Identifying barriers to starting a small business

John-Paul Hatala

Background and User Information

Table Of Contents

ADMINISTRATION OF THE BEST^Ó

INTERPRETATION

STATEMENT OF THE PROBLEM *

THEORY AND RESEARCH *

Barriers to Starting a Small Business *

Determining Success and Failure of a Business *

Summary *

METHODOLOGY *

Sampling and Data Collection *

Instrumentation *

Data Analysis *

RESULTS *

Factor Analysis *

Table 1

Variable Loadings, Item Means and Scale Ranks Factor 1: Lack of Confidence *

Table 2

Variable Loadings, Item Means and Scale Ranks Factor 2: Personal Problems *

Table 3

Variable Loadings, Item Means and Scale Ranks Factor 3: Lack of Skills *

Table 4

Variable Loadings, Item Means and Scale Ranks Factor 4: Start-up Logistics *

Table 5

Variable Loadings, Item Means and Scale Ranks Factor 5: Financial Needs *

Table 6

Variable Loadings, Item Means and Scale Ranks Factor 6: Time Constraints *

Interpretation of factors *

CONCLUSION *

Table 7

Barrier Classifications *

BIBLIOGRAPHY *

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ADMINISTRATION OF THE BEST^Ó

The BEST^Ó is a self-administering assessment tool for use with individuals or groups.  The tool takes approximately 15-20 minutes to complete, depending on age and reading ability.  When administering the BEST^Ó to groups, the administer should follow these steps:

Before You Start

Make sure that each participant has a copy of the booklet and a pencil.  The individual should be informed of why they are taking the test and how the results will be used.  Instruct participants to  write directly on the BEST^Ó.  It is important that all participants write there names and other information on the front of the tool.  Review the instructions on the front cover and explain to the participants that the BEST is not a test and there is no right or wrong answers.  Encourage them to take their time and rank the statements as honestly as possible.

Review Step One

Review the scoring procedures for step one.  Make sure that each participant scores each statement using the 5-point Likert scale, 5 being greatly effects them, 4 has an effect, 3 some effect, 2 little effect and 1 no effect.

Scoring

Instructions for scoring the BEST^Ó, although on the tool itself, may want to be reviewed with the participants to ensure that it is done correctly.  

There are six categories and scoring simply requires each section to be added from step one and transfer to step two.  Once scores are totaled for all categories, scores can then be plotted on the graph.  Comparison of other individuals who have taken the BEST^Ó can be looked at once the scores are plotted.

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INTERPRETATION

The BEST^Ó provides information about the barriers effecting the ability to start or operate a business.  Scores can be used to determine which barriers are effecting the participant more than others.  Scores that are below those of the  average scores already plotted on the graph represents that they are experiencing fewer barriers than most entrepreneurs.  Scores that fall around the same area as those on the graph means they are in the average range.  Those that are placed above the graph represent that more barriers are being experienced than the average entrepreneur.

Respondents can use their scores to isolate specific barriers affecting their decision to start or run a successful business.  It is important that they take their highest scores and start to interpret the impact of the barrier.  It is normal for some participants to have higher scores than others.  The BEST^Ó can be used to develop an individualized action plan, working on minimizing the barriers which affect them.

Group interpretation can lead to the implementation of specific program content necessary to reduce the barriers affecting the class.  The trainer can calculate the means for each category allowing them to identify specific needs of the group.

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STATEMENT OF THE PROBLEM

An individual’s decision to start a business is a complex, multifaceted process. Theory and research in this area have focused on the development of parsimonious conceptions of factors that impel adults to participate in the execution of bringing their business idea to life (e.g., Finnerty & Krzystofik, 1985; Lim & Wee, 1992). This research is important to the development of our understanding of the important characteristics of what prevents individuals from starting a business but is limited by its inattention to factors that are negatively related to motivation to actually carry out this process. Recently, researchers have focused much more directly on enhancing our understanding of what makes an individual successful and the skills associated with operating a business. Research on barriers, though relatively immature as a field of inquiry, promises to add significantly to theories relating to the implementation of new business ventures.

