Difficulties of Starting a Small Business on an Indian Reservation in America

Difficulties of Starting a Small Business on an Indian Reservation in America

Starting a business is often a challenging issue for virtually everyone around the world except for when the business owner has some prior experience in the domain, they are doing business. They need to have some business and managerial skills for the course to be manageable in the venture. It is hard for new business entrants to start small and even harder when they have additional issues to deal with (Darwin et al., 2020). Therefore, starting a new business on an Indian Reservation in the United States can be challenging. Besides navigating the challenges normal businesses experience, they also have to deal with potential discrimination in their businesses if they are small. The challenges faced when starting a small business on an Indian Reservation, like capital limitations, land use policies and the role of the tribal government in the venture, among others, are discussed in this essay.

Business and Economic Difficulties

Indian reservations operate the same way as other reservations in the country, as tribal governments are interdependent on the outside world. They decide how to use the resources at their disposal. The biggest challenges faced when starting new small businesses are associated with the reservations’ ways of life and economies (Leonard, Parker, & Anderson, 2020). Issues of how the land is used on Indian reservations, their economic indices, lack of capital and financing options, experience, and collaborations are the bottlenecks one must navigate to open and successfully run a small business.

Land Use Issues

Most reservations are located in rural areas, resulting in more land use. Agriculture and natural resources are the most common land use on Indian Reservations in the US. It limits them to the lines of businesses aligned with the land uses. Starting a small business outside the mainland use on a reservation is mostly resistant unless there is a collective decision. Resistance is a significant problem that monopolizes the business potential. People interested in starting small and unique businesses in these locations mostly experience more challenges than those in line with the land use (Crepelle, 2019). Some of the tribal leaders on reservations may also oppose new businesses to stay conservative.

Inadequate Capital and Poverty

The Native Indians living on reservations in the United States have limited resources to support new small businesses. They have more issues to deal with, and limited resources make it hard to deal with them. Some of the people living on reservations lead a life of poverty, and the reservations are dedicated to handling more pressing issues. External financing of ventures on Indian reservations is complicated (Jernigan et al., 2020). Except for expansive ventures and big businesses, financial institutions avoid the risk and barely fund small businesses that are started on reservations. The legal framework of the federal government is aligned with supporting minorities, but it has not been very effective for Indian reservations. Institutions set up to support Indian Natives are effective but have limited funds.

Inadequate Experience, Networks and Mentors

Native Americans living on Indian reservations have for so long been isolated. They also live a way of life that conforms with the land use of the reservation and the culture of the people. These are the experiences they have grown up in and thus very limited exposure to the outside world. It makes it extremely hard for occupants of the reservations to start a new small business because they lack experience in it. Business insights are generated from historical and current data. The lack of historical data for business on some Indian reservations means it is difficult to exploit superior tools and strategies like business intelligence and business process management. Inadequate education for Natives does not make it better. Lacking experience and education make it even harder to start and run a business successfully.

Collaborations and strategic partnerships are hard to strike unless there is an existing relationship between a reservation or its administration and external entities. The same applies to businesses; the avenues for collaboration are limited on reservations due to isolation from the outside world. It, therefore, becomes hard to start a small business in such an environment because it is unconducive. The conservative nature of tribal governments and lack of prior experience in business means that reservations have less knowledgeable and insightful people (St-Jean, Radu-Lefebvre & Mathieu, 2018). A lack of these people means there is limited knowledge to guide new business owners and translates to more unknowns for those looking to start new small businesses.

Social and Geographic Challenges

Indian Reservations are legally designated settlements for Indians who live in the United States as Natives (Waapalaneexkweew & Dodge‐Francis, 2018). Most reservations are located in the rural US and often have a given level of isolation from their surroundings due to differences emanating from their sovereignty. It is common for there to be gaps as the structure of tribal governments is not as extensive as that of the federal government.

Confluence of Traditional and Contemporary

Tribal governments advocate for the practice and preservation of cultures of Natives in the reservations. Most inhabitants on the reservations are stuck in these traditional practices that hinder the adoption of a contemporary lifestyle. Some leaderships of tribal governments are so conservative that they do not embrace diversity in culture. The inadequacy of cultural diversity directly translates to a limited ability to interact with others. The inadequacy of diversity or lack thereof hampers its suitability to external parties, visitors and potential business partners (De Bruin & Mataira, 2018). The people living in the neighboring regions are less likely to do business with businesses on reservations. It limits the potential consumers of products and services to those living on the reservations.

