With the number of entrepreneurs in the world increasing every second, the interest in developing one’s entrepreneurial skills and setting up one’s own venture has become something pivotal for many today. This includes youth as well as other groups of society, including those from vulnerable communities in search of livelihood opportunities that facilitate them to strive to achieve targets and enhance their social and economic resilience.
Entrepreneurship in a general sense refers to the act of “setting up a business” with the aim of enhancing and scaling up the generation of profits. However, with time, what constitutes entrepreneurship and the scope of this concept has evolved.
Modern entrepreneurship looks at other elements beyond the mere generation of profits, such as transformational impact through and finding solutions to the wicked problems the world faces today. This includes the creation of innovative products driven by the need to solve issues that humanity is facing, be it addressing pollution, climate change, or poverty. Present-day entrepreneurs strive to identify good practices that allow them to stand out through their ethical, sustainable, and climate-resilient start-up or business. This includes the generation of innovation and products leading to transformative impacts as well as identifying opportunities for changing the global trajectory from an exploitative pattern to a healthier, environment-centred one.
Further, entrepreneurship also includes the ability to make decisions independently, the ability to take risks, and the willingness to take a leap and work towards achieving one’s targets and objectives with the potential that the solutions strived for would address the issues that humanity, biodiversity, the environment, and ecosystems are facing today.
Scaling up Entrepreneurship
The importance of entrepreneurship could be attributed to its many benefits and contributions to social and economic empowerment. Among these benefits are the creation of jobs and livelihoods, the facilitation and generation of innovation, and the change that results from these. Creating jobs through entrepreneurship contributes to societies in many ways, including economic and social. It contributes to people’s adaptive capacities to risks, including climate and disaster risks, and scales up or improves their economic resilience and ability to recover from shocks.
Innovation and introduction of innovative solutions to generate jobs and find solutions to pressing issues could provide avenues to adopt approaches that are futuristic and engender social benefits and holistic resilience for all. Additionally, some of today’s best technologies have been generated through businesses with the need to solve a problem, enhance efficiency, or envisage a better world where the issue that the creator visualized addressing no longer exists.
It is also important to note that, when established through an enabling environment with clear legal and policy structures, entrepreneurs are capable of giving back to society and building the overall resilience of the population. Such an enabling environment includes tax and regulatory systems which facilitate scaling up entrepreneurship but also enhance accountable and transparent processes, corporate social responsibility, responsible business conduct, and investments into projects and ventures that present the ability to increase the collective resilience of a society vulnerable to different social, environmental, and economic risks.
Together, economic empowerment, livelihood generation, innovation, and technology present the opportunity to create impactful change through entrepreneurship in communities, countries, and beyond. To ensure that this creation of change could be sustained and the potential of entrepreneurship harnessed for positive action, it is important that entrepreneurs are capable of managing risks.
Risk Management in Entrepreneurship
While the path of an entrepreneur includes a leap of faith to change one’s trajectory and take risks that might present along the way, it is important to better understand the nature of these risks and being prepared to face them. Managing risks is one of the core skills of a successful entrepreneur, and there are many elements of risk management to consider when setting up a business.
In today’s word, climate and disaster risk management is an important part of rendering a start-up or enterprise resilient to sudden shocks and long-term climate impacts. This includes risk reduction and mainstreaming risk awareness, but also risk finance and transfer instruments that can minimize or avert risks to entrepreneurship. Climate and disaster risk finance in the form of insurance presents one possible risk transfer mechanism that can integrate climate and disaster risks into the planning processes of an entity, ensure that the calculation of risks is well assessed, and proactively navigate risks through anticipatory planning.
There are additional ways to incorporate climate and disaster risk finance and insurance (CDRFI) into entrepreneurship processes, for example by risk-proofing ways of production and operating practices or by leveraging climate-friendly, sustainable, and ethical elements to access climate finance and investment into green and sustainable development. It is inevitable for any business today to encounter climate impacts and shocks. By being prepared for them, this risk can be navigated and turned into an opportunity to not only survive but thrive by adapting and transforming to a new environment.
Entrepreneurship in Food Systems
Food systems are among the key sectors that see small- and medium-scale entrepreneurs striving to pave their way towards success, achieve financial stability, and reduce their vulnerabilities. While some entrepreneurs in the sector focus on the need to achieve a form of livelihood and financial empowerment, others look at food systems through a lens of identifying ways of promoting food and nutritional security and shifting food systems to ethical and sustainable production and consumption patterns.
In particular in rural areas, food systems form a key economic pillar and are strongly tied to the sociocultural and economic setup of communities. Entrepreneurs can engage throughout the system on all levels, including as food producers or processors, through value addition, by optimizing connectivity of supply chains, providing financial services, transforming the hospitality industry, or strengthening awareness of sustainable, ethical, and climate-friendly food products. In addition, many byproducts of the food industry can also serve as a basis for start-ups that reduce waste, re- or upcycle, and ensure the creation of a circular and holistic economy.
Entrepreneurship in food systems strongly connects to the need for climate and disaster risk management outlined above, as food systems depend on natural resources and reliable weather patterns and are highly vulnerable to disruptions. Shifting rainfall and temperatures, soil salinity, droughts, floods, storms, and an increase in pests and diseases can all affect the availability and quality of food products or ingredients, highlighting the need to have safety nets and risk management mechanisms within any business related to them, for example in the form of insurance, direct agreements with suppliers, climate-smart agriculture techniques, or the diversification of sources and inputs.
Challenges in Food Systems Entrepreneurship
Discussions with SMEs related to food systems in Sri Lanka highlight several challenges faced by entrepreneurs in the present context of the country. Some of the ones highlighted include challenges related to accessing fuel, gas and other resources needed for running their businesses as well as the difficulties in accessing agricultural products. Further the price hikes which include the materials purchased for food preparation pose challenges to the entrepreneurs as their products in turn are in need of price adjustments, which discourage purchases.
Among other challenges faced by entrepreneurs and SMEs today in Sri Lanka are the instability of supply of produce, and measures that are needed to facilitate fair trade by giving back to farming communities; the need for authentic certification processes which relate to products that are 100% vegan, organic, or ethically source.
To face the present challenges and to collectively address them, the SMEs highlight key actions that could be taken such as setting up a platform which allows for the entrepreneurs to share their experiences and identify solutions in a collective manner.
The SMEs further highlighted the need for setting up certification processes for ethical, organic, vegan products which would provide avenues for entering different market systems as well as ensuring authentic products to the buyers. They further highlight the need to buy directly from farmers so as to enhance local supply chains of smallholder farmers and local food product suppliers to ensure that resilience of the communities is protected.
Note: This article has been published on The Morning as part of the author’s weekly column.
Vositha is an attorney-at-law specialising in public international law, with a focus on international environmental law, UN human rights law, refugee law and EU law. She has over a decade of experience in working on climate change, at national and international level.