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GROWTH AND DEVELOPMENT OF
SMALL – SCALE BUSINESSES THROUGH SALESMANSHIP
PREFACE
The roles of small – scale business as a catalyst to the
development of growth of a nations economy but cannot be over emphasized. This
has been demonstrated in economy of nations like Japan, Indonesia, South Korea,
Malaysia among others. Bearing this fact in mind and having a careful look at
the problems facing this important sector of the economy in Nigeria, paramount
among is the issue of inadequate and often been described as the life blood of
any business ventures “Finance”. The overall impact of funds on the
rapid growth and development of small – scale business has consistently been a
cause of concern to the industrialist. A critical assessment of this sector
clearly revealed how the issue of inadequacies has constituted a major
predicament to the successful growth of small-scale business in our country.
The essence of this extended essay is to examine the roles of small – scale
businesses in the country. It is belief that this extended essay will be of
immense benefit to the Nigeria Industrialist most especially the small – scale
entrepreneurs.
TABLE OF CONTENTS
Title page - - - - - - - - - i
Declaration - - - - - - - - - ii
Approval page - - - - - - - - iii
Dedication - - - - - - - - - iv
Acknowledgement - - - - - - - v
Preface - - - - - - - - - vi
Table of Contents - - - - - - - - vii
CHAPTER ONE
1.0
Introduction - - - - - - - 1
1.1
Statement of problems - - - - - - 2-3
1.2
Objectives of study - - - - - - 4
1.3
Scope and limitations of study - - - - - 4
1.4
Significant of the study - - - - - - 5
1.5
Definition of key terms - - - - - - 6-7
CHAPTER TWO
2.0 Introduction - - - - - - - 8
2.1
Historical Background of the Study - - - - 9
2.2
Definition of Small – Scale Business - - - - 15-18
2.3
Characteristics of Small – scale business - - -
19
2.4
Roles of Small–scale business in economic growth - 20-21
2.5
Problems facing small – scale Business - - - 22-23
CHAPTER THREE
Summary,
Conclusion and Recommendations
3.0 Introduction - - - - - - - - 28
3.1
Summary - - - - - - - - 28
3.2
Conclusion - - - - - - - - 29
3.3
Recommendations - - - - - - - 29-32
Bibliography - - - - - - - 33
CHAPTER
ONE
INTRODUCTION
1.1 BACKGROUND
OF THE ESSAY
The history of indigenous businesses in Nigeria has
the history of small-scale enterprises. Independent businesses are everywhere
and in line of work in our community.
Many people
want to become their own boss someday. This goal serves as an incentive for
millions to become business entrepreneurs most especially now that people have
come to realize that it does not pay much to work as civil servant. But rather
think of operating businesses of their own.
In recent
times in this country, government (federal and state) level have championed the
campaign for individuals especially the unemployed ones to become creative and
bring to a halt the searching for a White Collar Jobs that are not
available; rather people should engaged themselves in thinking of how to get
themselves involved in doing one thing or the other on their own in order to
create employment for themselves and if possible employ other people.
Making this
possible will matched the nation towards its long awaited industrial take off.
It is a consensus opinion that small – scale and medium size entrepreneur can
assist in re – shaping our economic system.
However, a
close look at the performance of small – scale businesses in Nigeria portrays a
situation of neglect, apathy and general underdevelopment. This situation had
seriously hampered the rapid growth of this important sub sector of the
economy, pathetic situation could be attributed to a number of problems
hindering the development of small – scale businesses such as managerial problems,
marketing problems, lack of high caliber of employees and lack of quantitative
data among others. The above-mentioned factors have hindered the development of
small-scale business. The acute shortage of required capital to meet the
business operational requirements has cultivated has cultivated the fluctuating
performance and its declining role in the development of nations economy. The
difficulties of small-scale businesses in obtaining required credit facilities
and varieties of credit issues has further complication the financial problem
facing these industries.
1.2
OBJECTIVE OF ESSAY
The aims of this study are as follows: -
i.
To identify possible constraint facing the business
with a view to finding solutions.
ii.
To undertake an intensive investigation on how the
establishment of small-scale business could help in economic development.
iii.
To critically examine how small scale business can be
managed.
iv.
To humbly fulfilled the requirement for the award of
National Diploma in business studies (Department of Purchasing and Supply)
College of Business and Management Studies.
1.3
SIGNIFICANT OF THE ESSAY
The important of this study cannot be over
emphasized. In the course of this extended essay the following importance will
be revealed.
i.
Academic Significance: At the end
of this essay, it is hoped and wished that the study will be of an enormous
importance to other fellow student and the general public as a whole.
ii.
Policy Significance: It is equally hoped that
the essay will be of great assistance to the government in making decision
concerning economic development.
1.4
SCOPE AND LIMITATIONS OF ESSAY
The extended essay is all about the significance of
small scale businesses in economic development with a specific reference to the
Nigeria economy.
Effort on
the course of these essay study were constraint by the following factors:
i.
Having little experience in writing these extended
essay work is an obstacle, hence, how to go about it for ideas was a big
problem.
ii.
Seeing the supervisor twice a week or sometimes only
once a week was also a problem
iii.
