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THE PROBLEMS
AND PROSPECTS OF SMALL BUSINESS IN KHANA LOCAL GOVERNMENT AREA OF RIVERS STATE.
ABSTRACT
The
place of small scale business in the development and growth in an economy
cannot be over-emphasized especially in a developing economy like Nigeria.
Small scale businesses have been identified as the mainstay of the national
economy and as a panacea for growth and development. However this sector of the
economy is not without its problems just like every other sector of the
economy. This is the reason why the researcher decided to undertake this study
in order to identify the problems and prospects in this all important sector of
the economy, by developing research questions and providing answer to these
questions through, data analysis and presentation to identifying and make
recommendations concerning these problems. The researcher sampled opinion of respondents
on the failure rates of their business and it was discovered that the major
problems of small scale business are inadequate capital, poor location of
business, poor or unfriendly government policies on small business, lack of
experience, poor management of human and material resources. These problems
have negative effects on the prospects of small scale business on the
development of Nigeria as follows: It increases the rate of unemployment.
Reduces the rate productions of essential goods and services, it increases the
level of poverty in the country. Based on the findings, the following
recommendation were made: the government should established entrepreneurship
bank that will grant loan to small scale business and finally, the
entrepreneurs should take business planning seriously in order to succeed.
TABLE OF CONTENTS
Title Page i
Certification ii
Declaration iii
Dedication iv
Acknowledgment v
Abstract vi
Table of Contents vii
CHAPTER
ONE
1.1 Background
of the study 1
1.2 Statement
of the problem 3
1.3 Purpose
of the study 3
1.4 Research
questions 4
1.5 Significance
of the study 5
1.6 Scope
of the study 5
1.7 Definition
of terms 5
CHAPTER
TWO: REVIEW OF RELATED LITERATURE
2.0 Introduction 7
2.1 the
importance of small scale of business in Nigeria 7
2.2 problems
and causes of failure of small business 9
2.3 The
effect of high failure rate of small scale business on
the economic
development of Nigeria 18
2.4 strategies
to improve small scale business 21
CHAPTER
THREE: RESEARCH METHODOLOGY
3.1 Research
design 25
3.2 Population
of the study 25
3.3 Sample
and sampling technique 25
3.4 Instrumentation 27
3.5 Validation
of the instrument 27
3.6 Reliability
of instrument 27
3.7 Administration
of instrument 27
3.8 Data
analysis technique 28
CHAPTER FOUR: DATA PRESENTATION ANALYSIS AND
DISCUSSION
4.1 data presentation/analysis 29
CHAPTER
FIVE: SUMMARY OF FINDING, CONCLUSION AND RECOMMENDATION
5.1 Summary 34
5.2 Conclusion 35
5.3 Recommendation 36
References
Appendix
CHAPTER ONE
1.1 BACKGROUND OF THE STUDY
The
most essential benefit accruing to any business organization be it small or
large, is directly or indirectly concerned to the needs of the society in which
it operates and as well, to making profit.
Small
scale business, as the name implies, is the type of business whose size is
usually small with undifferential organizational structure and relatively has a
small share of the market. Depending on the economic condition, what is called
small scale business in one country may be different from what another country
terms it to be. For example, in United States of American, according to Okenwa
(1999), small scales business is ‘any manufacturing plants, employing fewer
than five hundred (500) workers, investing not more than Eight Hundred Thousand
and Dollar ($800,000.00) or one Million Dollars ($1,000.00) and which does
dominates its industry. The above defined to is based on the advanced economic
standard of the united states of America.
The
definition given by Osuaze (1986) is regarded as the all-embracing one, and it
states inter alia, “a small business is one, which is owned, managed,
controlled by one or two persons, his family influenced in decision making, has
an undifferential organization structure, has a relatively small scale of the
market and employs less than fifty (50) people”. According to the central bank
of Nigeria for the purpose of business loans and other situations in the 1995
budget, it is stated that, a small business in an enterprise whose initial
capital is not more than N10,million excluding land but includes working
capital.
