Introduction to small business
- 1. Introduction to Small Business Chapter Two
- 2. Concept of Business • The term business denotes activities related to trade, commerce, profession, occupation and industry carried out to make profit. • It is engaged in the production and marketing of products to make profit through customer satisfaction. • The primary beneficiaries of a business are its owners.
- 3. Products • Products are the focus of all business activities. • A product is anything that satisfies the needs of customers.
- 4. Types of Products • Goods • Services • Ideas • Events • Information • Properties
- 5. Definition of Business • A business represents organized efforts of enterprises to produce and market products to make profits through customer need satisfaction.
- 6. Characteristics of Business • Activities • Profit • Customers • Competition • Diversification • Change
- 7. Goals of Business are Many • Profit • Growth • Survival • Leadership • Efficiency • Social Responsibility • Corporate Citizenship
- 8. Meaning of Small Business • It is just like business discussed earlier. • 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. • More than the growth of the business, the aim is to continue operations over a period of time.
- 9. Characteristics of Small Business • Management is independent • Closely held ownership • Local operations • Small size – Number of employees – Fixed assets – Annual sales volume – Capital investment
- 10. Definition of Small Business • US definition: “A small business is one that is independently owned and operated and not dominant in its field of operation” • Nicholos Siropolis: “Typically, a small business is … mom-and-pop stores. Businesses … may be looked upon as big or small, depending on the yardstick and cut-off point used”
- 11. Types of Small Business Activities • Manufacturing • Wholesaling • Retailing • Service – Professional service – Financial service – Transport service – Repair service – Construction service
- 12. Differences between Entrepreneurial Venture and Small Business • Goals • Practices • Size
- 13. Large versus Small Business • Size • Ownership • Impact on industry • Flexibility • Economies of scale • Innovation • Quality • Customer relationship • Life
- 14. Evolution and Classification of Small Business • Evolution – Phase one: Owner-Manager – Phase two: Owner-Manager + Employees – Phase three: Owner + Managers + Employees
- 15. Evolution and Classification of Small Business • Classification of Small Business – Manufacturing – Merchandising – Services
- 16. Features of Small Business in Developed and Developing Countries • Similar Features – Independent management – Closely held ownership – Local operations – Small size
- 17. Features of Small Business in Developed and Developing Countries • Dissimilar features – Definition differences – Activities – Facilities
- 18. Importance of Small Business • Encourages innovation and entrepreneurship • Complementary to large business • Flexibility in operations • Job creation • Maintains close relation with customers and community • Simulates competition • Higher financial rewards
- 19. Strengths of Small Business • Independence • Innovation • Responsiveness • Employment creation • Financial performance
- 20. Indicators for measuring success in Small Business • Profit • Competitive advantage • Flexibility • Innovation • Quality • Customer relationship
- 21. Weaknesses of Small Business • Risk of failure • Lack of homework • Financial loss • Economic downturn • Inadequate management • Laws and regulations • Marketing problems • Technology • Poor financial management
- 22. Challenges of Small Business • Serving a well-defined market • Acquiring sufficient capital • Acquiring and using human resources • Staying informed • Managerial know-how • Time management • Coping with government regulations
- 23. Opportunities for Small Business • Technology • Knowledge • Women and ethnic groups • Occupational and industry shifts
- 24. Small Business in Nepalese Economy • Small businesses are backbone of Nepalese economy. • Ancient and medieval Nepal witnessed the growth of small businesses related to art, craft and cottage industries. • During the Rana Rule, their growth was slow and haphazard. • The era of planned growth since 1956 facilitated their growth in various activities.
- 25. Small Business in Nepalese Economy • Definition of small business in the context of Nepal • 2001/2002 census: 86% establishments had capital in fixed assets not exceeding Rs. 10 million. • These establishments accounted for 56% of employment. • More than 75% of economically active population is self-employed in agriculture and small business.
- 26. Small Business in Nepalese Economy • The number of registered cottage and small industries increased from 5727 in 1992 to 7572 in 2003. • This indicates important role of small businesses in creating employment.
- 27. Importance of Small Business in Nepalese Economy • Economic backbone • Employment creation • Entrepreneurship development • Complementary • Exports
- 28. Problems of Small Business in Nepal • Management • Employees • Technology • Market • Finance • Information • Strategic alliances • Government policies • Sickness
- 29. Reasons for Survival of Small Businesses in Nepal • Large number • Simplicity • Market • Flexibility • Quality • Inter-relationships • State patronage • Low operating costs
- 30. CASE STUDY • Case 1: Namuna Tailoring • Case 2: Mangale Sarki