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Small Business and Modern Technology

Mrs. Kulwinder kaur

Arshdeep Kaur B.B.A.(2nd YEAR) ROLL NO. 43

Patel Memorial National College, Rajpura

If words are considered as symbol of approval and taken of appreciation then let the words play the heralding role of expressing my sincerest gratitude and thanks A Project usually falls short of its expectation unless guided by the right person at the right time. Success of a project is an outcome of sincere efforts, channeled in the right direction, efficient supervision and the most valuable professional guidance. This project would not have been completed without the direct and indirect help and guidance of such luminaries. They provide me with the necessary recourses and atmosphere. I am today. In the end I would like to my parents for giving me strength in times when I thought I would never be able to complete this project. I thank them again and again for letting me be where I am thankful to all of my friends and batch mates for their help in completing this project work. Finally, I am thankful to my entire family members for their great support and encouragement.

Entrepreneurship is he act of being an entrepreneur, which can be defined as "one who

undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods".

Definition of Entrepreneurship
Entrepreneurship is more than simply starting a business. The definition of entrepreneurship is a process through which individuals identify opportunities, allocate resources, and create value. This creation of value is often through the identification of unmet needs or through the identification of opportunities for change. Entrepreneurs see problems as opportunities, then take action to identify the solutions to those problems and the customers who will pay to have those problems solved. Entrepreneurial success is simply a function of the ability of an entrepreneur to see these opportunities in the marketplace, initiate change (or take advantage of change) and create value through solutions.

What Is Business Entrepreneurship?

There are many interpretations and definitions of entrepreneurship. According to intellectuals and business experts, the definition of entrepreneurship is simply the combining of ideas, hard work, and adjustment to the changing business market. It also entails meeting market demands, management. Most importantly, it describes the key directive of any business - innovation.

Innovation is by far the primary factor that governs the very creation of a small business or entrepreneurship. Innovations can be processes or even products. One example of a process could be the creation of ideas through the written word. Products can refer to anything that is created that can be sold, whether it is a new type of glue or even a service that provides; for example, housecleaning. Whenever we talk about a business term it is essential to analyse its meaning, ENTREPRENEURSHIP i.e trying to identify market opportunities, arranging resources to bring an imaginative idea to a practical situation and investing these resources in order to attain long term gains. characteristics of entrepreneurship

CREATIVE ACTIVITY i.e it involves innovation of products and techniques by keeping in mind the market; DYNAMIC PROCESS i.e. keeps in mind changing external environment; PURPOSEFUL ACTIVITY i.e. purposed to earn profits or bring a difference to the market ; INVOLVES RISK i.e entrepreneurial decisions are vast and can not be reverted easily and involve great deal of investments.

The entrepreneur as a person who undertakes a commercial venture organizes it, raises capital to finance it or a major portion of the risk. Characteristics of an entrepreneur include

ability to bear risk, technical knowledge about production techniques and marketing, ability to gather financial and motivational resources ability to build a sound organization.


INNOVATIVE i.e introduction of something new to the nation (e.g: Dhirubhai Ambani, Indian entrepreneur); IMITATING i.e. one who adopts a method of production or technology already adopted by someone else and may not be able to afford resources for entrepreneurial research; FABIAN i.e those who are cautious in adopting any changes and are shy and lazy to adopt new methods DRONE i.e. those who resist changes and continue to use old or traditional methods of production.

ENTREPRENEUR An Entrepreneur is an individual who efficiently and effectively combines the four factors of production. Those factors are land (natural resources), labor (human input into production using available resources), capital (any type of equipment used in production i.e. machinery) and Enterprise (intelligence, knowledge, and creativity.) Entrepreneurship is often difficult and tricky, as many new ventures fail. is often . Most commonly, the term entrepreneur applies to someone who creates value by offering a product or service. Entrepreneurs often have strong beliefs about a market opportunity and organize their resources effectively to accomplish an outcome that changes existing interactions. Business entrepreneurs are viewed as fundamentally important in the capitalistic society. Some distinguish business entrepreneurs as either "political entrepreneurs" or "market entrepreneurs," while social entrepreneurs' principal objectives include the creation of a social and/or environmental benefit. The Enterprise can be set up in a designated industrial areas, where infrastructure facilities are available and is near to the market identified. It can also be set up in any other area depending upon nature of activity and local municipal rules.