Discrimination and Oppression

People who live on Indian reservations are often minority groups that choose to live per their ways. Minority groups in the US are often victims of discrimination either directly or indirectly. Discrimination against businesses owned by minority groups also exists in Indian reservations. External business entities often take advantage of business partners who are on reservations. They are aware that the businesses need consumers of their products for them to grow. Some external businesses that partner with those on reservations systematically discriminate against them on supply chains and directly oppress them by overpricing inputs that reservations need. Remote and isolated Indian reservations can’t start a small business due to the inadequacy of customers and consumers or lack thereof.

Isolated Geography

The geographic location(s) of some Indian reservations put them at a disadvantage when doing business. It is very difficult for reservations located in remote rural areas to get customers beyond those who already inhabit the location. Inadequate infrastructure to access the rural areas where businesses can be started makes it extremely difficult to operate. There will most likely be problems in transportation to those areas if they are remote. If the reservations are accessible, businesses struggle to cover transportation costs, which are often high (Aalbers, 2018). Location challenges limit the business to reservations and make it extremely difficult to do business with the outside world.

Lack of Education

Some reservations have lower literacy indices than their neighboring regions. Differences in the administrative and academic policies on the reservations and the outside world are the main cause of the lower literacy amongst inhabitants of the reservations. Few people get the chance to get better education outside, and even then, they are absorbed by the outside due to the existence of ready greener pastures. The brain drain leaves very few people with business acumen and an ability to deal with external businesses. There are few successful tribal governments in the US as it is difficult to stop the brain drain. Leaving less educated and less fortunate individuals on the limits of the Indian reservation their business potential, which effectively makes it hard to start small businesses on an Indian reservation.

Administrative and Governance Challenges

All Indian Reservations in the US govern themselves and are recognized as independent sovereignties by the federal and state authorities. That directly means they can carry out administrative and governance duties. The lack of experience in progressive administration in the reservations makes them vulnerable to the challenges they face. The structure of government, legal frameworks, risks, regulation and policies made by tribal governments are some of the main challenges this section addresses.

Indian Native Americans recognized by the US government can operate all activities in the reservations. A legal framework defines this arrangement for tribal governments in the country. Government structure variations in the reservations make it harder to coordinate operations to open small businesses. The United States government is against oppression and discrimination, but the minority groups still experience it. These vices are systemic and ingrained in the structure available to support the operations on reservations.

Inadequacy of resources has made it extremely hard to tread the red tape and bureaucracy involved in collaborations. In some cases, the entire legal framework supposed to support reservations fails and leaves the Natives on their own. It is hard to start a business with that many uncertainties, especially if they involve the party supposed to support the business. The same applies to policies that differ from one reservation to the next. It is hard to find common ground in the policies for collaborations to be stricken with governments on reservations due to their variances.

It becomes extremely hard for the federal government to coordinate engagements with the reservations considering there are 574 tribal governments in the United States. The low business potential of reservations renders them a high risk for investments. Banks and financial institutions would rather not engage in partnerships when risks are high. The federal government has tried to restructure its approaches on engagements and financing of ventures, but there remains a gap. The regulations and policies formulated by the federal government to promote the financing of ventures in minority groups have also not been as effective as desired. This is due to policy variations and the higher risks for financing Indian Natives on reservations hence the hardships encountered in venture financing for to start small businesses.

References

Aalbers, M. B. (2018). Financial geography I: Geographies of tax. Progress in Human Geography, 42(6), 916-927.

Crepelle, A. (2019). Decolonizing Reservation Economies: Returning to Private Enterprise and Trade. J. Bus. Entrepreneurship & L., 12, 413.

Darwin, S., Chesbrough, H., Bez, S. M., De Marco, C. E., & Cobben, D. (2020, February). Opening Up for Managing Business and Societal Challenges. World Open Innovation Conference.

De Bruin, A., & Mataira, P. (2018). Indigenous entrepreneurship. In Entrepreneurship: New perspectives in a global age (pp. 169-184). Routledge.

Jernigan, V. B. B., D’Amico, E. J., Duran, B., & Buchwald, D. (2020). Multilevel and community-level interventions with Native Americans: Challenges and opportunities. Prevention Science, 21(1), 65-73.

Leonard, B., Parker, D. P., & Anderson, T. L. (2020). Land quality, land rights, and indigenous poverty. Journal of Development Economics, 143, 102435.

St-Jean, E., Radu-Lefebvre, M., & Mathieu, C. (2018). Can less be more? Mentoring functions, learning goal orientation, and novice entrepreneurs’ self-efficacy. International Journal of Entrepreneurial Behavior & Research.

Waapalaneexkweew (Nicole Bowman, Mohican/Lunaape), & Dodge‐Francis, C. (2018). Culturally responsive Indigenous evaluation and tribal governments: Understanding the relationship. New Directions for Evaluation, 2018(159), 17-31.