MN9 – ENTREPRENUERSHIP: Schedule:

MODULE 1 – PART 1
A. CONCEPT OF ENTREPRENEURSHIP
Entrepreneurship is the ability and readiness to DEVELOP, ORGANIZE and
RUN a business enterprise, along with any of its uncertainties in order to make
profit
In economics, entrepreneurship connected with land, labour, natural resources and
capital can generate profit. The entrepreneurship vision is defined by discovery
and risk-taking and its indispensable part of nation’s capacity to succeed in an
ever-changing and more competitive global marketplace.

B. MEANING OF ENTREPRENEUR
Someone who has the ability and desire to establish, administer and succeed in a
STARTUP VENTURE along with RISK entitled to it, to make profit.
Often known as the SOURCE of new ideas, INNOVATOR, and bring new ideas
in the market by replacing old with new concept and invention which can range
from home business to multi-national companies.

C. ENTREPRENEURIAL TRAITS

a. Passion
b. Risk taking ability
c. Persisting nature
d. Innovative
e. Leading from the front
f. Ethical in nature

D. CHARACTERISTICS OF ENTREPRENEUR
Entrepreneurs arise from a range of educational, technical and business experiences that
include management, technology, sales, marketing and scientific research. However, the
commonality that is shared from these diverse backgrounds are;
a. Independent thinkers
b. Optimistic and confident about their chances for success
c. Creative problem solvers
d. Tenacious, visionary and focused
e. Act that to wait, attack challenges rather than avoid them.

E. TYPES of ENTREPRENEURSHIP

1. Small Business Entrepreneurship

a. The owner of the business manage their own business operation which is
small scales. They normally hire family members and friends to work with the
business.
2. Scalable Startup Enterprise
a. Normally begin with the vision of making an impact and contribute change in
the market.
b. Normally attract investor who appreciate innovative thinking (think out of the
box).
c. Backed-up with research and experimental models.
d. Require more Venture Capital to fuel to back their project or business.

3. Large Company Entrepreneurship

a. Companies with defines life-cycle
b. Grow and sustain by offering new and innovative products that revolve
around the product.
c. Pressured by change in technology, customer preference and new competition
in the market, companies buy innovative enterprise or attempt to construct the
products internally.

4. Social Entrepreneurship
a. Concentrate of producing products and services that resolve social needs and
problems.
b. Main goal is to work for society and not to make any profit.

A. CHARACTERISTICS OF ENTREPRENEURSHIP

1. Ability to take risks

Starting any new ventures involves a

considerable amount of failure.
Requires courage and be able to evaluate
all factors and need to take risks which is
the essential part of being an entrepreneur.

2. Innovation

Highly innovative to generate new ideas

Change can be the launching of a new
product that is new to the market or a
process that does the same thing but in an
more efficient and economical way.

3. Visionary and Leadership Quality

Must have a clear vision for the new

venture
Leadership is paramount because leaders
impart and guide employees towards the
right path of success.

4. Open Mind Every circumstance can be an

opportunity and used as a benefit to the
company.

5. Flexible

Must be flexible and open to change

according to situation.
Equipped to embrace change in a product
or services, as when needed.

6. Know your product

Know well the product offering

Aware of the trend in market
Know if the product and service offering
meet the demand of the market or
whether time to tweak a little.
Able to be accountable and then alter as
needed is a vital part of entrepreneurship.

B. IMPORTANCE OF ENTREPRENEURSHIP

a. Accelerates Economic Growth

Creates new products and services

Provides new jobs opportunities .
Utilizing resources in the most effective
ways.

b. Innovation

Serve as a HUB of innovations that

provides new product ventures, market,
technology and quality of goods
Increases the standard of living of people

c. Impact on Society and Community Development

Society improves if the employment base

is large and diversified.
Brings change in the society and promote
facilities that assists the organization
towards a more stable and high quality of
community life.

d. Support research and Development

New product and services need to be

researched and tested before launching in
the market

e. Develops and Improve Existing Enterprises

Increases the likelihood of finding

innovations solution to social challenges
faced bt communities around the world.

MODULE 1 – PART 3
REASONS WHY BUSINESS FAILS.
1. Lack of Planning

Business Plan should include:

a. Core Values
fundamentals that drive your business.
The guiding principles that should remain
constant even if the company grows.
Serve as the moral compass
CV engulf integrity, trust, excellence,
respect, responsibility and teamwork.
b. Mission Statement
c. Knowing who are your customers
d. What is your product / Service
e. Involve your customers in product
development
f. How will you sell and ,arket your product /
service

2. Leadership Failure Poor decision making that trickle down to

every aspects of the business.

3. No Differentiation Not setting up your business apart and unique

4. Ignoring or not meeting customer’s expectation and need.

Losing touch with the customers.

Not keeping eye on the trending values of te
customers

5. Inability to learn from Failure

Keep doing what does not work anymore for

your business.
Not willing to make adjustments to improve
product, service, systems and market
demands.

