Small scale entrepreneurs play a significant role in the economic growth and development of the Indian economy through poverty eradication. Entrepreneurial activity is increasing throughout the work. Small businesses are playing a crucial role in the economy of the world.
Meaning of Small Scale Entrepreneur
Small scale entrepreneurs are those entrepreneurs who operate on a small scale. This type of entrepreneur is popular in underdeveloped countries. They lack the resources to initiate large-scale production.
Importance of Small Scale Entrepreneurs
The following important role played in the small scale industries are:
1. Large Employment Opportunities
Small entrepreneurs use labor-intensive techniques and solve problems to a more significant extent. It is importance of small scale entrepreneurs. Many employment opportunities are created and work as a powerful job creation tool in India. The role of entrepreneurship in economic development and opportunities is very essential.
2. Economical Use of Capital
Less investment and capital are compared to large-scale units. Due to a shorter gestation period, small-scale units provide quick investment returns.
3. Balance Regional Growth
It encourages decentralized development of industries and sets up industries in rural and backward areas. They promote balanced regional growth and help to improve the standard of living in suburban and rural areas as it is the importance of small scale entrepreneurs.
4. Promotes Exports
It has shown phenomenal growth in exports over the years. It contributes a significant position to India’s total exports.
5. Consumer Satisfaction
Small entrepreneurs can produce a wide range of mass consumption items and provide consumer satisfaction. Also, direct and close personal contact with the customer and employees. It is importance of small scale entrepreneurs.
6. Better Industrial Relations
Small-scale industries establish better industrial relations between the employer and employees, and due to good industrial relationships, there are hardly any strikes and lockouts in sectors.
7. Improved Standard of Living
These industries bring higher national income and higher purchasing power to people in rural and semi-urban areas. Thus, improving the standard of living.
8. Protection of Environment
Small-scale industries help protect the environment by reducing the problem of pollution, as it is the importance of small scale entrepreneurs.
9. Mobilization of Resources
Small entrepreneurs mobilize and utilize local resources without small business units. It is importance of small scale entrepreneurs. These local resources are likely to remain unutilized. These industries facilitate the effective use of local resources and generate employment opportunities and sources of income for the local population.
10. Supports the Growth of Large Industries
Many times, small scale entrepreneurs play a supporting role in large-scale industries by providing parts, components and accessories. Thus, they act as ancillaries to large-scale enterprises. Therefore, the importance of small scale entrepreneurs is to assist more significant industries.
Problem of Small scale Entrepreneur in Indian Economy
Some issues for small scale entrepreneurs are:
1. Problem of Finance
Small entrepreneurs are not in a position to arrange total finance from their sources. The problem of small scale entrepreneur in Indian economy is finance arises mainly due to two reasons:
- Scarcity: Scarcity of financial resources in the country.
- Poor Credit Worthiness: Poor credit worthiness of small units in the country.
2. Problem with Raw Materials
Small entrepreneurs face problems related to the procurement of raw materials. The problems are:
- High cost of raw material
- Poor quality of the material
- Irregular supply of raw material.
3. Problem of Marketing
Small scale entrepreneurs face the following problems in the field of marketing are:
- Poor quality product.
- Not able to upgrade their products.
- Not getting information about competition, taste.
4. Problem of Outdated Technology
Small scale entrepreneurs usually use outdated technology and equipment due to obsolete technology. Therefore, the quality of products and productivity tend to be low for small entrepreneurs.
5. Under UtiliZation of Capacity
The problem of small scale entrepreneur in Indian economy is the utilisation of capacity as:
- Lack of financial resources
- Power problems
- Underdeveloped markets.
6. The problem of Skilled Manpower
The problem of small scale entrepreneur in Indian economy can be different. One of them is availability of skilled workers in backward areas. The problems are:
- Lower productivity
- Increase in wages
- Deterioration of quality
7. Poor Planning
Small scale entrepreneurs often fail due to proper planning, and due to inexperience, entrepreneurs fail to prepare realistic feasibility reports. Also, some business development plans ultimately negatively affect small entrepreneurs’ performance.
8. Managerial Problem
Small entrepreneurs need managerial competence for success, lack of proper commitment and managerial skill will add to the problem of small scale entrepreneur in Indian economy.
9. Lack of Infrastructure Facility
Inadequate infrastructure, i.e., insufficient quality and quantity of transportation, communication and other essential services, particularly in backward areas. Inadequate infrastructure adversely affects the quality and quantity of production.
10. Other Problems
Small entrepreneurs have several other problems, such as:
- Trained technicians
- Technological obsolescence
- Unorganised nature of the operation, etc.