Entrepreneurship is the practice of starting new organizations or revitalizing mature organizations, particularly new businesses generally in response to identified opportunities. Entrepreneurship is often a difficult undertaking, as a vast majority of new businesses fail. Entrepreneurial activities are substantially different depending on the type of organization that is being started. Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many "highprofile" entrepreneurial ventures seek venture capital or angel funding in order to raise capital to build the business. Angel investors generally seek returns of 20-30% and more extensive involvement in the business. Many kinds of organizations now exist to support would-be entrepreneurs, including specialized government agencies, business incubators, science parks, and some NGOs. CHARACTERISTICS OF AN ENTREPRENEUR Entrepreneurs have many of the same character traits as leaders, similar to the early great man theories of leadership; Entrepreneurs are often contrasted with managers and administrators who are said to be more methodical and less prone to risk-taking. Such person-centric models of entrepreneurship have shown to be of questionable validity, not least as many real-life entrepreneurs operate in teams rather than as single individuals

The Entrepreneur has an enthusiastic vision. The Entrepreneur's vision is an interlocked collection of specific ideas.

The overall blueprint to realize the vision is clear. The Entrepreneur promotes the vision with enthusiastic passion. The Entrepreneur develops strategies to change the vision into reality. The Entrepreneur takes the initial responsibility to cause a vision to become a success. Entrepreneurs take prudent risks. An Entrepreneur is usually a positive thinker and a decision maker.

ADVANTAGES OF ENTREPRENEURSHIP Every successful entrepreneur brings about benefits not only for himself/ herself but for the municipality, region or country as a whole. The benefits that can be derived from entrepreneurial activities are as follows: 1. Enormous personal financial gain. 2. Self-employment, offering more job satisfaction and flexibility of the work force. 3. Development of more industries, especially in rural areas or regions disadvantaged by economic changes, for example due to globalization effects. 4. Encouragement of the processing of local materials into finished goods for domestic consumption as well as for export. 5. Income generation and increased economic growth. 6. Promotion of the use of modern technology in small-scale manufacturing to enhance higher productivity. 7. Encouragement of more researches/ studies and development of modern machines and equipment for domestic consumption. 8. Development of entrepreneurial qualities and attitudes among potential entrepreneurs to bring about significant changes in the rural areas. 9. Freedom from the dependency on the jobs offered by others. 10. The ability to have great accomplishments. CONTRIBUTIONS OF ENTREPRENEURS 1) Develop new markets. Under the modern concept of marketing, markets are people who are willing and able to satisfy their needs. In Economics, this is called effective demand. Entrepreneurs are resourceful and creative. They can create customers or buyers. This makes entrepreneurs different from ordinary businessmen who only perform traditional functions of management like planning, organization, and coordination. 2) Discover New Sources Of Materials. Entrepreneurs are never satisfied with traditional or existing sources of materials. Due to their innovative nature, they persist on discovering new sources of materials to improve their enterprises. In business, those who can develop new sources of materials enjoy a comparative advantage in terms of supply, cost and quality.

3) Mobilize Capital Resources. Entrepreneurs are the organizers and coordinators of the major factors of production, such as land labor and capital. They properly mix these factors of production to create goods and service. Capital resources, from a layman's view, refer to money. However, in economics, capital resources represent machines, buildings, and other physical productive resources. Entrepreneurs have initiative and self-confidence in accumulating and mobilizing capital resources for new business or business expansion.

4) Introduce new technologies.