6. Poor management

Management inability to listen

Micro managing (aka lack of trust)
Working without standards or system
Poor communications
Lack of feedbacks

7. Lack of Capital

Inability to attract investors

Poor financial resources
Cannot support cdday-to0day operation
8. Premature Scaling Rush development without careful study

Ignoring right timing

9. Poor Location

Poor site location for market reach

Not evaluating enough the essence of foot
traffic, vehicle accessibility, road condition
especially during bad weather.

10.Lack of Profit Not understanding the difference between Revenue and Profit

11.Inadequate Inventory Management.

Poor inventory conversion to sales

12.Lack of focus Too many strategies without clear direction

13. Poor financial management Poor accounting system that impair judgment for budget,
expenses and cash flows.

14.Personal use of business funds

Using financial resources for personal interest

15.Overexpansion Making to many verticals Not maximizing existing markets

16. Macroeconomics factor Uncontrollable macroeconomic elements (e.g.

business cycles, wars, recessions, natural
disasters, govt. debts, inflation, etc.)

17.No succession plan No concrete and advance planning in case of death, departure,
retirement, etc.

18. Wrong business partner Incompatibility in ideas, approach and end goal

19. No accountability Not setting up measurable goals.

Treating business as a hobby
No commitment

20. After an idea – take action

Wantrepreneurs are full of ideas that never

result in action.
Entrepreneur are action driven

21. Believe that you can do it. Commit only to what you can do and make it

happen

22. Reach out to mentors Poor in establishing connections

23. Minimize risk but

understand that it is
unavoidable

Ignoring the presence of risk

Not understanding that there are internal and
external factors that could affect the business
operation is uncontrollable and could pose as
a risk.

24. Give it due time

Having an idea is fast but making them

happen takes time.

25. Get others to believe in you Sell your vision.

Convince vendors, partners, landlords,

investors and more people viable to your
business.

26. Prepare to fail Do not fear failing.

Learn from failure and adjust to recover.

27. Pivot, Rinse and Repeat Flexible to make adjustments

28. Focus on your customers Losing touch with customers interest and

demand

29. Stay Profitable

Profitability can solve a lot of business

problems.
Be mindful of your profitability.

30. Manage Cash well

Get paid in advance, ask for deposit or full

payment in advance
Be very selective in offering credit to
customers, avoid if possible.
Increase your sales
Offer incentives for early payments
Secure loans for emergencies.

30. Deal with the unexpected Set up a system to recover from disaster
Identify the key parts of your business and
think about of your approach when you lose
any of them.

MODULE 1 – PART 2
A. CHARACTERISTICS OF ENTREPRENEURSHIP

1. Ability to take risks

Starting any new ventures involves a

considerable amount of failure.
Requires courage and be able to evaluate
all factors and need to take risks which is
the essential part of being an entrepreneur.

2. Innovation

Highly innovative to generate new ideas

Change can be the launching of a new
product that is new to the market or a
process that does the same thing but in an
more efficient and economical way.

3. Visionary and Leadership Quality

Must have a clear vision for the new

venture
Leadership is paramount because leaders
impart and guide employees towards the
right path of success.

4. Open Mind Every circumstance can be an

opportunity and used as a benefit to the
company.

5. Flexible

Must be flexible and open to change

according to situation.
Equipped to embrace change in a product
or services, as when needed.

6. Know your product

Know well the product offering

Aware of the trend in market
Know if the product and service offering
meet the demand of the market or
whether time to tweak a little.
Able to be accountable and then alter as
needed is a vital part of entrepreneurship.

B. IMPORTANCE OF ENTREPRENEURSHIP

a. Accelerates Economic Growth

Creates new products and services

Provides new jobs opportunities .
Utilizing resources in the most effective
ways.

b. Innovation

Serve as a HUB of innovations that

provides new product ventures, market,
technology and quality of goods
Increases the standard of living of people

c. Impact on Society and Community Development

Society improves if the employment base

is large and diversified.
Brings change in the society and promote
facilities that assists the organization
towards a more stable and high quality of
community life.

d. Support research and Development

New product and services need to be

researched and tested before launching in
the market

e. Develops and Improve Existing Enterprises

Increases the likelihood of finding

innovations solution to social challenges
faced bt communities around the world.

MODULE 1 – PART 4
REASONS WHY BUSINESS SUCCEED

One of the sad realities of business is that only a small percentage of all start-ups succeed.
Starting a company is a risky business. Entrepreneurs face obstacles at every turn. Of course,
we
all know there are plenty of reasons why businesses can fail, but what about the reasons they
succeed? Are their commonalities between companies that are successful? If so what are they?
By examining successful companies, it turns out there are some key reasons why companies
succeed. These are:

1. DIRECTION
Every business needs a leader with a vision. During the difficult times, the business
owner needs a clear idea of the end mission and how the company will get there. A good
business leader keeps the long-term in mind whilst dealing with short-term challenges or
difficulties.

2. SPEED TO MARKET
You can‟t be second when it comes to getting to market. Especially with the rate of
technological development, the faster a business can produce its service or product, the
better chance it has of success. Small and medium sized businesses often have to
compete with established industries. One of the reasons small businesses often succeed
is that they reach consumers first.

