Modern Small Business Enterprises: Dr. Saumendra Das Saumendra@giet - Edu

Modern Small Business
Enterprises
Dr. Saumendra Das
saumendra@giet.edu
Small Business:
• Small businesses are types of corporations, partnerships, or sole
proprietorships which have a small number of employees and/or less
annual revenue than a regular-sized business or corporation.
• Businesses are defined as “small” in terms of being able to apply for
government support and qualify for preferential tax policy.
• The qualifications vary depending on the country and industry. Small
businesses range from fifteen employees under the Australian Fair
Work Act 2009, fifty employees according to the definition used by
the European Union, and fewer than five hundred employees to
qualify for many U.S. Small Business Administration programs
Continued….
• Small businesses in many countries include service or retail
operations such as convenience stores, small grocery stores, bakeries
or delicatessens, hairdressers or tradespeople (e.g., carpenters,
electricians), restaurants, motels, photographers, very small-scale
manufacturing, and Internet-related businesses such as web design
and computer programming.
• Some professionals operate as small businesses, such as lawyers,
accountants, dentists, medical doctors and developers (although
these professionals can also work for large organizations or
companies).
Characteristics:
Partnership
Sole-trader
Corporation
Concepts of small business, self-
employment, entrepreneurship, and
startup:
• Self-employment: an organization created primarily to provide income
to the founders, i.e. sole proprietor operations.
• Entrepreneurship: all new organizations.
• Startup: a new organization created to grow (and have employees).
• Small business: an organization that is small (in employees or
revenue) and may or may not have the intention to grow.
Definition (s):
• In India, all the manufacturing and service enterprises having
investment “Not more than Rs 10 crore” and Annual Turnover “not
more than Rs 50 crore” come under this category.
• In the United States, the Small Business Administration establishes
small business size standards on an industry-by-industry basis but
generally specifies a small business as having fewer than 500
employees for manufacturing businesses and less than $7.5 million in
annual receipts for most non-manufacturing businesses
Definition (s):
• In Australia, a small business is defined by the Fair Work Act 2009 as
one with fewer than 15 employees, although the Australian Bureau of
Statistics uses less than 20 employees as its threshold. By comparison,
a medium-sized business or mid-sized business has fewer than two
hundred employees.
Categories of small business:
• Franchise businesses-Franchising is a way for small business owners to
benefit from the economies of scale of the big corporation
(franchiser). McDonald’s and Subway are examples of a franchise.
• Retailers’ cooperative- A retailers’ cooperative is a type of cooperative
that employs economies of scale on behalf of its retailer members.
Retailers’ cooperatives use their purchasing power to acquire
discounts from manufacturers and often share marketing expenses.
Challenges:
• Bankruptcy
• Social responsibility
• Job quality
• Cyber crime
• Marketing
Role of Small-scale Industries:
• Employment generation
• Less Capital Requirement
• Use of resources and development of entrepreneurial skills
• Equal income distribution
• Maintains regional balance
• Short production time
• Supporting the large scale industries
• Improvement in Export
• Reduce the dependence of agriculture
Concepts of SSI:
• Small scale industries are referred to as those industries in which the process
of manufacturing, production and servicing are done on a small scale.
• The investment on such industries is one time and these investments are
mostly done on plant and machinery, the total investment on such industries
do not exceed 1 crore.
• In small scale industries, the manufacturing of goods and rendering of
services are done with the help of smaller machines and very limited
manpower.
• Small scale industries or SSIs are known as the lifeline of an economy, which
is very important for a country like India. Being a labor intensive industry, it is
very helpful in creating employment opportunities for the population of the
country.
Characteristics of Small Scale Industries:
• Small scale industries generally have a single ownership, which means it either
has a sole proprietorship structure or a partnership.
• The management of the small scale industries rests with the owners and
therefore, the owner plays an active role in the day to day functions of the
business.
• Small scale industries are very much labor intensive, hence there is limited use of
technology.
• Small scale industries are flexible and adaptable to a changing business
environment, unlike the large industries.
• Small scale industries work in a restricted area which makes them able to meet
local and regional requirements.
• Small scale industries use resources that are local and readily available, which
helps the economy fully utilise the natural resources and bear minimum wastage.
Objectives of Small Scale Industries:
• To create job opportunities for the population.
• To help in the development of the rural areas of the economy.
• To play an active role in reducing the regional imbalances in the
nation.
• To help in improving the standard of living for people in rural areas.
• To ensure there is equal distribution of wealth and income.
Role of Small Scale Industries in the
Indian Economy:
• They are the major sources of employment for the people living in
rural areas and therefore, play a vital role in generating employment
in an economy.
• Small scale industries account for almost 40% of the total goods and
services in India hence, is a very important contributor to the
economy.
• Small scale industries help in promoting the Make in India initiative
which helps in increasing demand for local made products.
• Majority of the export materials are provided to the Indian companies
from the small scale industries. It is estimated that around 50% of all
the material exported are produced from such industries.
Examples of Small Scale Industries-
• Paper Bags industries
• Leather belt manufacturing industries
• Small toys manufacturing industries
• Bakeries
• School stationeries
• Water bottles manufacturing industries
• Beauty parlors
• Pickle manufacturing industries
• Incense stick manufacturing industries
• Paper plate manufacturing industries

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