Traits and Objectives of Small Business

1.      

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      Traits of business

      Activities: A business consists of various activities basically economical and non-economical.

2.       Profit: The primary goal of business is to make profit for its owners. It is the main incentive for starting a business. Other goals of business can be growth, survival, market leadership, efficiency, innovation, social responsibility and corporate citizenship.

3.       Customers: Customers occupy a central place in business. Customer need satisfaction is the key to profit generation. Business exists to serve customers.

4.        Competition: Competition is an important characteristic of a modern business. Globalization and liberalization has brought competition everywhere in business. The world is becoming one big market.

5.       Diversification: Mechanization, automation and computerization have led to increase in the size of business enterprises. This has resulted in diversified product portfolio.

6.       Change: business is constantly undergoing change due to technological advances, information technology revolution and changing environment. It needs to manage change.

Objectives of Business

Business organizations can have multiple goals.

1.       Profit: Profit is excess of income over expenditure. It is the primary goal of a business. It is the main incentive of a starting a business.

2.       Growth: business should grow over a period of time in terms of sales, market share, product diversification and profits. Stagnant businesses tend to die in the long-run.

3.       Survival: Business should stay alive to thrive. Carpet business in Nepal is pursuing survival goal in the hope of seeing better days in the coming years.

4.       Leadership: Business should strive for market leadership through continuous technological innovation and quality improvements.

5.       Efficiency: Business should aim for higher productivity through reduced cost of operation.

6.       Social responsibility: Business should safeguard the interests of its stakeholders including employees, customers and the society. It should use power for the good of society and remain a part of society.

7.       Corporate citizenship: Business should comply with the laws of the land and develop good government-business relations for the corporate citizenship.

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Meaning of Small Business

Small business is an organization. It is engaged in production and marketing. The various types of activities can be: manufacturing, services, construction, transport and trade. It is everywhere.

The small business owner establishes and manages the business to attain personal objectives. The business is an extension of the owner’s needs, objectives and personality. The business growth is not a primary objective. The aim is to continue operations over a long period of time. The major characteristics of a small business are:

a.       Management is independent: Managers are owners. One or a few persons make all the critical management decisions. They are free from outside control.

b.      Closely held ownership: One or a few individuals supply the capital. Ownership is held by them.

c.       Local operations: Operations are locally based. It has a relatively small share of its market. It is located near the market. But market need not be locally based.

d.      Small size: Its size is small. Smallness is relative to the size of large firms in the industry. The measure for small size can be one or combination of

-          number of employees

-          total fixed assets

-          annual sales volume

-          capital investment

The definition of small size varies between different forms of activities, such as manufacturing and non-manufacturing etc. It also varies between small countries.

The number of employee’s yardstick is transparent, comparable and easily available.

Defining small business is difficult. A number of definition exists for small business.

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Case Study(One)

Namuna tailoring is a well-known name in the fashion world of Nepal. Its founder, Gyani Shova Tuladhar , is the first woman to start tailoring as a business enterprise.

 Tailoring is regarded as a job for illletrate low caste people. But  Gyani Shova took tailoring training at the age of 19.

She started her business with a single sewing machinein Kichapokhari of Kathmandu. Today her dress designs are very popular among woman including movie stars. In addition to Namuna Tailoring, she has established Namuna Institute of Fashion Technology, the first fashion college of Nepal under affiliation from Purbanchal University.

 Today, tailoring has become a profitable as well as prestigious business. Educated women are opting  for it. Gyani Shova says, “the secret of my success is hard work, perseverance and persistence.”

Questions

1. What motivated Gyani Shovato start tailoring?

2. What are the entrepreneurial qualifications possessed by Gyani Shova?

3. What are the indications for measuring success of Namuna Tailoring? 

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Drawbacks(Nepal)

Problems for entrepreneurship in Nepal 

1.       Most small establishments are owned and managed by the entrepreneur. Decision making is centralized. Management practices are traditional.

