Unique Characteristics of Small Scale Industries
Small Scale Industries in developing countries plays a vital role in its economic development. These small scale industries directs towards a stage of economic transition representing a shift to modern technology from traditional methods just after globalisation. The diversities in these industries reflects towards the variations in process of its transitional nature. As we all are aware that these small scale industries mostly use simple skills and machinery because of lack of knowledge, lack of finance etc and to transform them into large scale industries entrepreneurs play an important role (Bolton, 2000).
These small scale industries beside being a part of economic generation for the country, such industries have unique characteristics of economic generation and organisational phenomenon because of which they play a social and political role in employing the local population, utilising the resources in balanced form, generating income and bringing change in a peaceful and gradual manner within a society.
In the development of these industries entrepreneurs are very important as not only solve the problem of industry development but also the others problems of unemployment, problem related to unbalanced development of areas, problem of economic power concentration and diverting the path of profits from traditional methods to new latest technologies and investing money in the right direction. The present study will attempt to cover the significant issues faced by the entrepreneurs in small scale industries, entrepreneurial activity in this sector and the factors influencing the probability of new venture success.
Small Scale Industries are said to play an important role in stimulating the economic activity as they bring more employment, needs less investment, have lots of government support and have reduced regional imbalance. But in today’s scenario small scale industries are not able to play their role as efficiently because of few constraints which these entrepreneurs face.
Towards the road of success, an entrepreneur has to face various challenges. The very first challenge is the (Kanchana, 2013)
- Finance: The small Scale Industries face the major challenge of finance because of which they are not able to source latest technology, educated and trained staff. They also lack getting access to special government plans. Finance is like the blood for any organisation and no organisation can run properly in absence of adequate funds. Small scale industries are also not liable of getting credits because of which they are not able to develop (Smriti, 2012). Because of this challenge entrepreneurs are not able to get financial help to successfully run the small scale industries
- Developing the Vision and Business Idea: For any entrepreneur developing the business idea is the first challenge. An entrepreneur should be able to see what others don’t see and can’t think of it. For e.g. Steve jobs envisioned the need of personal computers and Bill Gates envisioned the need of Software to run these computers.
- Raising the capital for Start up: Usually investors are not ready to invest money in small scale industries and when an entrepreneur come up with a new idea of running the industry these investors are reluctant to new ideas thinking if it fails and will not get returns (Kanchana, 2013). To overcome this, an entrepreneur should have a good ability of selling his idea, should be prepared with his business plan and be good in convincing.
- Assembling a business Team: Still small scale industries are running on old methods of management with proper business team because of which entrepreneurs faces a problem in developing a core business team with which an entrepreneur can divide the work and vision (Curan, 2001). This business team consist of an accountant, banker, legal and financial advisor. A single entrepreneur cannot look after to all divisions and he is not master of all these business processes, so with a core team he can get the bestpossible knowledge and efforts can be directed in right direction.
- Finding the right business location: Usually small scale industries are set up in villages or outskirts which have connectivity problem to roads, big cities, internet etc facilities.So, a major challenge for an entrepreneur is to set up or change the location of small scale industry.
- Finding good employee: Finding a talented, educated, hardworking and loyal employee is not an easy task. For start up, passionate employees are required who are not working for money but for the success of the business idea.
- Finding good consumers: Finding good costumer is very hard, good costumers are those who are loyal to the business and will forgive the mistakes. Good customers will help the entrepreneurs to develop the business whereas bad customers will always try to find the loop holes and will try to liquidate the business.
- Unforeseen business challenges and expenses: another major challenge an entrepreneur might face is the over expenses in the business, bad weather, loss of market share, bad debts by customers which might ruin the business. Small scale industries are majorly prone to loss by bad weather conditions like in cotton industry a failure in crop yield will ruin the whole business plan.
- Dealing with the competition: In every type of industry competition is good and leads to road of innovation and creativity. It all depends on an entrepreneur how he takes the competition and how he deals with it.
