A Dissertation Submitted in Partial/Fulfillment of the Requirements for Award of the Degree of Master of Science in Entrepreneurship (MSc. Entre) of Mzumbe UniversityA business faces challenges of various types throughout the period of its operations. In Zanzibar, entrepreneurs organize themselves in business cooperatives as a means to overcome these challenges. Entrepreneurial cooperatives work together as a team hence they face various challenges in developing their business. These challenges can be categorized into economic, socio-cultural and managerial. The purpose of this dissertation is to examine an array of challenges facing entrepreneurs and limit business development in entrepreneurial cooperatives in Zanzibar Islands. The study adopted a methodology comprising quantitative and qualitative research whereby both primary and secondary data were collected. The primary data were collected by using a questionnaire about economic, socio-cultural and managerial challenges. As secondary data, information was acquired from various documents, literatures and other sources. Secondary and primary data were collected and synthesized with the literatures and matters findings that were afterward processed, presented and analyzed in order to generate research findings. Data were collected from 94 sample size whereas 90 samples were from entrepreneurial cooperatives and 4 others were the employees at VTA. Result of the research indicates the multiple regression model that show, there were insignificance relationship between business development and socio-cultural as well as managerial challenges, but significance in economic challenges. Nevertheless, regarding of correlation analysis results, the business development was medium to strong negative relationship with economic, socio-cultural and managerial challenges. The major findings of the study were that the entrepreneurial business encountered a lot of challenges, economically, socio-culturally and managerially; for somewhat they are in to some extent. These challenges are still required to be cleared by the government and other stakeholders in order to ensure that the entrepreneurs operate their businesses in the appropriate manners with condusive environment. There are most challenges exposed in developing business, which essentially brought to a close as the effects to business development. Effects need to be associated to various solutions in operating a business, whereas the consequences of these solutions create products that can offer values to customers and business as well.