Enablers and Barriers of Entrepreneurship in the UK Tourism Sector

Keywords: Entrepreneur and entrepreneurship, Model of Entrepreneurship development, Types of entrepreneurship, Barriers of Entrepreneurship, Exploratory research, Entrepreneurship assignment writing services

Introduction – Research background

The tourism sector in the UK supports 1 in 10 jobs and has an important role in growth, bringing jobs and security for working people. Tourism sector in the UK contributed £60 or 4% towards entire economy and job growth rate is nearly double than other industries (Visitbritain.org, 2016).

According to Burn-Callander (2013), the young entrepreneurs in the UK lag behind when compared with rest of world because young people in the UK lack the courage to make their entrepreneur success. Moreover, 18% of 18-30 years old in the UK have the business idea but only 4% create a company. In the US, entrepreneurs starting a venture stand at 1 in 7 compared to the UK, where ratio stands at 1 in 17.

In the UK, young people perceived entrepreneurship as a poor career choice as well as fear of failure is the barrier to starting a new business. Therefore, the tourism sector is selected for this study because of high economic opportunities for the entrepreneurship (Hoogendoorn, 2016).

Research aims and objectives

The aim of this research is to analyse and evaluate the barriers and enablers of entrepreneurship in tourism industry in the UK. The goal is to identify barriers to entrepreneurship and how entrepreneurial individuals can achieve success for new entrepreneurial venture in tourism sector.

The company selected for study is new start up called ‘ABC’ which offers opportunity to evaluate the barriers and enablers of entrepreneurial ventures in tourism sector. The research objectives of this study are

  • To identify barriers of entrepreneurs and how to overcome these barrier to ensure success in tourism sector
  • To identify the influence or motivation factors which enable the new venture success in tourism sector
  • To propose recommendation for improvement of entrepreneurial activity in tourism industry to overcome barriers and exploit opportunities

Organisation profile – ABC

ABC is a UK based new start-up which aims to help customers to find right holidays at the right price. Company started its operation in 2014 and aims to become UK leading site to provide best self-catered holiday properties. Company offers a platform with the listing of short-term vacation rental properties which enable the tourist to search and select properties from owners (cottage booking websites). Company has a total of 16 employees and raised equity of $3.45 million in two financing rounds (Bloomberg, 2017).

Literature Review

Entrepreneur and entrepreneurship

Drucker (2014) stated that an entrepreneur is a person who identifies and exploits opportunities through gathering resources and creates a business which bears the risk and gets rewarded from profit from such venture. In entrepreneurship context, entrepreneur design firm to adapt to the environment and exploit opportunities and shape environment which resemble aspiration of person and endowment of resources to create wealth.

Onat, Anitsal and Anitsal (2014) elaborated that the integrative 4P framework (pioneer, perspective, practice and performance) of entrepreneurship is useful to understand the meaning of entrepreneurship. Pioneer denotes entrepreneur as a champion for innovation, perspective means entrepreneurial mindset, and practices showed activities of entrepreneur and performance represent the result of entrepreneurial activities and actions.

Model of Entrepreneurship development — Enablers

The diagram below shows the model of entrepreneurship development. According to Carland and Carland (2015), the orientation of entrepreneurs is survival and growth of company and entrepreneur culture, education, family, work experience as well as personal orientation fosters it. The success determinants of new venture include human capital (knowledge and skills) rather an investment. The supportive and cooperative environment includes ease of entry into industry and motivation of involvement for entrepreneur attract to the sector. The negative indicators include public perception and unresponsive of industry to the situation.

Entrepreneurial Environment - Learn Entrepreneurship

Morgan and Sisak (2016) added that the assistance for SMEs requires formalisation and improvement of operational efficiency, branding and marketing, product improvement and network support for market access. The institution support is important which includes a registration process, membership fees and ease of entry is critical for development of new ventures.

Figure 1: Model of Entrepreneurship development

Skills and Abilities

Products and Services

This includes personal characteristics of individuals gained from various life and work experience as well as developed through training and development. The success factor of entrepreneurs includes risk orientation, creativity and innovation, human relations, leadership and positive attitude (Chell, 2013).The skills and capabilities of entrepreneurs enable to identify opportunities in the market and leverage the supporting environment and resulting develop product and services to meet opportunities and needs identified (De Clercq, Honig and Martin, 2013).

 Types of entrepreneurship

According to Williams et al (2013), the tourism entrepreneurship can be classified in a number of ways such as growth-orientated, lifestyle and survivalist. The growth-orientated entrepreneurs are useful for both emerging and established ventures and this type is important for faster economic growth. Entrepreneurs should be supported to identify such opportunities related to technology. Lifestyle entrepreneurs provide owner-managers with an acceptable level of income and driven by non-economic factors.

Lifestyle entrepreneur serves in small niche segments through creating product and services initiated for balance way of life. Finally, survivalist also known as a marginal entrepreneur is based on opportunity rather a necessity. This operates with limited employment-creation or income generation prospects (Urbano and Aparicio, 2016).

Barriers of Entrepreneurship

The common barrier for new entrepreneurs is access to finance. The problem such as poor credit history creates problems accessing financial support from mainstream institutions. However, for entrepreneurship the source of finance is friends and family as well as venture capitalist. Moreover, the lack of information on support initiatives for entrepreneurship restricts the development of new ventures. The lack of social capital and limited access to information on support systems are barriers to entrepreneurship (Lofstrom, Bates and Parker, 2014).