2.       Most entrepreneurs have learned by doing. They lack professionalism and training.

3.       Most enterprises are staffed by kith and kin relationships. The quality of human resources is poor.

4.       Technology used is not modern. Use of Indian technology is widespread. Efficiency is low. Repair facilities are poor.

5.       Market is limited.it is confined mostly to urban centers. Marketing problems are many. Customer-orientation is low. Cartel arrangements by big houses stifle competition.

6.       Infrastructure is inadequate. Delays are common in getting power, water and telephone connections. Transport facilities are inadequate and expensive.

7.  Strategic alliances are lacking among small enterprises. Strategic alliance is combining in-house resources with the resources of external unit. Mergers and acquisitions are also lacking.

8. Low creditworthiness has led to poor access to institutional credit. Cost of credit is also high.

9. Environmental changes are not effectively monitored. There is dearth of reliable and up-to-date information about small industries.

10. Government policies and facilities provided to small industries are inadequate. Policies are not properly implemented. They keep changing. Bureaucratic procedures have encouraged corruption, delays and harassment. Regulatory barriers are too many. Tax system is defective and conflicting. 

11. Sickness is the biggest problem of small establishments. More than 80% of small establishments remain sick or closed. Their sustainability is questionable.

12. Custom formalities are cumbersome for entrepreneurs engaged in exporting.

13. Protection of intellectual property rights is effective.

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Negative aspect of entrepreneurship

Entrepreneurship has the following negative aspects.

1.       Risk to failure : The entrepreneur bears personal liability for losses. The failure rate for new ventures is very high. There is no guarantee of success. The reasons are:

·         Lack of knowledge and experience of technical and business know-how.

·         Lack of capital. Poor creditworthiness with financial institutions.

·         Poor marketing. Lack of customer-orientation. Poor knowledge of marketing tools, concepts and competition.

·         Out-dated technology

·         Raw material shortages.

2.       Lack of professional management: New ventures lack professional management. This is reflected by:

·         Lack of vision and strategies.

·         Traditional management practices.

·         Centralized decision making. Lack of delegation.

·         Poor quality of employees. Staffing based on kith and kin relationships.

·         Ineffective leadership

·         Lack of use of systematic and analytical methods of management

3.     

             Changing government policies : Government policies change frequently. They adversely affect entrepreneurship. Policy also do not get properly implemented. Facilities provided to entrepreneurs in terms of infrastructure, training, advice and tax incentives tend to be inadequate.

4.       

      Low mobility: Mobility relates to movement of entrepreneurs between industries, occupations and locations. Women entrepreneurs generally suffer from low mobility. Family pressures restrict their mobility. Low mobility becomes a negative for entrepreneurship.

5.       Emotional stress: Entrepreneurship requires hard work, long hours and high level of energy. This may create emotional stress for entrepreneur.     

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Mission

This blog is generated to make the general individuals aware of the general terms regarding entrepreneurship. After going through this blog, the readers will be able to distinguish the meaning of management and entrepreneurship, managers and entrepreneurs, Intrapreneur and salaried employees and likewise the same. However, the general public will get a chance to apprehend about the key terms regarding entrepreneurship and various factors influencing entrepreneurship.  As a matter of fact, the key mission of this blog is to persuade the individual having innovative ideas towards entrepreneurship, generating awareness for the proper utilization of the available resources without any wastage, which increases productivity and efficiency which would reproduce economic development and prosperity in the country.

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About Me

Well, Introducing myself, I am Neeva   Shrestha, very much kind and initiative person. I have graduated from Caspian Valley College, Kathmandu, Nepal. Currently I am appointed as a full time in Siddhartha Insurance Limited, and work as a part timer in teaching field. I always believe in flourishing knowledge, as I follow a single concept, if a person gives knowledge, you will understand much deeply about a particular subject. Beside that I am always eager to assist people who want to learn more. Due to my simple interest, I work as a part timer, teaching entrepreneurship to the students.  Besides that, I want to explore more things in life. Perhaps, I travel from places to places to gain some knowledge, to give some knowledge .It is the only way we can explore new adventures and widen out thoughts and apprehension.