3. FINANCIALLY SAVVY
Successful businesses know how to work within a budget. They also know how to
manage cash flow. Cash flow is crucial to the success of any business and making sure

there is cash in the bank plays a vital role. For instance, making sure you get paid on
time can make all the difference between success and failure for a small business.
Knowing your numbers and keeping on top of the finances is a key skill for any business
owner.

4. DEDICATION
Business owners need to be leaders who are willing to work hard and stick to their goals.
This leadership will inspire others to commit and to align with the company‟s mission.
It‟s important to have everyone „on the same page‟ – engaged and dedicated to the
company‟s goals. But it starts with the dedication of the business owner.

5. PERSEVERANCE
When times get tough, and the road to success offers huge challenges, business owners
need to persevere to achieve success. There will be tough times. There will be times
when the best option feels like „giving up and going home‟! However successful
businesses stick at it, they persevere.
6. QUICK TO ADAPT
Successful businesses are comfortable with change. As an old boss of mine was fond of
saying: “the only constant around here is change”! Good leaders know how to adapt, and
to make good decisions often without a clear „roadmap‟. As a result, they take advantage
of opportunities that others might miss.

7. KNOWING HOW TO ATTRACT FUNDING

Funding will at some point be vital for the growth and development of any successful
business. A good business owner knows when the time is right to access funds. Whether
it is equity funding from investors or debt finance through a bank, savvy business leaders
know how to generate capital to give them the best possible chance of success.

8. CONFIDENCE
Confidence in themselves. Confidence in their businesses. Confidence in their ideas. This
is not about arrogance, but rather an unwavering and unshakeable commitment and
belief within the business owner about what they are doing and what they are trying to
achieve. All leaders of successful businesses have it.
9. EFFICIENT TIME MANAGERS
Great business leaders are good time managers. They have routine and they have
processes in place, often automated, which means they can spend more of their time
„working ON the business rather than IN it‟.

10. EXECUTION
Arguably this is the most important difference between a business that succeeds and one
that doesn‟t. Every business leader can have a great idea. Planning, strategy, goals,
vision are all vital. But if you don‟t put them into action, then quite simply, you don‟t
have a business. Knowing how to execute effectively sets successful businesses apart.

MODULE 2 – PART 1
RISKS ON ENTREPRENEURSHIP

A. Most of the entrepreneurs are risk-takers by nature. When they decide to launch a
business, they risk everything irrespective of the thought that they have no secure
monthly income and where the time-space for family matters is relatively null. There
are some factors of risk that an entrepreneur has to keep an eye on before starting a
business.

Risks in the financial sector: The fund required to start a business might be either
in the form of loans, lifetime savings, etc. The owner should put himself at risk
during the start of this new venture. If you failed to return the investors for the

next few years, it may lead to bankruptcy and might leave the investors empty-
handed.
Risk due to vintage strategies: The strategies taken in a business plan should be
appealing to the investors. Anyhow, we live in a fast-paced world, and as time
goes by, the current strategies become outdated. To avoid this situation, we must
update our strategies according to the change in the market, or else the company
might struggle to reach its benchmarks.

Market risks: Many risk factors in the market can affect the sale of a product or
service. The pros and cons of the sense of economy of the market pose a risk to
new businesses. For example, if the economy slumps, people are inclined to buy
non-luxury products rather than depending on the luxury ones. You must analyze
the factors like the demand for a product or service and consumer behavior to
capture the market.

Competitive Risk: The competitors are the major factor which an entrepreneur
should consider. The lesser the competitor’s, the lesser the demand for the product
in the market. A saturated level of large competitors might create a struggle to
compete in the market.

B. Risk-taking is a non-avoidable factor in entrepreneurship. To be a successful

entrepreneur, you have to be confident to catch risks and face the challenges that
follow. The following are the risks that the entrepreneur must take for ongoing
development.

Abandoning the current source of income: Before you attain the ownership of
any business, you have to resign from your current job or career. Some people
always keep a backup plan to resume their old job or career in case things go
wrong in their business. But a faction of the people holds the notion to risk their
current career. There is no guarantee for your income in the first few months.

Sacrificing personal capital: Some entrepreneurs depend on external funding like

loans, government grants, etc. You should at least take the risk of spending some
personal money that means diminishing your safety net.

Trusting a key employee: There is only a minimal chance of attaining a full team
at the start of a business. You will have only a few people who are willing to work
for a lower salary for the upliftment of the company.

Getting Compensated: The earnings of the organization would see whether the
entrepreneur will get compensated or otherwise. The entrepreneur doesn’t have the
posh of the assured paycheck like his counterparts in compensated employment.
When the business doesn’t make profit, there’s nothing for that entrepreneur.
Sporadic Earnings: The beginning-up entrepreneur might not have enough
business to supply her or him with steady earnings. Their earnings may fluctuate
every day or monthly.