In Canada, self-employment has become the single largest growth sector in the labour market. The small business sector in Canada accounts for over half of all private sector employment (Canadian Federal publication, 1994). The impact of small business on Canada’s economy is important for continued economic growth and job creation. The need to deal with removing barriers affecting an individual’s decision to start a business has become an important focus in an economy where the traditional labour market has come to depend on entrepreneurs for job creation. Much of the research in this area has focused on the identification of specific success criteria necessary to operate a business and the extent to which these generalize over various populations (Finnerty & Krzystorfik, 1985; Knight, 1996; Mariani, 1994). While barriers to successfully operating a business are discussed, very little attention has been directed toward the empirical evaluation of barriers associated with starting a small business and the obstacles individuals face in launching their new ventures.

The present study seeks to add to our knowledge about forces that negatively affect an individual’s decision to start a business by identifying barriers they encounter. By identifying barriers to starting a business, we stand to learn much about how an individual identifies, confronts and responds to decisions which may seem to be beyond their control. Such data will be instrumental in developing practical applications for helping individuals overcome unresolved barriers that potentially prevent them from starting a business. Correlating the identification of barriers to specific populations will allow program planners and administrators to effectively plan, market and deliver business start-up programs that help alleviate barriers.

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THEORY AND RESEARCH

Barriers to Starting a Small Business

Many descriptive surveys have queried individuals about the barriers associated with starting a business, and produced long lists of discrete items identifying what was necessary for an individual to succeed as a microenterprise. Like most of the smaller scale studies, two major surveys (Finnerty & Krzystofik, 1985, Knight, 1996) studied the process of entrepreneurship and identified success factors to operating a business as well as barriers to starting one. The Finnerty & Krzystofik study examined the comparison of characteristics and beliefs of individuals who form new businesses and those who do not. Their goal was to provide some insight into the entrepreneurial process by administering a survey questionnaire to 630 new business candidates. The respondents were individuals who received at least five hours of consultation from the Massachusetts Small Business Development Center (MSBD) between 1982 to 1983. The MSBD was developed to encourage the growth of small business and assist individuals in the entrepreneurial process.

Of the 630 questionnaires sent they received 161 or a 26 percent response. Of the 161 respondents, 112 had actually formed and were operating businesses when they received the questionnaire while 49 respondents had not formed a business. The questionnaire was designed to elicit three types of information. The first type of information consisted of individual opinions about the importance of three factors: the product, general market conditions and the environment, and personal considerations (Finnerty & Krzystofik, 1985). The second type of information sought was basic demographic data about age, sex, education, salary, size of family, and work experience. This information was collected in hopes of developing profiles of individuals who start businesses and those who do not. The final question asked was "Are you still considering going into business?" Information gathered from this question was used to determine differences between those that did not go into business, but were still interested in doing so, and those who did not go into business and no longer had any interest.

Demographic profiles were formed and Chi-square independence tests were used to determine any similarities between group profiles. The opinion profiles were analyzed by calculating: One, conditional probabilities; and two, F ratios. The F ratios were used to measure the effect of each opinion variable of whether or not someone formed a business. The results of this analysis provided insight into what barriers to business formation exist. For the group that did not go into business, squared independence tests were performed to determine the difference between those who continued to have interest in forming a new business and those who did not.

The study concluded with three factors rated most significant by a large majority of the respondents. One, the ‘market potential for the product’; two, ‘the ability to secure financing’; and three, ‘the rewards and satisfaction of forming a business’. The potential for the product was "very important" to 64 percent, and "important" to 24 percent, the rewards and satisfaction of forming a business was "very important" to 62 percent and "important" to 34 percent, and, the ability to secure financing was "very important" to 59 percent and "important" to 24 percent.

This study allowed the researchers to identify specific differences between those who started a business and those who did not. However, what the study lacked was its ability to elicit information regarding an individual’s ‘decision’ to start a business but was deterred by both intrinsic and extrinsic forces. Intrinsic barriers are those which are internal to the individual (i.e., family support, experience, confidence, etc.) and extrinsic barriers are those beyond the control of the individual (financial institutions, suppliers, etc.). The inability to identify specific barriers to business start-up has left a gap in our knowledge. The need to identify the barriers associated with starting a business is necessary for the development of programs to effectively deliver information that will alleviate start-up obstacles and specific barriers dealing with an individual’s decision to start a microenterprise.