- Keeping up with Industries changes and Trends: Changes in trends can happen any time and an entrepreneur should always be ready to face these changes while starting a small business. For eg In India in 2016 demonetisation came which have affected the whole country and in such time an entrepreneur should be ready with all its sources to cope up with such changes and bring its business from such changes without any loss.
- Exiting the business: Along with a business strategy an exit strategy is also very important. Most of the entrepreneurs do not plan exit strategy or one who prepare are not able to implement it which is one of the reason why business crumbles after the death of the founder. Exit strategy is used when the certain target is achieved like annual sales is achieved then the business can be shut down (Rose, 2007).
- Passion and Purpose: Many people choose to become entrepreneur just to become their own boss, they don’t want to be ruled by others and want to earn huge money. Such passion if not directed into a positive manner these entrepreneurs will not get success. Thus, they have tohave a positive feel about their business and doings.
- Overestimation: A very common challenge faced by the entrepreneur is the overestimating their success in the few years. They want to achieve profits in one year itself.
Entrepreneurs who are motivated for attaining higher achievements rather than profits or financial gains will come forward for changing the stagnant inertia and will of course create the preconditions for development. In any type of economy like capitalistic economy or state capitalism growth cannot be imagined without the Entrepreneurial activities (K. Lavanya et al. 2008). The very famous entrepreneurial activity in small scale industry was shown by Jamshedjee TATA, a Parsi who started a small steel enterprise in Jamshedpur, India. Today TATA is a world known name of Steel which was started as an entrepreneurial activity. The other successful entrepreneurial activities are entrepreneurs getting government support especially in cotton and cement industry in Indian economy. The famous entrepreneurs who got success from small scale industries are Birla, TATA, DhirubhaiAmbani who started their enterprises on a small scale and today they are ruling the world and have made the country one of the most preferred country for investment world wide.
Importance of Entrepreneurs in Small Scale Industries
India is an agricultural economy which depends mostly on its agricultural and industrial performance for its economic development. India’s agricultural sector has huge capacity to provide employment but is unable to do so, therefore the government has accelerated the growth of this sector by assigning high priority to small scale entrepreneurship for development of the small sector industries like agriculture.
The various factors which will lead to success for entrepreneurs in entering to small scale industries are: a huge support from the government like in terms of concessions and incentives for buying lands and machineries. Entrepreneurs show more interest in those economies which has free economy and provide security and prestige to them. India can be a good venture for entrepreneurs as the Indian government in its Five Year Plan programme provide land and incentives to entrepreneurs for establishing their industries. There are few institutions and programmes like National Small Industries Corporation, Financial Corporations, Small Scale Industries Board, are established by the State Government to promote new entrepreneurs in setting up their enterprises.
Factors leading to success in new ventures are formation of new policies and programmes which are backed by strong support from institutions with an aim to identify and motivate the new pool of entrepreneurs (Padmanand, 2004). These new entrepreneurs who are coming from the non-traditional groups are getting full support so that they can break the monopoly of dominating business caste and communities and bring more opportunities and employment to the Nation. Another factor for success in entering into new venture for entrepreneurs is the removal of regional disparities in the various businesses (I. Malyadari ,2014).
Thus, government is trying hard and giving full hand support to these small scale entrepreneurs by developing an effective mechanism which will help these small scale entrepreneurs to defy the various challenges and risks which they face while starting a new venture. If we talk about American government there have been great opportunities available for small scale industries like by giving special plans for women, disabled veterans, minorities to motivate them to come up with their business plan and support the economy (Rose, 2007).
Conclusion
The process of development of an economy is also dependent on its entrepreneurial activity. Without local support and government policies and programmes such entrepreneurial activities cannot gain momentum (Sameer, 2007). Thus it is very urgent to come out from the vicious circle and start the process of development- to start with the small scale industries are the best and most desirable dent. Thus the above study shows that the probability of success for entrepreneurs while entering small scale industries with new ventures is more and have good future indeed.
References
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