The lack of entrepreneurship education such as basic understanding on how to start and run business and financial literacy are barriers to entrepreneurship. Moreover, the business operating environment such as business advisory services, legislation knowledge and access to market act as barrier to entrepreneurship. Furthermore, factors such as insufficient and inadequate information on tourism products, unnecessary regulation and access to government interventions affect the entrepreneurship activity (Fayolle, Linan and Moriano, 2014).

Methodology

Research design

The success of research depends on approach and design used by researcher to collect and analyse data. For this research, exploratory research is useful to understand the barriers and enablers of entrepreneurship in UK tourism sector. Moreover, qualitative research design is used because of flexibility it offers to study human behaviour and habits. The usefulness of qualitative approach is that it allows adjusting the research process as new information emerges Silverman, 2016).

The goal of qualitative research is to gain insight and explore the problem in-depth to understand the complexity inherent in situation. Moreover, case study approach is used to explore in depth experience of ABC management though direct interaction (interviews) and present holistic perspective (Yin, 2015).

Data collection and analysis

The data collection is important phase to answer the research question through interpretation of results and draws a conclusion. For this research, primary data is collected through conducting three semi-structure interviews of ABC management. The selection of respondent is managed through non-probability sampling technique and benefit of such approach is it allows selecting individual suitable for this research. The interview question for this research is based on both open-end and closed-end questions.

There were two interviews conducted because of ‘size limitation’ associated with this report. The content analysis approach is used to analyse the data and respondent were code as respondent A and respondent B. Finally, no personal information is collected and informed consent asked before the interviews (Galletta, 2013).

Data findings and results

The education and work experience in the tourism sector is not a determinant of success to start and running new business. The both respondent had no previous experience and education in tourism and respondent A has degree in information technology whereas respondent B has experience in marketing and sales. However, respondent indicates that work experience played an important role in success of new business. The experience of respondent B through travelling as marketing and sales representative has allowed understanding the dynamic of market.

The IT skills of respondent A has enabled develop platform which response to customer needs. In term entrepreneurial history, both respondents had no previous own business experience and this is first venture. The resident started ABC after leaving formal employment after identifying opportunity and developing business plans. The main source of information for entrepreneurs was friends and family along with the internet as main source of information. Respondent B stated that “that they have managed to expand business beyond original idea and capacity” (Chell, 2013).

The third question was designed to understand family contribution in terms of setting up business. The respondents added that “family contribution through provision of capital and working in business to provide technical support”. This allowed establishing social capital and network and exploiting opportunity of starting new business.

In terms of support from tourism organisation, both respondents added that there was no information or support was provided in terms of training or network development. The respondent B highlighted on need of knowledge on institution supporting training and networking for new venture development (Morgan and Sisak, 2016).

The main source of funds for development and expansion of business for entrepreneurship are private. Both entrepreneurs highlighted that the initial investment was managed through sales of personal assets and savings. Moreover, it was acknowledged by both respondents that there motivation for business was economic driven rather social motives. The respondent A stated the lack of financial support from funding institutions whereas respondent B hinted on making personal scarifies such as sale of car to raise fund for initial investment. In terms of personal challenges and experiences, respondent B added “that it has to travel on his own account to meet potential investors and business partners”.

This was important to build network and profile for success of business. Nevertheless, both respondents agree to human management challenges and particular cash flow constraints at beginning of business require adjustment to environment. Respondent A added that “The lack of local technical staff increases the operational and training cost for business” (Fayolle, Linan and Moriano, 2014).

The seventh question highlighted that the response of interviewee highlighted that they did not receive formal mentorship and mentoring was received from personal contact. There is no formal channel support or information available for entrepreneurial mentorship. The support from family members and social contact contribute towards success of business and invest resources in entrepreneurial ventures.

In context of success experienced and award for business, the sustainable business growth is important because new start-ups close in first three years of operations. Both respondents agreed to fact that growth of business is significant challenge. However, current head count of 16 employees show great potential for job creation in tourism sector and allowed to raise their business profile and made financial gains.

Conclusion and Recommendations

The finding of study highlight that tourism sector is attractive for entrepreneurs and present economic opportunities. Entrepreneurs face different barriers at entrepreneurial level and individual personal characteristics influence how to view the challenges and overcome these barriers. The barriers include cash flow problem, technical knowledge, human resources and lack of institutions support. Entrepreneurs used own resources, family support and assistance as well as personal contact to start new venture.

The choices of entrepreneurs are influenced through technical knowledge, environment and business disintermediation. The current track record contributes towards success of new venture and opportunities encouraged exploiting economic business through new start-ups. The key recommendation for improvement and development of tourism entrepreneurship are given below.

  • There is need to provide education and institution support for entrepreneurs in tourism industry
  • Impact of training and development on entrepreneurial development in tourism sector through inclusion of expert mentoring and support
  • Entrepreneurs should have access to start-up finance and technical knowledge for new venture in tourism sector

 

 

7.0 Appendix 1 – Interview Questions

Question no. 1: Please share your education, business background and work experience particular in reference to tourism sector.

Question no. 2: What is your motivation to start ABC and have you previously involved in other business?

Question no. 3: In what capacity, your family member or social contact helped in the business and what motivated for tourism business?

Question no. 4: To start business what process you followed and how industry organisations helped in your business?

Question no. 5: How did raise finance/capital for your business and what were sources of finance? Was it from personal or external institutions?

Question no. 6:  Can you please highlight biggest challenges and enablers you have experienced and how did you overcome these problems?

Question no. 7: Did you receive any mentorship for new venture and if so, was it personal or from organisation. What is your source of business advice and support?

Question no. 8: How you elaborate you success in tourism entrepreneurship and what advice would you give to new entrepreneurs planning to start tourism business?

 

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