In 1986, Knight conducted a study consisting of 1379 participants who intended to start a business. The study looked at individuals who expressed an intent to start a new business, comparing the experiences of those who actually started with those who did not. The respondents had either taken business related courses or used the services of the London Community Small Business Centre (LCSBC), a business incubator. They were evaluated to determine whether they actually started their business. The study specifically looked at the process of entrepreneurship and examined various issues relating to that process. The first issue was the ‘source of the idea’ for their new business. In most cases, the respondents, although not sure where the idea originated, identified the most common source as a previous job or employment. Other sources included ‘discussions with friends’, ‘suggestions by customers’ and ‘reading about new businesses started elsewhere’ (Knight, 1996). The respondents self-reported barriers to entrepreneurship, listing items such as ‘lack of financing’, ‘marketing problems’ and ‘attitude of banks towards startup companies’ as major obstacles. Planning, location, knowledge, time and the economy were acknowledged as secondary barriers. The study elicited these issues by using an open-ended survey allowing respondents to give feedback of why they did not choose to start a business. Although barriers were identified for this population, the study was conducted as a qualitative project and lacks the necessary empirical data required to identify barriers in a systematic way. The sample population was heterogeneous, and as a result, the study was unable to identify any specific demographic information. The need to identify barriers for specific groups may lead to the improved development of programs and devices to overcome the barriers individuals face starting a micro enterprise. Once these barriers are identified, program planners and administrators can effectively gauge the obstacles facing their specific audience and therefore be able to develop curriculum and strategies based on this information.

Research on barriers to starting a business has looked at specific issues relating to an individual’s decision to start the venture. Many barriers have been identified but have not been grouped in easily interpretable components that would allow program planners, business consultants and administrators to effectively identify the obstacles individuals face starting their business. The psychological barriers to starting a business need to be addressed in order to deal with issues relating to an individual’s decision to follow through with their idea. The possibility of a correlation between successfully overcoming start-up barriers to actually operating a successful microenterprise needs to be explored.

Determining Success and Failure of a Business

Researchers have been analyzing the entrepreneurial process in order to identify why some individuals are successful and others are not. Many researchers (e.g., Baker, 1986; Ibraham, 1986; Gasse, 1994; Knight, 1996) have conducted studies designed to illuminate the reasons why individuals start a business. These perceptions stimulated researchers such as Tan, Long and Robinson (1996) and Nagarajan, Lebrasseur and Blanco (1996) to systematically assess the forces that affect the ‘success’ and ‘failures’ individuals face in the world of entrepreneurship.

Two studies conducted in 1986 by Ibrahim and Ellis and Ibrahim and Goodwin on the failure and success of small business, identified factors associated with running a business. These studies provided evidence that ‘management skills’ are critical factors in both the failure and success of operating a business and provided important information in determining whether a business would survive over time. Accounting, cashflow analysis, and marketing were deemed as critical skills needed and conversely the lack of these skills were the major causes of failure. Successful business traits were identified as successfully managing cashflow, having a niche marketing plan, delegating and a having a simple organizational structure. The study concluded by identifying two sets of factor constructs under success and failure. These were labeled as follows: for success factors, entrepreneurial skills, management skills, interpersonal skills and environmental values, for failure factors entrepreneurial skills, managerial skills (incompetence) and non-controllable (less importance).

While these two studies have helped to clarify the nature of why a business succeeds or fails, they reveal nothing about the extent to which different individuals experience the forces inhibiting them from starting a business. This gap in our knowledge can impede the development of business start-up programs and may hinder the effectiveness of business consultations. It has become important to identify issues relating to an individual’s perception of what a successful business is and how they can acquire the necessary skills to achieve it. Both intrinsic and extrinsic barriers affecting an individual’s decision to start a business must be identified in order for them to contribute to society and the economy and commence their microenterprise.