No Earnings: A business owner may face a season in their business existence

when there’d not be any business whatsoever or when customers have
unsuccessful to satisfy their payment obligations and for that reason no earnings.
Start-up entrepreneurs are often advised in order to save a minimum of enough to
pay for six several weeks expenses and earnings needs in their financial planning.

Getting Security:Whatever a business owner has originates from the company.

Unlike individuals compensated employment and also require a compulsory
retirement funds account supported by their employer, the entrepreneur needs to provide his
very own insurance and retirement security. Before moving from
compensated employment to full-time entrepreneurship, it is crucial that ambitious
entrepreneurs add in their financial planning, some component of insurance and
retirement security through savings.

MODULE 2 – PART 2
REWARD ON ENTREPRENEURSHIP
In the fast-paced world of entrepreneurship, two kinds of people cohabit the
world of business. Ambitions are not only limited but also have boundary lines.
The ups and downs in the business are quite transient. The qualities and
personal choices that an entrepreneur makes are important, such as;

Attributes: A person doesn’t need to be highly qualified to start a

business. It is only imminent that he /she should possess the qualities
to be a good entrepreneur. For instance, qualities of aggressiveness,
social exposure, networking, and being good at mental mathematics are
the most important hallmarks of intelligence. Moreover, marketing
abilities should be possessed by them.

Attitudes: Two most essential qualities of being patient and

perseverance are something that can be attained through
entrepreneurship. He/She must attain the quality to compromise when
things are down and to strive for betterment in the future.

Business ethics: The foundations of business will become weak over

time if the business ethics and values are not in place. The reputation of
a company is gained by acclaiming customer faith and public interests
and introducing new business practices.

Human value system: The deciding platform or the root of any business
organization is a strong HRM (Human Resource Management). The
companies which are highly successful in consolidating human
resources are traditional, while non-traditional companies invite more
trouble in the name of innovation and rational approach.

Passion – Passion they are saying sells. Among the finest joys of
entrepreneurship is working daily around the passion of the existence.
When a person’s work and daily pursuits have been in the world of their
innate desires, one works together with enthusiasm, appetite and hunger
that drive to great action. Aside from as being a reward by itself, passion
helps to ensure that the first is dealing with never-ending energy which
results in greater production.

Great Boss – Entrepreneurs work with the finest boss on the planet that
is themselves. In compensated employment, we meet all sorts of bosses –
some nasty, some good and a few boring. The finest boss anybody might
have is yourself. Entrepreneurship allows you be your own boss which
creates an unbeatable feeling which money cannot buy.

Hours – Among the immediate advantages of entrepreneurship is getting

charge of a person’s existence. Though the start of entrepreneurship
might be rough, the opportunity to maintain charge and be capable to set
your occasions and schedules for the work and clients are an incentive of
inestimable value.

Location – Where you reside and jobs are one main factor to non-public
satisfaction. Entrepreneurship allows you to get this to choice without
having to rely on another person figuring out your workplace location
which can be to date from your geographical area resulting in daily
lengthy commuting in private or public transportation. In Lagos Nigeria,
where most corporate offices can be found are extremely costly for many
workers to exist in. A number of such locations don’t have areas.
Workers are forced into lengthy distance commuting and traffic hold ups
that improve their price of fueling and it is the reason high bloodstream
pressure because of chilling out within the holdup year in year out. The
entrepreneur may even keep his location virtual, meaning he might work
straight from their own home online. A business owner may also made a
decision to be mobile.

The foremost importance of entrepreneurship is the creation of employment. It

opens the door for an entry-level job that provides training for unskilled
laborers. Entrepreneurship is the hub of innovations that provides new product
ventures and quality products, which thereby increase the standard of living of
people. The greater the employment rate the larger the society. It fluctuates
lifestyle change and promotes higher expenditure in several fields of economy.
As new products need to be researched and tested before the market launch,
show its impact and support in the field of research and development.

MODULE: 3 – part 1
NATURE OF SMALL BUSINESS
What is Small Business? Types of Small Business

Small Business Meaning

A business which functions on a small scale level involves less capital investment, less number
of labour and fewer machines to operate is known as a small business.

Small scale Industries or small businesses are the type of industries that produces goods and
services on a small scale. These industries play an important role in the economic development
of a country. The owner invests once on machinery, industries, and plants, or take is a lease or
hire purchase. These industries do not invest on large amount in millions. Few examples of
small-scale industries are paper, toothpick, pen, bakeries, candles, local chocolate, etc.,
industries and are mostly settled in an urban area as a separate unit.

Characteristics of Small Business

Different countries have adopted different definitions of small business or industry.
Other than a legal framework or small business, there a general understands the smallness of
business among the people operating in this type of business.

1. The business, as a rule, is managed by the owner or owners of the firm. The management
team of the business might consist of family members, relatives, and close friends.

2. The responsibility for decision-making normally lies with one key executive, with very
little or no delegation of authority. Small-business owner-managers maintain a high
degree of concentration of authority. They do not delegate as they believe that if you
want a thing done right, do it yourself.
3. There appears to be a close management-employee relationship. Entrepreneurs take an
active part in the management and operation of the firm. They develop a very intimate
relationship with the employees by working along with them. Therefore, relationships are
informal and friendly.
4. Small business is an extension of the personality of the entrepreneur. It is the reflection of
the dreams and desires of the entrepreneur(s).