Thus,
small businesses fulfill certain basic characteristics irrespective of the
definition according to Urieto (2005). These characteristics are:
1. The manager being the owner
2. The
capital being the supplied and the ownership held by and individual or a small
group.
3. The
area of operation being mainly local but market need not be local.
4. It is
usually in size
5. Its
owner(s) employees and customers often live in the small town in which the firm
is located.
In
Nigeria, a typical example of small scale business include food processing,
tailoring, transportation, newspaper hawking, farming, fishing, animal
husbandry, metal work, weaving, cyber café, wholesale and retail business. For
our country to advance in industrialization and economic development, small
scale business must be given the necessary attention, which it deserves, since
by nature, they are the bedrock and nucleus on which the nation is built.
However,
like any other business establishment, small business faces some problem, that
hinders its development and growth in the economy. Therefore, this study is to
examine these problems critically and make recommendation that will help to
improve the growth of this sub-sector of the economy.
1.2 STATEMENT OF THE PROBLEM
The
issue about the problem of small scale business has been of serious debate and
interest to government, non-government organization and individuals. According
to Samuelson
(1996:105). “There is every evidence today that small scale business springs up
almost every day. Equally, it has been observed that these business which
sprang up almost every day close within one or two years. It is based on these
observations that the researcher wants to identify the problems and prospect of
small business using Khana Local Government Area Rivers State as a case study.
1.3 PURPOSE OF THE STUDY
The
purpose of this research work is as follows:
a. To
identify the problems and prospect confronting the operation of small business
in Khana Local Government Area.
b. To
identify the problems militating against the establishment and development of
small scale business.
c. To
investigate into the nature and magnitude of the problems
d. To
examine the reasons behind the failure of the more than 50 percent of small
business in their first years of existence.
e. identify
the real problems discouraging the entrance of entrepreneur into small scale
business in Khana Local Government Area.
1.4 RESEARCH QUESTION
1. To
what extent does the various problems encountered by your business related to
the initial capital which you’re invested.
2. What
is your view about the location of your business to its success?
3. Having
been involved in business for many years what effect does the various
government policies have no you and your business.
4. Has
experience any role to play in the growth of your type of business.
5. What
can be done to reduce the high failure rate among small scale business?
1.5 SIGNIFICANCE OF THE STUDY
There
are many small scale business organizations in Nigeria. All these businesses
are expected to fulfill both goals and objectives which they set out for
themselves and the expectation which they are required to meet in the
development of the national economy. But a careful study reveals that small
business in Nigeria as a whole and Khana Local Government Area in particular
have not optimized their goals set overtime and have failed in their role to
sustain the national economy.
The
significance of this study therefore has in the recommendation that will be
made at the end of the study and solution. This study will also serve as a
guide for advancing better policies toward improving and encouraging small
scale business.
Finally,
it is significance to the promotion of small business enterprise by providing
weaknesses and strength as well as recommendations that if followed will
encourage individual to invest the growth of national economy.
1.6 SCOPE OF THE STUDY
This
study would be of eminent value at the national level, this is due to the fact
that small business are vital aspect of the national economy and contribute to
its development. However, due to the limited time allocated for this project
work, the researcher is limited to focus on small scale business in Khana Local
Government Area Rivers State.
The
fact that the study is limited to Khana Local Government Area does not make it
inapplicable to other parts of Nigeria. Therefore, this findings and
recommendations apply to the whole Nigeria.
1.7 DEFINITION OF TERMS
a. Entrepreneur: An entrepreneur is seen
as a risk taker, one who introduces new goods and services, see and evaluate
business opportunities, an innovator in order to make profit.
b. Problems: Those factors or things that
are making it difficult for small business to develop.
c. Prospect: The word prospect as used in
this work means the chances of being successful, the expected hope for or
forward looking for the betterment of small business.
d. Bedrock: Small business is a pillar for
the national economic development.
e. Establish: The gradual growth of the
economy so that it becomes advanced stronger due to increase productivity and
several business being put in place.
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