Aside from being innovators and reasonable risk-takers, entrepreneurs take advantage of business opportunities, and transform these into profits. So, they introduce something new or something different. Such entrepreneurial spirit has greatly contributed to the modernization of economies. Every year, there are new technologies and new products. All of these are intended to satisfy human needs in a more convenient and pleasant way.

5) Create Employment.
The biggest employer is the private business sector. Millions of jobs are provided by the factories, service industries, agricultural enterprises, and the numerous small-scale businesses. PROMOTION OF ENTREPRENEURSHIP Entrepreneurship was potential to support economic growth and social cohesion, it is the policy goal of many governments to develop a culture of entrepreneurial thinking. This can be done in a number of ways: by integrating entrepreneurship into education systems, legislating to encourage risk-taking, and national campaigns Many of these initiatives have been brought together under the umbrella of Global Entrepreneurship Week, a worldwide celebration and promotion of youth entrepreneurship, which started in 2008. FINANCIAL ASSISTANCE Financial assistance is available from institutions such as Nationalised Banks, Small Industries Development Bank of India, Regional Rural Banks, National Small Industries Corporation, State Financial Corporations etc. depending upon the project requirement and promoters background. Financial assistance has two components. Loan for fixed capital is used to acquire Plant and Machinery, land and building. Working capital loan is used to meet day to day operational cost of the production. State Financial Corporation and National Small Industries Corporation generally provide working capital. However under a package assistance, State Financial Corporations also provide a composite loan covering plant and machinery and working capital.





Small and Medium-sized Enterprises (SMEs) in market economies are the engine of economic development. Owing to their private ownership, entrepreneurial spirit, their flexibility and adaptability as well as their potential to react to challenges and changing environments, SMEs contribute to sustainable growth and employment generation in a significant manner. SMEs have strategic importance for each national economy due a wide range of reasons. Logically, the government shows such an interest in supporting entrepreneurship and SMEs. There is no simpler way to create new job positions, increasing GDP and rising standard of population than supporting entrepreneurship and encouraging and supporting people who dare to start their own business. Every surviving and successful business means new jobs and growth of GDP.

Therefore, designing a comprehensive, coherent and consistent approach of Council of Ministers and entity governments to entrepreneurship and SMEs in the form of government support strategy to entrepreneurship and SMEs is an absolute priority. A comprehensive government approach to entrepreneurship and SMEs would provide for a full coordination of activities of numerous governmental institutions (chambers of commerce, employment bureaus, etc.) and NGOs dealing with entrepreneurship and SMEs. With no pretension of defining the role of government in supporting entrepreneurship and SMEs, we believe that apart from designing a comprehensive entrepreneurship and SMEs strategy, the development of national SME support institutions and networks is one of key condition for success. There are no doubts that governments should create different types of support institutions:

i) To provide information on regulations, standards, taxation, customs duties, marketing issues; ii) assurance; To advise on business planning, marketing and accountancy, quality control and

iii) To create incubator units providing the space and infrastructure for business beginners and innovative companies, and helping them to solve technological problems, and to search for know-how and promote innovation; and iv) To help in looking for partners. In order to stimulate entrepreneurship and improve the business environment for small enterprises.

Basic training differs from product to product but will necessary involve sharpening of entrepreneurial skills. Need based technical training is provided by the Govt. & State Govt. technical Institutions.

There are a number of Government organisations as well as NGOs who conduct EDPs and MDPs. These EDPs and MDPs and are conducted by MSME's, NIESBUD, NSIC, IIE, NISIET, Entrepreneurship Development Institutes and other state government developmental agencies.

Marketing Assistance

There are Governmental and non-governmental specialised agencies which provide marketing assistance. Besides promotion of MSME products through exhibitions, NSIC directly market the MSME produce in the domestic and overseas market. NSIC also manages a single point registration scheme for manufacturers for Govt. purchase. Units registered under this scheme get the benefits of free tender documents and exemption from earnest money deposit and performance guarantee.

