials.
10. Negative attitude: The environment in the family and society is not
favorable to support rural people to take up entrepreneurship as a
career. It may be due to lack of awareness and knowledge of
entrepreneurial opportunities.
Advantages of Rural entrepreneurship:
● Abundance of Resources: Rural areas have abundant natural
resources including land, water minerals and solar power and also wind
power. Moreover land is easily available at cheap rates.
● Easy availability of labour: Semi skilled and unskilled labour is easily
available and low wage rates increases the vulnerability of rural areas
for industrialization.
● Tax advantage: Tax burden in rural areas is low, which increases
competitive strength of rural industry.
● Low investment: Rural industries can be started with low investment
and Production can be done at a less cost due to easy availability of
resources.
● Employment: Rural Industries generate jobs in the developing
countries like India where the unemployment is the main problem.
● Slow down urban migration: As rural industries create jobs, therefore
it slows down the rural- urban migration which creates problems in
urban areas.
