THE PROBLEMS AND PROSPECTS OF SMALL BUSINESS IN KHANA LOCAL GOVERNMENT AREA OF RIVERS STATE.
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THE PROBLEMS AND PROSPECTS OF SMALL BUSINESS IN KHANA LOCAL GOVERNMENT AREA OF RIVERS STATE.
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
Table of Contents vii
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
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.