Promotional Schemes
Government accords the highest preference to development of MSME by framing and implementing suitable policies and promotional schemes. Besides providing developed land and sheds to the entrepreneurs on actual cost basis with appropriate infrastructure, special schemes have been designed for specific purposes like quality upgradation, common facilities, entrepreneurship development and consultancy services at nominal charges.

Government of India has been executing the incentive scheme for providing reimbursement of charges for acquiring ISO 9000 certification to the extent of 75% of the cost subject to a maximum of Rs. 75,000/- in each case. ISO 9000 is a mechanism to facilitate adoption of consistent management practices and production technique as decided by the entrepreneur himself. This facilitates achievement of desired level of quality while keeping check on production process and management of the enterprise.

Concession on Excise Duty

MSME units with a turnover of Rs. 1 crore or less per year have been exempted from payment of Excise Duty. Moreover there is a general scheme of excise exemption for MSME brought out by the Ministry of Finance which covers most of the items. Under this, units having turnover of less than Rs. 3 crores are eligible for concessional rate of Excise Duty. Moreover, there is an exemption from Excise Duty for MSME units producing branded goods in rural areas

Credit Facility To MSME

Credit to micro, small and medium scale sector has been covered under priority sector lending by banks. Small Industries Development Bank of India (SIDBI) has been established as the apex institution for financing the MSME. Specific schemes have been designed for implementation through SIDBI, SFCs, Scheduled Banks, SIDCs and NSIC etc. Loans upto Rs. 5 lakhs are made available by the banks without insisting on collaterals. Further Credit Guarantee Fund for micro, small and medium enterprises has been set up to provide guarantee for loans to MSME up to Rs. 25 lakhs extended by Commercial Banks and some Regional Rural Bank.

Policies And Schemes For Promotion Of MSME Implemented By State Governments

All the State Governments provide technical and other support services to small units through their Directorates of Industries, and District Industries Centres. Although the details of the scheme vary from state to state, the following are the common areas of support.

1. 2. 3. 4. 5. 6. 7.

Development and management of industrial estates Suspension/deferment of Sales Tax Power subsidies Capital investment subsidies for new units set up in a particular district Seed Capital/Margin Money Assistance Scheme Priority in allotment of power connection, water connection. Consultancy and technical support

Advantages of Profit Planning

Profit planning offers many advantages to your business. The modest investment in time required to develop and implement the plan will pay liberal dividends later. Among the benefits that your business can enjoy from profit planning are the following: * Performance evaluation. The profit plan provides a continuing standard against which sales performance and cost control can quickly be evaluated. * Awareness of responsibilities. With the profit plan, personnel are readily aware of their responsibilities for meeting sales objectives, controlling costs, and the like. * Cost consciousness. Since cost excesses can quickly be identified and planned, expenditures can be compared with budgets even before they are incurred, cost consciousness is increased, reducing unnecessary costs and overspending. * Disciplined approach to problem-solving. The profit plan permits early detection of potential problems so that their nature and extent are known. With this information, alternate corrective actions can be more easily and accurately evaluated. * Thinking about the future. Too often, small businesses neglect to plan ahead: thinking about where they are today, where they will be next year, or the year after. As a result, opportunities are overlooked and crises occur that could have been avoided. Development of the profit plan requires thinking about the future so that many problems can be avoided before they arise. * Financial planning. The profit plan serves as a basis for financial planning. With the information developed from the profit plan, you can anticipate the need for increased investment in receivables, inventory, or facilities as well as any need for additional capital.

Role of entrepreneurship in economic dvelopment

Need for Entrepreneurship Development

Economic development essentially means a process of upward change whereby the real pr capita income of a country increases over a period of time .Entrepreneurship has an important role to play in the development of a country. It is one of the most important inputs in economic development. The number and competense of entrepreneurs affect the economic growth of the country.