In 1990, Gould and Parzen conducted an examination of women and entrepreneurship and identified seven barriers: ‘lack of socialization to entrepreneurship in the home, school and society’; ‘exclusion from traditional business networks’; ‘lack of access to capital and information’; ‘discriminatory attitudes of lenders’; ‘gender stereotypes and expectations, such as the attitude that women entrepreneurs are dabblers or hobbyists’; ‘socialized ambivalence about competition and profit’; and ‘lack of self-confidence’.

The study identified that women experience different obstacles to starting a business than men do. When working with these individuals, every effort should be taken to break down the barriers and develop action plans that will prepare them for success. In 1993, Kerka followed up to the 1990 study and provided an overview of support systems for women who require assistance in starting their business. The paper identified specific resources women can use to overcome barriers they face. For example, many programs are available to assist in the development of the business idea, such as, ‘The Women’s Business Ownership Program’ and the Women’s Business Ownership Act of 1998 which offers incentives to banks to make loans to these entrepreneurs. This study has helped identify barriers for women but lacks a systematic approach for effectively gauging the extent to which these barriers affect them. This would be a useful tool as it is necessary to target specific needs of a given population early in business development.

Although studies have been conducted to determine factors for why businesses succeed or fail, there has been a paucity of empirical research dedicated to identifying factors underlying barriers to starting a business. The need for this empirical research will contribute to the development of conceptual models and theories, which address entrepreneurship and an individual’s decision to commence with the process of starting a business.

Summary

Although empirical research on barriers to starting a small business has increased in recent years, it is deficient in at least five respects. First, most studies are limited to surveys of general populations. While such studies have helped to list discrete items of barriers to starting a business, they do not further our understanding of how to detect and measure them within a given population. Second, most of the research has been qualitatively self-reported, using various methods such as interviews and focus groups and have not been cross-validated with quantitative research data. Third, while different groups of individuals have different barrier profiles and barriers experienced by entrepreneurs may be differentiated in terms of these profiles, barrier scales have not been used or developed to determine an individual’s changes in perceptions regarding barriers to starting a small business. Fourth, almost no empirical work has targeted apparati designed to measure barriers to starting a small business for specific populations. Finally, almost no studies have examined the impact of barriers to starting a small business as an obstacle specifically confronting unemployed and laid-off workers to successfully contribute to the economy. Any related work that has been reported has been highly descriptive and less than empirically rigorous in generating conclusions about business startup barriers.

The present study is an attempt to overcome the deficiencies of prior research through the identification of barriers for unemployed individuals wishing to enter the world of self-employment. The population for this study has a high need for identifying the barriers to starting a small business and is demographically highly varied. Rapid changes in technology and in business economics mean that these would-be entrepreneurs must upgrade their existing skills and acquire new ones throughout their business lives. They must be prepared for the demanding role an entrepreneur faces in their quest to launch their new venture.

The specific research questions are:

1. What variables create barriers for individuals contemplating starting a business?
2. Do these individual barrier variables interrelate to form meaningful patterns?
3. Is there a difference between the types of barriers (intrinsic and extrinsic) individuals experience during business idea development?

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METHODOLOGY

Sampling and Data Collection

The survey population consisted of individuals who were presently receiving employment insurance or had done so within the last three years. All participants resided in the Greater Toronto area. Respondents were seeking information regarding the Self-Employment Assistance (SEA) Program at one of four orientation sessions offered by the Enterprise Centre at the Y.M.C.A. of Greater Toronto. Each session contained information about the SEA program and the necessary steps required to apply for the program.

In total, there were 121 respondents to the questionnaire administered during the sessions. Of the 121 individuals, males represented 60% of the total respondents. 44% of individuals were between the ages of 30 to 39, 33% between 40 to 49 years of age and 11.5% were between the ages of 18 to 29 and 50 or over. With regards to respondents last time of employment, 68% of respondents were employed within the last year, 17% within the last two years and 15% were not employed for over two years. The number of children per individual ranged from 55% of respondents with no children to 10% with three and marital status saw that 42% of respondents were single, 41% were married, 12% were divorced and 5% were separated.

