Companies in the Existence Stage range from newly started restaurants and retail stores to high-technology manufacturers that have yet to stabilize either production or product quality. Use of indigenous raw materials: Small-scale industries use indigenous raw materials and promote intermediate and capital goods. This is a business owned and operated by an individual. Thus, the relative importance of this factor is shown to be declining. The internet can be a good low cost way to get started and sell to a global market. Small-scale enterprise has contributed enormously to the development of Nigeria economy via employment generation, income creation, and poverty reduction. Many large-scale industries also have a healthy presence on the stock exchange.
There has been a paradigm shift in the approach of the Government towards this sector. It is the mother of all other problems of the small scale business sector. As such, owners often staff small-scale businesses themselves, allowing them to keep whatever profits they make. Does the owner wish to commit his or her time and risk the accumulated equity of the business in order to grow or instead prefer to savor some of the benefits of success? Capital will not be blocked for a longer period. Exhibit 1 Growth Phases First, they assume that a company must grow and pass through all stages of development or die in the attempt. He was also of the view that financial institutions that have been established to grant loan to small scale enterprises have not yielded fruits, as result of fear by the lending institution which emanate from the perceived inability of the small-scale business to re-pay.
Examine the compensation plan, be sure you can stand behind the products and remember that products do not sell themselves and it will require consistent daily work to build your business and see a profit. See endpoint 1 on Exhibit 4. It is an extremely important resource at the start, becomes easily manageable at the Success Stage, and is a main concern again if the organization begins to grow. Thus, many small businesses are financed through personal capital and bank loans. It has enough customers and satisfies them sufficiently with its products or services to keep them. The smallest businesses are run entirely by single individuals or small teams.
As a business moves from one stage to another, the importance of the factors changes. The key problem thus shifts from mere existence to the relationship between revenues and expenses. The organization is a simple one—the owner does everything and directly supervises subordinates, who should be of at least average competence. Their capacity to repay the loan is little. Lack of providing after sales services, on the part of the small firms. Key Difference — Small Business vs Entrepreneurship Small business and entrepreneurship are two terms that are often confused and used interchangeably; thus, it is important to understand the difference between small business and entrepreneurship clearly. Small credit card terminals and portable cash registers are perfect for these needs.
Fields like real estate typically require a short course and a licensing exam to start a business. Many companies that are immensely successful have started out as entrepreneurships. To keep payroll costs manageable, small-scale businesses often limit their number of employees. While each enterprise is unique in many ways, all face similar problems and all are subject to great changes. What is the difference between Small Business and Entrepreneurship? Limited Area of Fewer Locations A small-scale business, by definition, can be found only in a limited area. Now, government make money too. To move on, the manager must devote attention to growth and expansion, manage increased overhead and complex finances, and learn to become an administrator.
The managers should be competent but need not be of the highest caliber, since their upward potential is limited by the corporate goals. Even if you are losing money or if you borrowed money from loaner. A company in Stage V has the staff and financial resources to engage in detailed operational and strategic planning. Unwillingness of distribution channels to deal in products of small manufacturing units. Characteristics of a Small Scale Business A few examples of small-scale businesses include a flea market or shopping mall booth, a consultancy business, or even a computer repair shop that moves into retail space. Although rarely is a factor more than one stage ahead of or behind the company as a whole, an imbalance of factors can create serious problems for the entrepreneur. The simplest stage, at the end of which the owner must become a manager by learning to delegate to others.
Don't sweat and just enjoy it! Starting a Small Business The characteristics of small business make it alluring for those just starting out, those building a second career and people who are retired and looking for extra income. . Steinmetz theorized that to survive, small businesses must move through four stages of growth. This type of business is flexible, which means that the owner can generally set hours at any time to accommodate customers. Holiday gift shops that sell candles and novelty items are a perfect example of portability; all that's typically required is empty space at a shopping mall with a small table or booth to display products.
In most of the cases, when raw materials are in short supply, large scale business enterprises grab the entire supply, because of their stronger bargaining position. Facebook began in a Harvard dorm room, Google started in a garage, YouTube began in a cubicle and The Walt Disney Company began in the back of a small apartment. Of course, this study was not conducted in Botswana so their results may not be externally valid. Employees Usually very few employees, if any, work for a small-scale business. Another example is a sma … ll pizzeria or a kiosk or say a moving around with an ice-cream van, these are types of small scale industries. A small-scale business selling retail goods at flea markets will only need require funds to purchase initial inventory and pay for a spot at the flea market. In addition, the first professional staff members come on board, usually a controller in the office and perhaps a production scheduler in the plant.
Some major marketing problems of the small business are: 1. Further, unlike in a small business, their main objective is not making profits, but to do business creatively and sell a unique product or service. At this point, the planned strategy for growth is often beyond the managerial capabilities of the founding owner and the outside capital interests may dictate a management change. The organization is still simple. The very definition of small-scale prevents these companies from serving areas much larger than a local area, since growing beyond that would increase the scale of a small business's operations and push it into a new classification. As a small-business owner, Ingram regularly confronts modern issues in management, marketing, finance and business law.
If the owner rises to the challenges of a growing company, both financially and managerially, it can become a big business. These forms of organization provide the greatest degree of managerial control for company owners, while minimizing the hassle and expense of business registration. So, these small scale business are pretty important for our economy. Small businesses vary widely in size and capacity for growth. Competition from the big business counterparts on grounds of higher cost and inferior quality characteristic of small business.