Obstacles to Entrepreneurship

EghtesadOnline: In their book “Rich Dad, Poor Dad”, Robert Kiyosaki and Sharon Lechter convey one message to young jobseekers: The only way to create wealth (real, financial or human assets) is by becoming an entrepreneur and not being an employee.

News ID: ۷۸۷۶۱۳

11 January 2022

In other words, investment or self-employment is the only way to financial salvation which, of course, is different in Iran, said Mehrad Ebad, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture, in his write-up for the news portal of Tehran Chamber of Commerce, Industries, Mines and Agriculture.  A translation of his write-up follows:

In Iranian schools, students are taught to study and receive various degrees so that they are able to eventually land a job with a decent income. This approach runs counter to what’s needed to nurture an entrepreneur.

After graduation, young people enter the job market to gain experience and income. Some of them work in jobs that do not require much experience, some others try to become entrepreneurs and start their own business after a while. Here they face challenges since they have not been trained adequately.

Those seeking to start a business have no knowledge about the different types of companies or what advantages formal or informal business activities have. They don’t know how to deal with different governmental and non-governmental organizations at the beginningو or how to deal with tax and insurance offices, company registration process, chambers of commerce, banks, large state-owned companies, customs and different ministries.

On the other hand, the general perception of young people, given their lack of trust in governments, is that it is much easier to start an informal, underground business at a lower cost. Of course, this idea is not far from reality.

Had starting a business in Iran been simple and easy, no one would have turned to underground businesses. However, the right path to entrepreneurship is by complying with the law, no matter how bumpy it is; that’s the same path followed by all great entrepreneurs.

It is better for the government and the private sector to be more active in showing this path to those willing to enter the field of entrepreneurship and to provide them with the necessary support. It is recommended that more useful and up-to-date measures be taken at least in the field of pre-business education.

The prospective entrepreneur needs to first take several initial steps to obtain startup licenses. The process of receiving the economic code, added value registration and obtaining the national ID might take months. In the meantime, there are non-transparent procedures that may mislead economic operators, or even inflict losses on them.

A young economic operator must go to great lengths to obtain the commercial card from the Ministry of Industries, Mining and Trade and Iran Chamber of Commerce, Industries, Mines and Agriculture. If they are lucky, they should not fall in the trap of unreliable commercial card registration companies.

In addition, an economic operator must obtain a workshop code to buy insurance policies for employees; it would take several days to pass through the administrative bureaucracy of the insurance organization. The prospective entrepreneur will probably need a loan to prepare the initial working capital. It is very difficult for a young entrepreneur to take out a loan from a bank and almost impossible to get banking facilities without having a property deed.

Banks do not provide loans to small startups with a low credit score; banking facilities are mainly given to large public and private companies.

To link up with state-owned corporations, a young entrepreneur has to submit documents. Young entrepreneurs usually end up as loser when they enter into unilateral contracts with these corporations.

Young economic players may have to wait for years to collect their debts judicially. When it comes to interacting with governmental bodies like health and industries ministries, the young entrepreneur should be tenacious to maintain correspondence for many months.

These young people are the ones who are supposed to create sustainable development and economic growth. But with the aforementioned obstacles, many of them prefer underground activities, and of course, some of them opt for migration.