Spending money in going about the process of writing
the essay is a major problem.
iv.
Time was also not sufficient enough to obtain all the
relevant fact in respect of the essay.
However, all the limitation mentioned above were put
aside to conclude the extended essay study.
1.5
DEFINITION OF KEY TERMS
DEVELOPMENT: A Multi –
dimensional process involving re – organization and re orientating the entire
economic and social system. This involves, in addition the improvement of
income and output, radical changes in institutional, social and administrating
structure as well as in popular attitudes, customs and beliefs. In other words,
it is a process of change from one stage to another, which is a positive
change.
ECONOMIC
DEVELOPMENT: It is a service provided by people in the increment of
skills, capacity, freedom, creativity, self-discipline, responsibility and
material well being where poverty, unemployment and inequality have reduced
tremendously.
ECONOMIC
GROWTH: This is a quantitative increase over a country’s level of
output both goods and services at a particular period of time.
GROSS
NATIONAL PRODUCT: The (GNP) is the sum total market value of all final
goods and services produced in a country in one year.
EMPLOYEMENT: Using the
services of some and pay in return a form of salary or wage.
ENTREPRENEUR: One who
initiates, establishes, organizes, maintains and expands economic activities.
DEPRECIATION: This is
the wearing or loss of quality of fixed assets from use.
INDUSTRY: A factory
where raw materials are used to manufacture usable and consumable goods.
PROFLIGACY: This is
the state of being reckless and extravagance the use of resources.
CHAPTER TWO
LITERATURE
REVIEW
1.0
INTRODUCTION
This chapter intends to review the valuable
importance of small – scale enterprises. What some authors, academicians and
scholars have written on the contributions of small – scale business to
economic development. Books and papers presented by various authors will be
thoroughly analyzed in this chapter to show more light on the role played by
small – scale business in the development of economy of a nation.
The concept
of economic development will be look into in details based on the views of
authorities mentioned later on the course of this chapter. To some development
is a condition in which people living in a country has adequate food, shelter
and the income in equality among them greatly reduced. While to pothers, it is
the transformation of the nations mode of production and seeing into bearing
into being a qualitative change in the living condition of the people.
Various
definition of small-scale business both within and outside the country are
given and also the characteristic of small-scale business which differentiate
it from large business is also highlighted. The problems of small-scale
business are identified in this chapter and the contributions of small-scale
businesses to this great country of ours will make our country become the emulation
of nations.
1.1
DEFINITION
OF SMALL – SCALE BUSINESS
A clear definition of small-scale business is an
essential element of government policy in any country since it distinguishes
specific group of industries. The definition varies from country to country,
depending on the states of development of each country. The definition
undergoes periodic changes in response to such factors as inflation and
exchange of rate movements. As the Naira has depreciated, the monetary values
of small-scale businesses have increased but the size remains relatively
constant. The definition of small-scale business that are regarded small in
developed countries could be very well be large in a developing country. The
question crises how small in scale business. Most people apply the term small –
scale enterprises or business to the local concern such as drug stores, service
stations, barbers shops, road mechanics workshops. The concept may be accurate
enough for general use, since most small firms in Nigeria operates on this scales
within small-scale business could be defined as any business with the total
capital investment of less than two million Naira (2,000,000) with a number of
employees not more than fifty (50). Small business dominates the overall
business activities in Nigeria. The measures are subject to constant changes.
but whatever the nature of small scale business such business shares the same
characteristics as big ones. It is interesting to note that most big business
started off as small outfits but with proper planning and effective management
expanded and grew.
In February 1985, the Central Bank of Nigeria (CBN)
came out with a definition of small-scale business. It states, for attending
purpose of merchant banks small-scale enterprises is one with a maximum annual
turnover of five hundred thousand (500,000) or with a capital investment of not
more than two hundred thousand (200,000) excluding the cost of land. And for a
commercial banks, a small-scale enterprises is one with annual turnover not
exceeding five hundred thousand (500,000) to five million (5,000,000).
The center for industrial research and development
(CIRD) Obafemi Awolowo University Ile – Ife define small-scale enterprises with
the total investment capital not exceeding two hundred and fifty thousand
(250,000) and employing not more there fifty (50) full time workers.
The Nigerian industrial Development Bank (NIDB)
classified small-scale enterprises with project cost (investment and working
capital) not exceeding seven hundred and fifty (750,000). For many years now
Nigeria economy is characterized by rapid inflation, which may render the
monetary definition of these small-scale enterprises in valid. A holistic view
expressed by the committee for economic development (CEO) in the United States
of America, considered a business small when at least two (2) of the following
characteristic prevails.
i.
The
managers are often the owners.
ii.
Capital
is furnished by an individual owner or a small group.
iii.
The
area of operation is local
iv.
The
business is small in comparison with the larger competitors industries.
Putting the above features
together it can be summarized by saying small-scale business is self initiated,
largely self – finance, closely self – managed and its of relatively small when
considered as part of the industry. This definition provided is within
respective countries; the frame – work for the administration of policy
measures designed for small-scale businesses. Therefore, a country’s definition
must be made to suit its own particular circumstances and needs.
