The Financial Purpose of an Entrepreneurial Venture

Topic: Enterprise
Words: 1494 Pages: 6


Entrepreneurs are often considered national assets cultivated, motivated, and rewarded to the greatest extent possible. Entrepreneurs can change the way people live and work. If successful, their innovations can improve the population’s standard of living. In addition to creating wealth from their entrepreneurial ventures, they also create jobs and conditions for a thriving society. To a large extent, developed countries solve problems with unemployment precisely at the expense of small businesses. By developing small businesses, the state ensures the growth and development of a market economy. The reduction or increase of this system will significantly reduce or reduce (respectively) economic development. A new enterprise needs financing, and, therefore, entrepreneurs must decide where to get financing, how to invest, and how much to borrow. It is an essential factor that will ensure the stable development of the enterprise and take into account all risks.

Financial Reasons for Developing an Entrepreneurial Venture

The company’s financial goals are the material results of the organization’s activities planned by managers. An increase in the growth of dividends, income, stock price, return on investment, the enterprise’s creditworthiness, and timely cash receipt (Charles et al., 2020). One of the most important goals of the company is financial viability. Issues related to profitability are always of primary importance; therefore, each workplace is considered for its efficiency and payback. Financial goals reflect the desired financial results and parameters of the enterprise’s financial condition. Their priority is interpreted about the company’s life cycle stage, internal resources, and the current market situation. The stages of the life cycle of the business sphere in which the company operates can distinguish by types of strategic development – from aggressive growth of the share of this business in the market to consolidation or withdrawal from the market and liquidation.

A company at the growth stage has the potential that can capitalize. To do this, you need to attract resources to present a new product and service to consumers. Investments in network scaling and infrastructure improvement are also needed. This stage is characterized by negative cash flow indicators and low investment profitability. Since the investments invested in development often exceed the income received by the organization from the sale of goods and services in the current market. Financial goals at this stage can express a percentage increase in sales volumes and a reduction in costs.

A stable state of the company characterizes the stage of business maturity, investment and reinvestment are still necessary, but there is a high return on investment at this stage. A qualitative indicator is the preservation of market share and its annual growth. Investment projects are aimed at increasing profitability by improving processes and eliminating shortcomings. At the company’s maturity stage, management sets standard financial goals, linking them with the business’s profitability growth.

Challenges Facing Entrepreneurs in the Competitive Business World

Entrepreneurship is characterized by a high dependence on the external environment. In carrying out its activities, the business is influenced by several factors that restrain its development. These factors can be divided into general (of a general economic nature), territorial, and private (mainly of an organizational nature). One of the reasons that complicate the activities of entrepreneurs is related to legal registration and registration, as well as the opening of a bank account.

Financial (investment) problems of capitalization of individual liquidity savings: difficulties in legalizing capital for the registration of an enterprise, the problem of forming start-up capital, and establishing relationships with suppliers.

People are attracted by the desire to become entrepreneurs when looking at successful business people. However, they look at the results of these people and do not know what kind of struggle they had to fight to succeed. The path to becoming an entrepreneur is not the easiest. A person will do something that no one has done before (Farzana et al., 2019). In addition, future entrepreneurs will have no one to go to in difficult times. They will have to face all the problems and solve them as they appear (Sherine et al., 2019). When entrepreneurs enter the market and start to grow, they face competition. Competitors will be not only new enterprises but also experienced companies. Giant companies mainly use the services of inexperienced entrepreneurs. Either they are trying to buy them out or become their competitors. As a business owner, an aspiring entrepreneur is obliged to respond to his competitors and offer ideas to fight competitors.

Common Challenges Entrepreneurs Face in UAE

The Arab Emirates has long turned from a backward country with substantial oil reserves into a powerful state with weight on the international market with a developed economy. The UAE is adored by migrant workers because there are always many vacancies waiting for them, tourists for the fact that only in this country you can find out what a royal vacation is, and entrepreneurs. After all, it is here that they have created excellent conditions for their activities. Many of the most famous foreign companies want to open a business in the UAE is not an accident. The Government of Dubai has provided all entrepreneurs with equal opportunities, eradicating bureaucracy and corruption in the echelons of power and turning the tax department from a bribe-taker and extortionist into an effective state body operating exclusively within the framework of legislation.