5. Generally, there are fewer functional specialists, such as a fulltime accountant or a

personnel manager, in the organization. The nature of work generally is not that complex.
Moreover, if the work is complex, technically different, it is the owner who generally
holds that capacity or who can strongly supervise the task with his/her strong command
on the technology. Therefore, they can develop a skilled or semi-skilled person for their
ventures. Other functional tasks are performed by the owner-mangers themselves with
their learned knowledge or framing in a relevant field.
6. The firm normally has no more than two tiers of management reporting, and the size of
employment is made limited by the law of the specific country. In general, it does not
exceed 1500 persons.
7. In most cases, the owner-managers are verbal communicators. Least number of written
communications is made within the small businesses. Instructions are generally made
through oral media of communication.
8. The firm often places little emphasis on long-term planning, although the owner-manager
may be aware that a formal long-term plan is necessary. The owner-managers
entrepreneurs are reluctant to make a plan as it requires a handful of intellectual exercise
with past, present, and future data to profess the future. The demand for continuous
adjustment with the current environmental conditions sometimes discourages
entrepreneurs from making.
9. Normally, the firm’s stock is not listed with a stock exchange.
10. The management of the firm is independent. They are not subject to any other’s
supervision. Entrepreneurs are the owner-managers of small businesses. They are the sole
authority of the firm to decide about the organizational matters.
11. The capital is supplied, and the ownership is held by an individual or a small group of
individuals. Small businesses may take proprietorship, partnership, or private limited
company. In any case, the number of owners is always limited, and they hold the total
ownership, and they supply the required equity too.
12. The area of operation is mainly local, with the workers and owners living in one home
community. However, the markets need not be local.
13. The relative size of the firm within its industry must be small, which is not dominant in
the industry. A small business should not have a major share of the market.
14. Doctors, dentists, and lawyers may fit all or some of these characteristics, but in most
cases, they are considered professionals rather than small business operators.

Categories of Small Business

On the basis of capital invested, small business units can be divided into the following
categories:
(1) Small Scale Industry (Before 2006)

They invest in fixed assets of machinery and plant, which does not surpass than one
Crore. For export improvement and modernization, expenditure ceiling in machinery and plant
is five crores.

(2) Ancillary Small Industrial Unit (subsidiary)

This industry can hold the status of an ancillary small industry if it supplies a minimum
50 per cent of its product to another business, i.e. the parent unit.
They can produce machine parts, components, tools or standard products for the parent
unit.
(3) Export Oriented Units
This industry can possess the status of an export-oriented unit if it exports exceeds 50 per
cent of its manufactures.
It can opt for the compensations like export bonuses and other grants awarded by the
government for exporting units.
(4) Small Scale Industries Owned by Women
An enterprise operated by women entrepreneurs in which they alone or combined share
capital minimum of 51 per cent.
Such units can opt for the special grants from the government, with low-interest rates on
loans, etc.
(5) Tiny Industrial Units
It is an Industrial or a company whose expenditure on machinery and plant does not
exceed millions.
(6) Small Scale Service and Business
It is a fixed asset investment on machinery and plant excluding land and building should
not surplus of millions.
(7) Micro Business Enterprises
It is a tiny and small business sector. The investment in machinery and plant should not exceed
Rs.1 lakh.
(8) Village Industries

The industries which are located in rural areas and manufacture any product
performs any service with or without the utilization of power is called village
industries.
(9) Cottage Industries

It is also known as traditional or rural industries.

These industries are not covered by the capital investment criterion.
Cottage industries are characterized by the following features :
1. These are organized by a single, with private resources.
2. Use family labour and local talent.
3. Simple instruments are used.
4. Small capital investment is involved.
5. Simple products are made.
6. Indigenous technology is utilized.

MODULE: 3 – PART 2 STRENGTHS and FAILURES OF

SMALL BUSINESS
A. Strengths of Small Business
The definition of a small business varies from country to country and between times in the same
country. There is no generally accepted concept of small business. It defies easy definition too.
The following discussion will deal with various concepts of small business adopted in various
countries of the world:
1. Spurs of innovation
Small businesses are the major sources of innovation in our civilization. Substantive
numbers of successful innovations are implemented by small businesses.
Sources of new materials, processes, ideas, services, and products that large business firms
are reluctant to provide arc being provided by small businesses. Thus, the small business acts
as a spur of innovation lo millions of entrepreneurs throughout the world.

2. Checks monopoly
Small businesses encourage competition by checking the development of monopolies by
large businesses. It produces new products, methods, and services and so forth and checks
large firms’ tendency to control the market.
It also provides differentiated products that give the market a wide spectrum of choices.
Therefore, small businesses keep large firms on their toes.

3. Creates employment
Small, young, high technology businesses create jobs at a much higher rate than do older,
large businesses.