1.2
CHARACTERISTICS
OF SMALL – SCALE BUSINESS
Apart from the market size,
small-scale businesses usually have three (3) distinguishing characteristics.
According to Olokoyo (2002:3) in his book managing your small-scale enterprises
a guide to managers, entrepreneur and students identity the followings as
small-scale business: -
i.
Management:
The management
of small business unit is generally coordinated by the owner. As an owner
manager, he is in position to make his own decision. As small operating output
owner is both an investor and employer. This givens him or her freedom of
action.
ii.
Capital
Requirement: The
amount of capital required is relatively compared with that required by larger
firms. The capital required is supplied by one (1) or at most by few
individuals.
iii.
Local
Operations: For
most firms the area of operation is local. The employer and employees often
live in the community in which the business is located this does not mean that
however that all firms serves only local markets. Some go beyond their areas of
operation by seeking outlets for their products or services in other parts of
the country or even export.
1.3
THE
ROLE OF SMALL – SCALE BUSINESS IN ECONOMIC DEVELOPMENT
It is undoubtedly accepted that
small-scale enterprises forms the foundation of any nations industrial take –
off, especially in a typical developing country like Nigeria. The importance
and roles which small-scale business played in developing economy is so vast
that this vital sector cannot ordinarily be relegated to a weak background. The
word small-scale should not be in anyway reflect the importance of this sector.
This sector will be more beneficial for restricting our growing industrial
economy in the short run than large industries.
Small-scale business provides
more employment for unit of capital invested because they are generally more
labour intensive than large-scale business. Where for example one would find
large scale business that cost about twelve million (12,000,000), employing a
mere sickly scale workers, whereas one can find a small-scale industry that
cost just merely a two hundred thousand (200,000) employing thirty to forty (30
- 40) workers. Small-scale enterprises are generally flexible and more willing
to expect new opportunity. Small-scale businesses would aid larger, industries.
Thereby generating the desired forward and backward linkages requires to build
a healthy vibrant industrial forward and backward linkage. In the bicycle in
Nigeria for instance, the facts still remain that no bicycle medium scale
industries can take in some of the lines of production. The two (2) major
bicycle manufacturers in Nigeria, which are Comrade Cycle Co. (Nig) Limited
(First Indigenous Bicycle manufacturers) located in Zaria, Kaduna and Raleigh
Industries Located in Lagos. Small and medium scale enterprises can manufacture
some of the parts. For example, Rims, Cranks, petals, Tube, Tyres, chains
spokes Hubs, mud guards, break Rods, Rod cable, Brake pads, basic nuts, Bolts
and screw as inputs for the bicycles companies. Small – scale business will
help from the technological base where such industries would start from a small
unit operating and innovation indigenous technology to suit our particular
needs and utilizing local value of resources product, equipment and power.
Small-scale enterprises encourage indigenous entrepreneurship, which will help
to develop power techniques.
1.4
PROBLEMS
FACING SMALL – SCALE BUSINESS
In a paper presented by Kashim
(1992:10) on problems facing small-scale businesses. He enumerated some of the
problems as follows: -
i.
Financial
Problem: The
financial problem arises from the fact that a man who has own in adequate
resources to setup a medium small enterprise had no inclination to invite
others to join him. As noted earlier on, no financial institution can provide
all the funds required to set up industry without an adequate equity base for a
number of reasons. The mutual confidence needed for the polling of resources is
extremely lacking among Nigerian industrialist. This is a problem, which
generally militates against industrialization.
ii.
Technical
Problem: Reliance
on imported raw materials is another major constraint of small businesses in
Nigeria. It is for this reason that small enterprises have been hit harder by
the depreciation of the Naira as they lack enough resources to compete effectively
with large-scale businesses. In some countries world over individuals greatly
relies on local resources. But Nigerian small-scale scale enterprises are
almost a dependent on importation input as their bigger counter parts. There is
an urgent need for reorientation in order to make then fulfill their expected
role in industrial development.
iii.
Infrastructure
and Policy Problems:
The managerial problem is created by the proprietary attitude of the average
Nigerian industrialist which motivates him or her to run the entire business by
him or herself. While entrepreneurial talent and managerial expertise are not
mutually exclusive they do not always co – exist in the same industry. And such
proprietary attitude constitutes a great barrier to modern managerial process.
Everything resolves around the proprietor who interferes with the day-to-day
managerial activities rather than delegating authority to qualified and
experience staff. More over, the same proprietor is bent on developing himself
when his business is booming. He siphon his funds to serve his personal
activities instead of serving his debt of putting the funds back into the
business, some rational business owners prepare (3) separate accounts one for
the creditors, one for the business and another for himself. Lastly, despite
the attention which small-scale business has recorded institutions under the
past administration. There is a perceptible lack of coordination engaged in the
promoting and financing of small scale businesses. However, the federal
ministry of industries is already addressing this problems and a coordinating
agency may emerge in the nearest future.
iv.
Lack
of High Caliber Employee: Because
the Business can only pay minimum wages, guarantee few fringe benefit, often
low jobs securities and few promotional opportunities. it is reasonable to
expect difficulties in recruiting high caliber of employees.
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