Instrumentation

The principal measurement device was the Barriers to Entrepreneurship Success Tool (BEST). It was embedded in a questionnaire that also sought information about respondent background characteristics as we as the nature and extent of their inability to start their business. The first step in the construction of the BEST was the development of an interview schedule to obtain information on barriers to starting a business from a volunteer sample of 22 individuals. As well, a review of the literature regarding barriers to starting a business was conducted to determine any qualitative data that could be used for the questionnaire. Next, a prototype BEST was constructed by assembling, in random order, a list of barriers to starting a business identified through the interviews and literature search. After elimination of equivalent statements, 52 items were retained for pretesting. Item clarity was assessed by soliciting comments from 10 SEA participants, who in addition completed the prototype BEST. The prototype was subjected to standard item-analysis procedures, including an overall measure of internal consistency. Although overall reliability was high (alpha = .93), analysis of respondent comments and item statistics indicated that the scale could be both improved and shortened by revising or deleting certain items. Consequently, several items were revised and 17 of the original 52 were deleted. The alpha reliability coefficient for shortened, final version of the BEST was .91.

Respondents to the 35-item BEST were given a brief definition of starting a business followed by this statement ‘Although an individual has a good idea for a business it is sometimes difficult to start, even when they want to. Try to think of the time when you first wanted to start your business, but never did’. A sample item is given below. The respondents chose between 1 and 5, 1 being the least effecting my decision and 5 the most effecting my decision.

1. Because I was not confident of my business idea 1 2 3 4 5

Data Analysis

Because no firm theoretical basis existed for predicting the pattern of relationships among the BEST items, exploratory factor analytic procedures were employed. A principal components analysis, with unities in the diagonal of the correlation matrix, was employed to extract the initial factors. The number of factors retained for rotation was determined by the Kaiser criterion. To avoid multicollineraity and obtain the simplest possible factor structure (maximization of the variance of the squared loadings in each column of the factor matrix), diagonal rotation using the Varimax procedure was utilized to reach a final solution.

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RESULTS

Factor Analysis

Although nine of the factors initially extracted by principal components analysis met the criterion for retention (an eigenvalue of 1.0 or greater), a more parsimonious solution was pursued. Four terminal factor solutions representing 3, 4, 5 and 6 components were computed using the Varimax procedure. After inspection of the rotated factor matrices, the 6-factor solution was selected as the conceptually most meaningful representation of the data, accounting for 57% of the scale variance. Tables 1 through 6 present the BEST items, scale ranks (1-35), item means (mean importance scores) and factor loadings for each of the six factors. Only those variable loadings of .45 or greater were used to define a given factor. Overall scale reliabilities (alpha) for the six factors were .85, .86, .74, .83, .84, and .74 respectively. None of the BEST items loaded on more than one factor and the majority of the loadings were substantial (.60 or higher). Thus the final solution, with a factorial complexity of zero, met the most rigorous criteria of simple structure.

Table 1

Variable Loadings, Item Means and Scale Ranks Factor 1: Lack of Confidence

__________________________________________________________________________

BEST

Loading Item Scale

Variable Value Mean Rank

__________________________________________________________________________

Because there were too many competitors               .71     1.23     25

in my field

Because I felt I couldn’t compete with                         .70     2.08     24

existing businesses similar to my

idea

Because I was afraid of failure                                     .66     2.56     11

Because I did not like to prospect for                           .65     1.87     27

new business

Because I was not confident of my business                 .65     2.20   18

idea

Because I was not confident in my selling                     .48     2.21     17

ability

Because my friends did not encourage me                   .47     1.57     30

__________________________________________________________________________

Table 2

Variable Loadings, Item Means and Scale Ranks Factor 2: Personal Problems

__________________________________________________________________________

BEST

Loading Item Scale

Variable Value Mean Rank

__________________________________________________________________________

Because of family problems                                         .82     1.43     33

Because I had trouble arranging for child                     .77     1.41     34

care

Because of a personal health problem or                     .77     1.38     35

handicap

Because starting a business would take                         .74     1.59     29

away from time with my family

Because I wasn’t willing to give up my                             .52     1.49     31

leisure time

Because I felt I was too old                                                 .52     1.45     32

