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Small Business

Q. State the features of small business? Do you think it can survive in competitive market?

Ans.  These are the features of small scale business:

                     I.         Personal Touch- The management and organisation is personal in nature. Themanagers and owner are the same.

                    II.         Capital- The amount of capital required is less as compared to large scale industries.

                  III.         Employment-Small business is labour intensive and it does not require huge amount of capital because its scale is small.

                  IV.         Technology-The technology used is simple in nature.

                  V.         Area of operations- Small business firms generally has local area of operations.

 

Small industries do survive in the competitive environment because of the following reasons:

                     I.         Special treatment: Small enterprises succeed in areas requiring personal touch in handling customers such as restaurants, boutiques hair cutting saloons, jewellery stores etc.

                    II.         Limited Finance: Small business enterprises require limited financial resources in comparison to large scale industries because they are less capital intensive.

                  III.         Flexibility: Small scale enterprises are more flexible in the sense that they are able to react more quickly to changes in the environment they are usually owner operated and this allows them to try to new ideas without lengthy and elaborate approval procedures.

                  IV.         Limited Demand: Small business enterprises are suitable for goods and services have limited market. Large business will not find it worthwhile to invest in such projects because the demand is not sufficient for mass production.

                   V.         Low Cost of Production: Small business use locally available resources and raw material. Small businesses have low overhead costs. As a result small business enjoys the advantage of low cost.

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