4. Produces people
Small business has more intimate knowledge of its communities: therefore, take more
personal interest in them. It takes community projects. It produces people as well as goods
and services.

It enables the community people to achieve a better-rounded balanced development than

they could enjoy in large organizations. It provides them a greater variety of learning
experiences in work activities.
People have greater freedom in making decisions and in perforating a greater variety of
activities. It lends zest and interest to their work.
It also trains people to become better leaders and to use their talents and energies most
effectively.

5. Contributes to Gross Domestic Products (GDP)

Small business contributes to the national economy of every country of the world
significantly. It generates 54 percent of the sales revenues and 40 percent of the gross
national product.

6. Higher financial performance

The small business earns higher returns on owners’ equity (ROE) than large manufacture do.
That is, for each dollar invested in the business, small business investors earn more than do
big-business investors.
Because small business cart respond quicker and at less cost to quickening rate of change in
products and services, processes, and markets.
It has also become more attractive to talented, individualistic men and women who
successfully utilize the fund.

7. Makes big business dependent

Small businesses provide business with many of the services, supplies, and raw materials
they need. General Motors, for example, buy from more than 10,000 suppliers, most of
whom are small. It is because bug businesses cannot supply product and services as cheaply
as do small
businesses can effectively supply those goods and services cheaply whose sales volume is
small, whose sales demands close personal contact with customers, and whose supply
requires meeting each Customer’ s-untrue needs.
They also sell most of the products made by big manufacturers to consumers. Thus, bit;
businesses are dependent on small businesses for their very survival in many respects.

8. Develops risk-takers and fosters flexibility

Small entrepreneurs have relative freedom to enter and leave a business at will. They can
start and grow, expand or contract, succeed, or fail as they feel comfortable with the
situation.
This freedom is the essence of the free economy. It makes managers responsible for
customers, employees, investors, and the community.
Moreover, they can switch their production readily you meet changing market conditions,
can adapt themselves quickly to chatty mu demands within their fields and capacity, and
even can chance field at low cost.
This environment of small businesses helps developing risk-takers in society and fosters
flexibility in the practice of economic activities.

9. Provides opportune grounds for women

Small businesses are the most opportune sources of self-employment tor women. About 2.8
million women are engaged in self-employment in small businesses in the USA (1998).
According to a study sponsored by the National Foundation for Women Business Owners in
the USA, the number of women-owned businesses grew 78 percent between 1987 and 1996,
and women now own 37 percent of all businesses .

10. The seedbed for the new venture

Small business is the seedbed for new ventures throughout the world. Many of the big-
businesses today started small because of its many-fold start-up advantages in 1993, 700,000
new small businesses are started in the USA (SBA.1994).

11. Career for new graduates

Small business is the right venture for the new graduates who welcome the challenge of
innovative work, want to be decision-makers, want the freedom of owning a small business,
or want to have a financial incentive which one could never obtain by working for others.
12. Ease of entry
Small business does not require much formality to start.
Financial requirements are not high too. Entrepreneurs can choose almost any line of
business they like. This freedom of opportunity guarantees them the right to launch their
ventures.

B. Reasons for the Failure of Small Business

The bright side of the small business is not all small businesses. In contrast, the dark side
reflects
problems unique to small business- Its death rate is high.
Researchers have identified many reasons for the failure of small businesses in the developed
and
developing countries of the world.
The following are the description of those weaknesses or dements of small business:

1. Inadequate management
The lack of managerial knowledge and skills is the vital cause of failure of the largest
number of small businesses. It is more evident in the case of expanding a situation.
Anybody with any academic background and experience can go for starling his/her small
venture.
No law can stop them from entering into their ventures. It is not recognized that managerial
expertise is a priori condition for starting and operating a business.
This deters them from recognizing, hire, and tap the talents they need to survive and grow.

2. Shortage of working capital

Working capital is the lifeblood of all business enterprises.
Small businesses, with a small capital base, faces a shortage of working capital to maintain a
desirable level of operation. It also thwarts its expansion and its capacity to avail profitable
opportunities.
Study shows that businesses that start with loo little investment by owners have a greater
chance of failure than businesses with adequate investment by owners.

3. Lack of balance
Small business does not maintain a proper balance among many interrelated affairs of the
organization.
The significant reasons for such imbalance arc the lack of coordination between production
and marketing, lack of proper record-keeping, lack of effective selling techniques, lack of
coping with the increasing complexity of internal management, and lack of balance between
having too few products so that sales are lost and diversifying too fast.
These lacks of balance make small businesses vulnerable to failure.

4. Unabated entry
The chief reason for small business failure is the unabated entry. Any men and women can
enter into small business without any hindrance.
They may have 20 years of experience in that line or none at all. They may do a textbook job
of searching their markets or plunge in with no information at all. They may be millionaires
or penniless.
Yet regardless of their qualifications, the small business is open to them.
But economists’ often point out; freedom of opportunity means not only the freedom to
succeed but also the freedom to fail. Failure to sec this reality often causes untold stress,
trauma, and tragedy.