Because my family did not encourage me                         .49     1.70     28

__________________________________________________________________________

Table 3

Variable Loadings, Item Means and Scale Ranks Factor 3: Lack of Skills

__________________________________________________________________________

BEST

Loading Item Scale

Variable Value Mean Rank

__________________________________________________________________________

Because I needed to research my idea more                 .78     2.63     10

thoroughly

Because I lacked the technical knowledge                         .65     2.19     19.5

necessary to compete in my market

Because I felt I didn’t have enough                                     .64         2.17     21.5

experience

Because I was only competent in one or two                     .58     2.19     19.5

skills necessary to operate a business

Because I had more than one business idea                     .50     2.29     14

and wasn’t sure which one was most viable

Table 4

Variable Loadings, Item Means and Scale Ranks Factor 4: Start-up Logistics

__________________________________________________________________________

BEST

Loading Item Scale

Variable Value Mean Rank

__________________________________________________________________________

Because I did not know how to do a business                 .85     3.02     7

plan

Because I did not have the financial                                 .78     3.04     6

management skills necessary to operate

a business

Because I did not know the legalities of                             .76     3.08     5

starting my business

Because I didn’t know where to begin                                 .62     2.83     8

__________________________________________________________________________

Table 5

Variable Loadings, Item Means and Scale Ranks Factor 5: Financial Needs

__________________________________________________________________________

BEST

Loading Item Scale

Variable Value Mean Rank

__________________________________________________________________________

Because I couldn’t afford the start-up costs                 .86     3.62     1

Because I was unable to secure the proper                 .84     3.26     2

financing

Because I lacked the resources to begin my                 .81     3.25     3

business

Because I required immediate income                         .64     3.24     4

__________________________________________________________________________

Table 6

Variable Loadings, Item Means and Scale Ranks Factor 6: Time Constraints

__________________________________________________________________________

BEST

Loading Item Scale

Variable Value Mean Rank

__________________________________________________________________________

Because I did not have the time to start my                 .73     2.26     15

business

Because I was not willing to take the risk                     .61     2.66     9

of not having a regular income

Because I found a job                                                     .58     2.17     21.5

Because of the amount of time required to                  .53     2.34     13

start a business

_________________________________________________________________________

Only four items failed to load on any factor. These were items 6, 11, 18, and 35: "Because I couldn’t afford to take classes which provided information for the business startup," "Because I don’t enjoy the financial aspect of starting a business," "Because I wasn’t sure of the market my product or service was intended for," and "Because I had a poor credit rating." Mean importance scores for these items were 2.50, 2.24, 2.13, and 1.88 respectively, and scale ranks, also respectively, were 12, 16, 23, and 26. The overall mean importance score for the 35 item scale was 2.28, roughly equivalent to the scale descriptor "slightly effecting me".

Interpretation of factors

Factor 1. Lack of Confidence. The variables loading on this factor relates to the individual’s ability to deal with self-esteem and how it affects their ability to start their business. Items "because I was not confident in my selling ability" and "because my friends did not encourage me" had low loading values on this factor and appear to have little impact on an individual’s decision to start a business. The variables scoring highest in this factor were "because there were too many competitors in my field" and "because I felt I couldn’t compete with existing businesses similar to my idea". These factors fit the notion that competition was perceived as negative and the confidence necessary to survive in a competitive market was a critical barrier to staring a business. This factor was labeled "Lack of Confidence" and is identified as a "intrinsic barrier".

Factor 2. Personal Problems. The seven variables correlating with the second factor dealt with issues relating to an individuals personal life. Family problems loaded highest in this factor and represents the time necessary to deal with specific situations in an individual’s life. Being an entrepreneur does not yield the traditional support systems a regular worker would receives from their employer and as a result must compensate by developing their own support systems. This can be extremely intimidating for a new entrepreneur and issues regarding their personal life may interfere with the operation of the business and may ultimately cause the business to fail. These unresolved issues need to be dealt with in order for an individual to pursue their business idea and launch their new venture. This factor was labeled ‘Personal Problems’ and is identified as a "intrinsic barrier".

