Entrepreneurship Effectiveness in Small-Scale Industries

Entrepreneurship Effectiveness in Small-Scale Industries

   Entrepreneurship is an age long phenomenon. It arises in England with the advent of industries revolution in the 18th century.

Basically, entrepreneurship growth and effectiveness start from investment, motivational and incentive programmes of various industrial agencies public awareness to entrepreneurial potentials and venture management itself. Towards this end, the federal government has recently in addition to the already existing financial incentives of various industrial and small-scale business agencies, given a fresh boost to small-scale entrepreneurship.

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Given these facilitatory roles for entrepreneurial and small-scale business growth, the foundation to any entrepreneurial effectiveness is a good feasibility study. Everything that connects exploration of new business opportunities is indication of entrepreneurial growth. In this regard, there is the need for a through analysis of the possibility of the success of any new venture. These early entrepreneurial activities form the characteristics and qualities of a successful entrepreneur.


          A typical small scale business has some features of which one can make a number of valid generalization in Nigeria two or more of these characteristics may be combined in determining a small scale business the following characteristics of a small scale are as follows:

  • Most small-scale business owners are not knowledge professionally; they lack experience and managerial skill.
  • A good number of small scale business in Nigeria are indigenous in ownership . Even those that were not, were compelled to do so by the indigenisation degree.
  • Small scale business have limited number of paid employees for assumption, it is not more in some industries.
  • They are mostly unincorporated and operated under registered business names.
  • Most small-scale business is often at difficult situation on how to obtain the necessary finance for their business operation.
  • The capital use to start the operation is how and the annual profit released is equally low.
  • The rate of failure in the business is very high, changes in the line business occur frequently and it is easy to establish and to go out of operation.
  • In small-scale business, the relationship between the employer and the employees is very cordial.
  • The manager or the proprietor handles and supervises the financing, marketing and personnel of the business unit.
  • The small-scale business is closely integrated with and meet only the immediate needs of the local community in which the carries on the business. He has little knowledge of wider and distant markets.


          In Nigeria many multinational or even super-national business today started as small-scale business. The economic history of industrialized countries points to the obvious fact that easiest way to an industrial revolution is through small-scale business. Proper attention towards small scale business has contributed to the national development the importances are mentioned as follows:

  1. Small-scale business generated employment in the areas of skilled and unskilled labour. Most individuals have resorted to creation of employment themselves by owning small-scale businesses.
  2. Small scale promotes training of indigenous manpower for local industries and thus reduces the nations absolute dependency on foreign goods.
  3. With the exportation of local raw materials and manufactured goods, there is inflow of foreign exchange earning into the country.
  4. many small scale industries provides also consumers goods or services to local populace.
  5. There is promotion of nation wide industrial development through industrial dispersal and improvement in technological skills.
  6. Through the application of improve and sophisticated systems of business, Macon’s as a small scale business enhance healthy business environment, trade and services.
  7. Small scale facilitates even development of the country by distributing business unit to the hinterland.
  8. It stimulates economic advancement because it facilitates and generates effective mobilization of local resources like land, labour, and capital.
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Research has revealed that small-scale industries are faced with a number of problems. These obstacles contributed a lot to the future of such business, and they are enumerated as follows:

  • Limited access: this influences the financial structure of such small-scale business unfavorably. It is believed that small scales are usually individual business operating a low-income economy, so through personal savings and borrowing to fiancée their capital equipment or other fixed assets will be in insufficient.
  • Lack of formal education and requisite skill an immense failure of small scales. The success or failure of any venture depends basically on one person. The entrepreneurs who have nether inadequate education nor requisite skill and training create ineffectiveness to the enterprise. In a study concluded by Dum and Brand Street in 1972, on the causes of failures of business firms was found that of 9556 business failure were as a result of managerial inexperience or indentures. He noted that the best way for any entrepreneurs to learn management skill is studying the mistakes of others.
  • Liquidity creates failures of small scale business since poor entrepreneurial effectiveness does not give them enough room to make profits to justify their stay in the business, repayment of loans granted to them by banker face some problems in their regard bank remain reluctant or unwilling about advancement of further loans and advances.
  • As regard, management of effectives, the inability to keep accurate record and measurement of their effectiveness by entrepreneurs has resulted to the failure of many small-scale industries via entrepreneurial ineffectiveness. For example, poor accounting, poor cash management and sales record have maimed the reliability of profit figures and returns to the enterprise.
  • The inability to obtain supply from manufactures is also one of the reasons, why small-scale business fail, they find it difficult to be supplied with adequate raw materials for their production. The reason is that many of them require a huge sum of money as deposit, before such consignment could be delivered to purchase their needs from the open market at an exorbitant price, hence sold to the final consumers at higher make up price.
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Specifically, for growth of entrepreneurship effectiveness, in small scale industries, certain factors must be considered before setting the industries, the following factors must determine the effectiveness of small scale industries n an area.

In setting small scale industries, it will be real to locate them to public places where activities are going on. This is why many small scale industries must be located where customers could easily reach them, pubic places like garages, hospitals, institutions, and government offices, etc, when such business are located near public places where every body will get whatever he wants, it will be at a great advantages to get the patronage of people either going to or coming from such places. Macon’s bakery as a business like was sited at Onu Asata in Enugu by Pauly Bus stop. Unlike other small scale Eastern shop was sited at Ogui Road due to promptly to public places. These small scales are placed at a very good advantageous position that it enjoys a lot of customer patronage.

Transport facilitates is another factor one has to consider before the setting of industries. Adequate road transport is very necessary to enable the firm move its material freely. Setting of small scale industries would be made available in such a way that customers who have no vehicles could easily trick morcler to reach them. Any small scale that wishes to improve sale must endeavor to locate it along major places. Also nearness of raw materials should not be neglected. It plays an important role in the success of any business set up. The raw materials needed for the production of finished goods must be considered and if they were favorable then nearness to source of raw materials would be preferred.

Another issue is that arrangement with professionals like solicitors, accountants, marketers, salesmen and entrepreneurs consultants. Operating with out these professionals may not yield good result. The accountant provides useful financial advice while the solicitors interpret and arrange all the laws and judicial intricacies surrounding the registrations of business names and the formalities involved in obtaining the licenses. The last but not the least is the availability of vehicles by any small-scale industries. These vehicles will facilitates distribution and delivery of goods and articles for small scale to be run effectively, enough motor vans must be provided to ease transportation problems. It will help the dealers to procure their goods much more easily from the manufacturers.

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The internal financing of small-scale business comes from the internal funds and this account for about half of the total capital of the small-scale business. This concludes past and current profits of the industry and also the income and savings arising out of other activities. Many small scale industries rely heartily on this source of funds sine the source is the user, there is no problem of conflict or controls of other terms which restrict the use of the funds which is obtained with external source.

Another method of financing is obtaining loan from financial institutions. Financial is institution like commercial banks, Nigeria industrial development banks (NBI) as mentioned earlier that commercial banks are major source of institutional finances; funds can be obtained either by loans or overdraft. Small-scale business finds it difficult to obtain loan or overdraft from the institutions; this arises if the firm did not give them certain requirements to their satisfaction such as locater’s security.

Other source of fund is through private financiers or moneylenders. Apart from government, bank or personal savings, small scale industries borrow funds to finance their buskins through private financier or money lenders. Also funds can be obtained from friends, relatives and local investors.

Another method of financing is through the trade credit. This implies that materials or inputs for production are supplied without prompt payment. The use of this method has greatly increased due to high rate and cost of their finances. Other methods like retained profits, debentures, subsidies; equity shares, etc contribute significantly to this method of financing small-scale industries.

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