5. Lack of business experience

Small business run by people without prior industry experience is vulnerable to failure.
People with any track record start small businesses and could not cope with operational
problems and crises. Inexperience in a fine of operation makes decisions faulty and
disastrous to the organizational continuity.

6. Fraud or Disaster
Small business is vulnerable to many situations due to its inability to 10 sustain the damage.

It may be caused by fraud, by fire, flood, burglary, criminal act, or by the death of owner-
manager or a key person of the business. It affects its continuity in the market or sometimes

causes the death of the firm.

7. Insufficient inventory turnover

Small business faces inventory turnover problem that docs not only blocks the working
capital but also risks the business for product obsolescence.
It also affects profit due to lack of sales and deters the smooth progress of the operation of
the business,

8. Improper markup
Small business does not set its price policy with sufficient market information rather goes on
traditions cost-plus or competitive pricing.
It sometimes does not cover the expected rates of return necessary for maintaining the
financial strengths of the firm. It is observed that small firms that fail, they fail because of
insufficient return on their investment.

9. Wrong location
Location is one of the fundamental reasons for the success and failure of small businesses. A
common saying is that “the three most important factors in a small business success arc
location, location, and locator.
Though exaggerated, it underscores the need for the right location for the small business.
Location is more vital in some industries than in others depending on whether customers
must travel to the entrepreneur’s place of business or the entrepreneur must travel to
customers, whether the business offers a unique product or service with little competition, or
even on whether convenience is a key selling point.
However, it is well recognized that the wrong location seriously affects the success of small
businesses.

10. Poor credit-granting practice

Uncontrolled receivables or poor credit practices affect credit collection and due position.
It causes extra pressure on cash position and other working capital items; it also seriously
handicaps the firm to maintain the daily operation.
Thus, many small businesses fail due to excessive blocking of a fund with the debtors due to
poor credit granting practice.

11. Non-business family background

Business owners whose parents did not own business have a greater chance of failure than
the owners whose parents did own a business.

12. Neglect
Little attention to the affairs of small businesses by the entrepreneur or owner-manager is a
strong reason for the failure of small businesses.
Small businesses need absolute personal care, attention, and dose supervision, as it does not
sustain any set back of any kind. Therefore, many small businesses fail due to neglect of
their managing.

13. Too much investment in fixed assets

Small businesses that have made an excessive investment in fixed assets face the problem of
operating funds. It also requires high operating expenditures and, thus, needs high financial
obligations too.

This heavy-head structure stalls the operative capacity and causes the failure of the small
venture.

14. Marketing inefficiency

The survival of the firm depends on generating sufficient sales from its market. Market
creation, maintenance, and expansion arc the pivotal tasks of small businesses.
A study found that business owners without marketing skills have a greater chance of failure
than others with marketing skills.

15. Inefficient succession

Lack of succession or inefficient succession is a strong reason for early death or failure of
small businesses. The majority of small businesses are sole-traders or partnership.
The sudden death of the entrepreneur or departure of partner/partners or incapability of
entrepreneur calls for successors to take up the business.

16. Lack of planning

Small businesses that do not prepare business plans have a greater chance of failure than
businesses that do.
There is general neglect in small businesses toward preparing a plan for that it loses its
focus. Many small businesses fail because of unplanned action.

The success of small businesses depends on careful handling and overcoming the above-
mentioned situations.

Every entrepreneur should rake necessary measures to prevent these reasons to protect
his/her entrepreneurial venture from failure.

C. Scope of Small Business

The scope of small business is quite vast, covering a wide range of activities. Businesses that
come within the distinct characteristics of small businesses are too many.
The industrial policy 2005 has mentioned a list of’ industrial activities that come within the scope
of small businesses.

The National Taskforce on Development of Small and Medium Enterprises has also pointed out
some area where small and medium enterprises can successfully operates The following arc a
list of the area of activities where small business will fit best:

Electronics or Electrical.
Software-development.
Light -engineering and metalworking.
Agro-processing/ agro-business/plantation agriculture/specialist farming/tissue-culture.
Leather-making and leather goods.
Knitwear/Ready-made Garments.
Plastics and other synthetics products.
Healthcare and diagnostics.
Educational services.
Pharmaceutical/cosmetics.
Fashion-rich personal effects.
Car and consumption goods.
Fast-food and frozen food.
Food processing and food assembling.
Paper printing and publishing.
Small fabrication.
Poultry farming.
Fisheries.
Lea gardening and processing.
Vegetable seed farming.
Floriculture.
Construction.
Cold storage.
Furniture.
Computer assembling.
Transportation, including automobiles.
Battery.
Glass and Ceramics.
Multilateral jute goods products.
Rubber.
Retailing, wholesaling.
Tourism, indenting.
Hotel, restaurant.
Cybercafe.
Mineral water.
Garments.
Stationery items.
Natural essential oils.
Organic chemicals and chemicals.
Boats and truck body buildings.
Auto parts components.
Miscellaneous transport equipment.
Sports goods.
Clocks and watches.
Servicing or repairing.
Financial like money exchange and many others.