Factor 3. Lack of Skills. The items associated with this factor represent an individual’s skills as related to the logistics of starting a business. "Because I needed to research my idea more thoroughly" ranked the highest and can be related to an individual’s ability to research their idea adequately, thus reinforcing their initial thoughts of why the business should succeed. An individual’s perception of what skills are needed to run a successful business may determine whether they would actually start it. Consequently, this factor was named "Lack of Skills" and is identified as a "extrinsic barrier".

Factor 4. Start-up Logistics. These variables dealt with the process of starting the business. The four items in this factor ranked high on the BEST and thus lends to the notion that identifying a starting point represents a large barrier for individuals who have a business idea and want to initiate it. "Because I did not know the legalities of starting my business" ranked fifth on the scale and encompasses the process in which an individual must establish their understanding of what their business must abide by in order to meet its industry standards and be competitive in its market. Individuals contemplating starting a business may seem timid and unsure of what legal channels they must go through in order to start their business. This could include tax laws, contract signing, leases, trade marks, etc. Subsequently, this factor was labeled "Start-up Logistics" " and is identified as a "extrinsic barrier".

Factor 5. Financial Needs. This factor speaks for itself. All the variables on this factor scored highest on the scale and dealt with an individual’s financial needs. It was no surprise that these variables would score the highest, as the aspect of money and financing a venture tops the list of most individuals in many studies conducted over the years. The factor could be broken down into both personal and business related finances making it difficult for an individual to commence their business. This factor was named "Financial Needs" and is identified as a "extrinsic barrier".

Factor 6. Time Constraints. This factor dealt with an individual’s ability to acquire the necessary time to nurture their business idea. It also looked at an individual’s time with family and personal life and what starting a business would mean. Also, individuals who had other events or activities presently going on in their life tended to take precedence over their business idea and start-up. In most cases the individual has reexamined the time it would take to start a business and the actual time they have available or willing to commit, ultimately delaying their start-up. Thus this factor was called "Time Constraints" and is identified as a "extrinsic barrier".

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CONCLUSION

This study sought to elicit from individuals the barriers they face attempting to start their business. The six factors that emerged from the analysis of the BEST lends to the development of a barrier construct with well-defined and logical components. For the first time a study has provided empirical evidence to the identification of barriers to starting a small business for a specific population. The BEST has presented a logical sequence of potential barriers individuals face and has answered the first and second research question by illuminating the barriers an individual faces and has categorized them in an understandable and simplistic way.

In regards to the third research question, there is an obvious difference between those barriers that are business specific and those that are psychological. Those that were business specific barriers such as ‘Because I needed to research my idea more thoroughly’ and ‘Because I lacked the technical knowledge necessary to compete in my market’ were grouped together through factor analysis and lend to the notion that these extrinsic skills can be identified quite easily and help could be sought. The psychological barriers could be identified as factors ‘Lack of confidence’ and ‘Personal problems’ and perceived as intrinsic to the individual. The intrinsic barriers, when identified, need to be dealt with on an individual level. One-on-one counselling versus group work may prove to be more beneficial to alleviating those barriers and should be looked at closely. The need to identify both extrinsic and intrinsic barriers will assist individuals in developing their business startup. By grouping business startup barriers for specific populations, measures can be undertaken to break down the obstacles that these individuals face and allow them to work towards their small business goals. Table 7 below demonstrates the two classifications of barriers and how each one can be addressed.

Table 7

Barrier Classifications

Program planners and administrators must be able to identify the barriers associated with the population they are dealing with in order to assist in the process of self-employment. At present, an unstable economy has caused us to look for new means to develop employment opportunities for individuals. The need to look for alternate ways for people to make a living has created the need to facilitate the process of individuals starting a business and becoming self-sufficient. Not only does this help the individual achieve their goals but helps to strengthen the economy.

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BIBLIOGRAPHY

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Copyright © 1999-2006 by Evaluform.
Revised: January 19, 2006.