Suppose people show due perseverance and diligence, competently draw up a business plan quickly, and issue a package of documents according to the requirements. In that case, businessmen will instantly experience the advantages of entrepreneurial activity in this region (Yananto, 2019). The entrepreneurial activity of foreigners here is limited to free economic zones. They are ideal for international activities; businessman will have to look for a local sponsor, make him the owner of 51% of the shares, and give 20% of the annual profit. Even if this partner performs nominal functions, his material remuneration will have to be spent. Business from scratch, without start-up capital in Dubai, is impossible.

They will have to buy a license corresponding to their activity type, pay a state fee for entering into the register of entrepreneurs, rent a room (the area of which directly depends on the number of resident visas for your employees), and purchase the necessary equipment. Dubai banks do not provide loans to non-residents to start a business. The Arab Emirates is a Muslim country and, even though the attitude towards non-believers here is incredibly tolerant, especially when compared with neighboring countries (for example, Saudi Arabia).

Financial and Economic Factors affecting Entrepreneurship Development

Several factors influence the development of entrepreneurship at the present stage. The influence of these factors is complex. Whether it is positive or negative, the further development of entrepreneurial activity and entrepreneurship’s role in the country’s economy depends (Rizwan & Mohamed, 2019). From the point of view of entrepreneurs, the most significant impact on the activities of organizations is the price of raw materials, materials, and other production costs. Inflation and the growth of tariffs for services of natural monopolies seriously affect the cost of goods and services and require businesses to constantly optimize their activities while being virtually out of the control of the business community.

The factor of availability of financial resources is, first of all, the opportunity to receive credit funds and investments for business development. Today, banks are actively developing lending to small businesses, but not everyone can yet afford to receive funds from a credit institution. Credit institutions make severe demands on the financial condition of enterprises and the availability of liquid collateral, which is difficult for most small and medium-sized companies, especially startups – aspiring entrepreneurs. There is extreme difficulty in obtaining a bank loan in the presence of a high-quality business plan but in the absence of collateral. It is the most potent deterrent to financing and promising development of the segment of small enterprises.

Further, among the factors that have the most significant impact on entrepreneurship development is the availability of human resources. The personnel problem is noted as relevant for most industries. Entrepreneurs need to have qualified specialists in the labor market whose skills would be adequate for the current tasks of the enterprise. To date, the labor market cannot meet the needs of companies either in qualified engineers and technical specialists.


Developing a business is very difficult and costly, but it can pay off and begin to flourish with the right approach. It is essential to show responsibility, plan, study all the risks and the relevant market to solve all the necessary issues. In some countries, it is essential to consider local peculiarities, ranging from climate to religious beliefs. The state and the banking system should expand the number of benefits and subsidies provided for start-up entrepreneurs and simplify obtaining them. In the future, this will bear fruit, which will lead to an improvement in the welfare of citizens and the solution to such a problem as unemployment. The quantity and quality of the goods and services provided will become bigger and better.


Charles, Y. M., Anthony C. K. and Dean A. S. (2020). ‘Entrepreneurial motivation: A review of the literature and an agenda for future research’, Journal of Organizational Behavior, 41(2), pp. 115-143.

Farzana, C., David, B. A. and Maksim B. (2019). ‘Institutions and entrepreneurship quality’, Entrepreneurship Theory and Practice, 43(1), pp. 51-81.

Rizwan, T. and Mohamed E. B. (2019). ‘Behind the veil: the challenges and impediments encountered by women entrepreneurs in the United Arab Emirates’, International Journal of Entrepreneurial Venturing, 11(3), pp. 258-282.

Sherine, B. et al. (2019). ‘Business education and entrepreneurial skills: Evidence from Arab universities’, Journal of Education for Business, 94(5), pp. 314-323.

Yananto, M. P. (2019). ‘Analysis of factors affecting the interests of SMEs using accounting applications’, Journal of Economics and Business, 2(3), pp. 818-826.

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