Quiz # 1 - Fundamentals
Being tenacious is a common characteristics of an entrepreneur. TRUE

A person vision and long-term goal and who manages own business operation with help
from friends or family is known as a small business entrepreneur. FALSE

Growth and sustenance by offering new and innovative product is a form of large
company entrepreneurship. TRUE

Entrepreneurship is also known as a start-up venture. FALSE

Anyone can be a successful entrepreneur. FALSE

Entrepreneur is exclusive for those that has background in management, technology,

sales, marketing and research in order to assure success in entrepreneurship. FALSE

Social Entrepreneurship’s main purpose is not to make revenue out of its business.
TRUE
A large company entrepreneurship is backed-up with research and conduct
experimental models to assure success. FALSE

Independent thinking is one of the commonality among entrepreneur from different

background. TRUE

Is ethics not considered as entrepreneurial traits. FALSE

Risk control and avoidance is a classified trait in entrepreneurship. FALSE

Entrepreneurship is about someone who stands as the source of ideas and bring the
idea in the market. FALSE

Innovativeness means ability to duplicate what is already available in the market. FALSE

The only end goal of entrepreneurship is to make profit from establishing business.
FALSE

Entrepreneurship is concentrated more for small scale or intermediary business start-up

only. FALSE

Rush development without careful study is a premature scaling. Working in absence of

standards is classified as poor management. Both statements are CORRECT

Effective management is exercising micro management system. Acknowledgment of

right timing is a form of premature scaling. Both statements are INCORRECT

No differentiation means setting up your business as unique business. Keep doing what
does not work anymore for your business is an ability to learn from failure. Both
statements are INCORRECT

Flexibility is being open to change, while risk means understanding that business
venture may result to considerable amount of failure. Both statements are CORRECT
Acceleration on economic development does not result from entrepreneurship.
Entrepreneurship provides impact to the standard living of the people. Only statement 2
is CORRECT and statement 1 is INCORRECT

Business need to persevere during times of challenges. Risks in inevitable to happen

that results to challenges. Both statements are CORRECT

Visionaries can be a successful entrepreneur and flexibility play no role for success.
Only statement 1 is CORRECT and statement 2 is INCORRECT

Knowing your product not necessarily require research and knowing your product being
the idea maker does not translate to market acceptability. Both statements are
INCORRECT

Quick to adapt refers to business that comfortable with change. It is not essential in
making good decision often without making a clear path. Only statement 1 is CORRECT
and statement 2 is INCORRECT

Inability to learn from failure is by making adjustments to improve the systems. Planning
include knowing how to sell your product. Only statement 2 is CORRECT and statement 1 is
INCORRECT

Lack of capital cannot support the daily operation. Management inability to listen is
poor. Both statements are CORRECT

Lack of planning can also happen even if you know your product. Poor location does not
contribute to business failure. Both statements are INCORRECT

Leadership is not a core value in entrepreneurship. Not being open minded is not
necessary translate to loss of opportunity. Both statements are INCORRECT
Funding is vital for growth. Anytime is the right time to access funds. Only statement 1 is
CORRECT and statement 2 is INCORRECT

Keeping eye on the trending values is a form of ignoring customers need. Poor capital
resources is a form of lack of capital. Only statement 2 is CORRECT and statement 1 is
INCORRECT

Direction requires the owner to have a vision. Leaders must keep a long term in mind.
Both statements are CORRECT

Entrepreneurship develops and improve existing enterprise and finding innovation

solutions to social change. Both statements are CORRECT

Knowing how to generate capital is a characteristic of a non-financial savvy. Successful

business reflects on confidence with the business itself. Only statement 2 is CORRECT and
statement 1 is INCORRECT

Core values engulf integrity, trust, excellence, respect, responsibility and teamwork.
Involving your customers in product development is not part of planning. Only
statement 1 is CORRECT and statement 2 is INCORRECT

Being ‘on the same page’ does not necessarily means that all are on board. Direction
requires leaders to know how to deal with short term challenges or difficulties. Only
statement 2 is CORRECT and statement 1 is INCORRECT

Financial savvy means a leader need not to know how to work with budget. Further, it
must have minimum knowledge in handling cash flow. Both statements are INCORRECT

Supporting research is not classified as an important factor under business venture.

Testing of product is a key importance under entrepreneurship. Only statement 2 is
CORRECT and statement 1 is INCORRECT
Being a visionary is a characteristic of entrepreneurship, while flexibility is not a part of
its characteristics. Only statement 1 is CORRECT and statement 2 is INCORRECT

Giving up on business challenges is an example of perseverance. Dedication is not a

factor of perseverance. Both statements are INCORRECT

Losing touch of customers is a product of nor meeting the customers need. Keeping eye
on the trending values of the customers as a form of ignoring the customers
expectation. Only statement 1 is CORRECT and statement 2 is INCORRECT

Innovation provides change and risks is avoidable because of innovations. Only

statement 1 is CORRECT and statement 2 is INCORRECT