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Positive Aspects Of Entrepreneurship

Entrepreneurship creates new ventures and new jobs. It is the source of innovation. It creates new processes, products, markets and facilitates change. It puts economic development on a new course. Entrepreneurship is the driving force for economic development. It plays a critical role in economic development in the following ways:

Capital Formation

Capital is one of the vital sources for economic development. It is addition made to the stock of physical and human capital. Entrepreneurs stimulate investment interest in new ventures to mobilize idle savings of public.

Employment Creation

Generally, Entrepreneurs create employment opportunities for self and others. New business ventures are an important source of employment opportunities. Unemployment goes down and income level increases. Entrepreneurs provide employment to special focus groups such women and disadvantaged persons.

Increased productivity

Entrepreneurs make effective utilization of resources with minimal wastage. This leads to increase in production and productivity. The use of new technology also facilitates productivity increases. The rate of economic growth also increases. Potential resources get effectively exploited to provide goods and services to customers. Whatsoever, Entrepreneurs reinvest to expand existing venture or start new venture and try to maximize the value.

Balanced Development

Entrepreneurs start new ventures in various parts of the country. Incentives and facilities granted by the government provide attraction for starting business in backward regions of the country. This promotes balanced regional development as local resources get utilized. Entrepreneurs establish back ward linkages with the suppliers and forward linkages with the distributors. This also aids balanced development.

Export Promotion

Entrepreneurs innovate to develop new products for the needs of foreign markets. They tailor their products to the changing needs and preferences of foreign customers. Exports bring valuable foreign exchange. Exports are essential for economic development. Basically in countries like Nepal, Nepalese Entrepreneurs manufacturing woolen carpets tailor their design to satisfy the needs of various foreign markets. The design requirements of European and American markets may vary significantly. However, it also facilitates import-substitution.

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Entrepreneurship Development

Usually, Entrepreneurs practice entrepreneurship. Entrepreneurship qualifications are possessed by entrepreneurs. Seemingly, there is no general agreement about the qualifications of entrepreneurs. The common qualifications that make entrepreneurs successful are explained as:

Achievement Oriented

Entrepreneurs have strong need for achievement. This need serves as the prime motivator for them. It drives them towards the accomplishment of challenging tasks and makes them creative. It provides them desire to succeed. Money is not their obsession.  It is only an indicator of accomplishment. They see and act on new opportunities.

Hard working

Entrepreneurs are motivated to consistently work hard by devoting necessary time efforts. They work hard endlessly with persistence and perseverance. They possess high level of energy, enthusiasm and diligence. They take initiative and are action oriented. Most probably, entrepreneurship is action which involves getting things done through others. They pursue excellence by performing better than others.

Desire for responsibility

Entrepreneurs feel personally responsible for the results. They like to influence results by controlling resources and are utterly committed to their ventures. They respond positively to challenges. They are assertive. They accept responsibility with enthusiasm and have passion for business.

Preference for risk

Entrepreneurs are the risk takers. They have willingness to take moderate to high risk. However, the risk taking is guided by information analysis and experience. They possess self-confidence for achieving their goals. They have high tolerance for ambiguity. They take calculated risks to achieve goals.

Good Manager and Leader

Entrepreneurs ought to be good managers. They take various actions in favor of the organizations. They take decisions to solve problems. They bring together all the available resources such man, machine, materials, money to produce products. They prepare business plan. They get along with others and create networks of relationships. They effectively manage time and stress.

Entrepreneurs are also leaders. They motivate and influence people. They communicate effectively and initiative in accordance to the demands of the situation. They move forward with an open mind.

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