Small business

Common External Barriers to Start-up and Survival
EFFECTIVE POLICIES FOR SMALL BUSINESS - © OECD 2004
101
MOTIVATION
- Cost of moving from
informal to formal sector
- Welfare and security in
existing jobs
- Societal view: too risky 
- Societal view: difficult,
needs special qualities
- Anti-entrepreneurial
culture 
- Low status of
entrepreneurs 
- Control by criminal
elements
IDEAS/MARKETS
- Declining or stagnant
general demand 
- Low local demand
- Little chance to explore
ideas with (potential)
customers 
- High market entry barriers
- Poor patenting laws
- Poor legal framework for
licensing ideas
- No incentives to exploit
research-based
intellectual property
- Procurement decisions
large firms made
elsewhere
- Lack of incentives to add
value within supply chains
- Privatisation and
downsizing processes of
large (state) firms
unfavourable for small
enterprise development
- Poor physical access to
markets
RESOURCES
- Inadequate financial
institutions for the sector
- Inadequate physical
infrastructure for small
enterprise development 
- Poor ‘easy’ means of
funding asset acquisition
such as leasing)
- Inadequate payment
guarantees
- Corruption, bribery and
mafia operations’
- No bankruptcy laws
- No credit rating systems
- No or poor property rights
regulation 
- Bank and other finance
tied to over-sophisticated
business plan formats.
ADMINISTRATION AND
ORGANISATION
- Lengthy and complex
registration processes
- Lengthy and complex
licensing systems
- Poor property rights and
transfer regulation
- Complex and overlapping
tax regulation
- Overlapping local and
national legislation 
- Heavy social/welfare
insurance charges
- Inadequate understanding
of small business by
officials
- Corruption and bribery by
officials
- Absence of or weak
support for compliance
with regulations, such as
lawyers and accountants
- Inadequate contract law
- Lack of formal regulation
on duties and rights of
directors, shareholders,