The task of promoting entrepreneurship through business startups has often been relegated to government organs. Most people are usually discouraged from venturing into business by economic uncertainty. Furthermore, most individuals are afraid of venturing into business because they do not believe that they possess the qualities of an ‘entrepreneur’. An Entrepreneurship Center (EC) is a good example of a tool that might help prospective entrepreneurs to form their own startups. It is important to note that most modern entrepreneurs are inclined to start new forms of business as opposed to opening familiar ones. This paper details the methods of financing a prospective EC as well as the risks involved when opening one.
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Research indicates that “cities and states have been devoting a great deal of energy and resources towards the promotion of entrepreneurship, yet entrepreneurship has been sputtering” (Briffault 368). Consequently, one of the most practical methods of financing an EC is by soliciting money from government organizations. Previously, governments and other public organs only used standard methods of promoting entrepreneurship such as tax breaks and quotas (McQuaid 910). Funds from governments can be channeled to the EC where competent private individuals can come up with methods of promoting startups. On most occasions, “the public sector typically lacks the expertise to evaluate and support entrepreneurs, and business incubators may only serve to prop up businesses that would not otherwise survive” (Kuratko 578). An EC is an incubation center for nurturing businesses that will generate a lot of revenue for government organs in future. Therefore, it is easy to convince public organs to finance the EC.
Another method of financing the EC is through donors. Donors can be in form of individuals or companies from the private sector. The private sector dedicates a significant amount of its resources to research-based activities. Most startups operate from a research point-of-view. When opening an EC, the research argument can be used to solicit finances from the private sector. It is a common misconception that startups are often in competition with established businesses. However, most businesses are realizing the importance of collaborating with startups. Businesses such as Microsoft and Facebook Inc. have funded and acquired hundreds of startups with the view of enhancing their portfolios. Consequently, it should not be difficult to source finances from private sector donors because helping startups is in their best interest.
There are several risks that are expected when instituting an EC. First, prospective startup entrepreneurs might misunderstand the social-enterprise of the EC. For instance, some individuals might think that the EC is an entity that is meant to exploit potential entrepreneurs. An EC is a place where people who have unique ideas meet and this might expose them to malicious individuals who would want to ‘steal’ their initiatives (Finkle, Kuratko, and Goldsby 185). Consequently, all terms and conditions of engagement should be clearly laid out as far the EC’s mode of operation is concerned. In addition, the EC should “create tools for navigating entrepreneurship’s legal and regulatory framework” (Yunus 48). Another risk that is associated with establishing the EC is lack of a strategic plan. Without a strategic plan, the EC’s chances of success are quite low. It is important to formulate a sound plan for the EC where all stakeholders’ interests are catered for (Zahra, Newey, and Shaver 113). Stakeholders might include the government, donors, and entrepreneurs.
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Kuratko, Donald F. “The emergence of entrepreneurship education: Development, trends, and challenges.” Entrepreneurship theory and practice 29.5 (2005): 577-598. Print.
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Zahra, Shaker A., Lance R. Newey, and J. Myles Shaver. “Academic advisory boards’ contributions to education and learning: Lessons from entrepreneurship centers.” Academy of Management Learning & Education 10.1 (2011): 113-129. Print.