The economic history of the presently advanced countries like USA, Russia and japan supports the fact that economic development is the outcome for which entrepreneurship is an inevitable cause. The crucial and significant role played by the entrepreneurs in the economic development of advanced countries has made the people of developing and under developed countries consious of the importance of entrepreneuship for economic development. It is now a widely accepted fact that active and enthusiastic entrepreneurs can only explore the potentials of the countries availability of resourses such as labour, capital and technology.

The role of entrepreneurs is not identical in the various economies. Depending on the material resources, industry climate and responsiveness of the political system, it varies from economy to economy. The contribution of entrepreneurs may be more in favourable opportunity conditions than in economies with relatively less favourable opportunity conditions.

Entrpreneurship and Economic Development

Entrepreneurship helps in the process of economic development in the following ways :

1) Employment Generation :

Growing unemployment particularly educated unemployment is the problem of the nation. The available employment opportunities can cater only 5 to 10 % of the unemployed. Entrepreneurs generate employment both directly and indirectly. Directly, self employment as an entrepreneur and indirectly by starting many industrial units they offer jobs to millions. Thus entrepreneurship is the best way to fight the evil of unemployment.

2) National Income :

National Income consits of the goods and services produced in the country and imported. The goods and services produced are for consumption within the country as well as to meet the demand of exports. The domestic demand increases with increase in population and increase in standard of living. The export demand also increases to meet the needs of growing imports due to various reasons. An increasing number of entrepreneurers are required to meet this increasing demand for goods and services. Thus entrepreneurship

increases the national income.

3) Balanced Regional Development :

The growth of Industry and business leads to a lot of Public benefits like transport facilities, health, education, entertainment etc. When the industries are concentrated in selected cities, development gets limited to these cities. A rapid development . When the new entrepreneurers grow at a faster rate, in view of increasing competition in and around cities, they are forced to set up their enterprises in the smaller towns away from big cities. This helps in the development of backward regions.

4) Dispersal of economic power :

Industrial development normally may lesd to concentration of economic powers in a few hands. This concentration of power in a few hands has its own evils in the form of monopolies. Developing a large number of entrepreneurers helps in dispersing the economic power amongst the population. Thus it helps in weakening the harmful effects of monopoly.

5) Better standards of living :

Entrepreneurers play a vital role in achieving a higher rate of economic growth. Entrepreneurers are able to produce goods at lower cost and supply quality goods at lower price to the community according to their requirements.When the price of of the commodies decreases the consumers get the power to buy more goods for their satisfaction. In this way they can increase the standard of living of the people.

6) Creating innovation :

An entrepreneur is a person who always look for changes. apart from combining the factors of production, he also introduces new ideas and new combination of factors. He always try to introduce newer and newer technique of production of goods and services. An entrepreneur brings economic development through innovation.

Entrepreneurship also helps in increasing productivity and capital formation of a nation. In short, the development of the entrepreneurship is inevitable in the economic development of the country. The Role played by the entrepreneurship development can be expressed in the following words :

" Economic development is the effect for which entrepreneurship is a cause "

Small Business Development What is in this guide?

This guide provides government policy on Small Business Development. It has the following sections: 1. 2. 3. 4. 5. 6. 7. 8. 9. Why develop small business? Description of Small, Micro and Medium Enterprises (SMMEs) Intended outcomes of the small business strategy Support for the development and growth of SMMEs Promotion of SMMEs by government Business management support services Access to loans for starting or expanding SMMEs SMMEs established by women The Youth entrepreneurship programme

1. Why develop small business?

Unemployment is one of the most important challenges facing the poor people in our country. This has been made worse by the fact that over the last two decades, the formal economy (especially mining) has been shedding jobs and many workers were retrenched. Furthermore, every year hundreds of thousands of new job seekers (the vast majority of them youth) join the army of unemployed. It is accepted worldwide that the development and growth of small, micro and medium enterprises (SMMEs) can play an important role in turning this situation around. Policies and programmes to support the development of SMMEs are therefore an important part of the democratic governments programmes to create a better life.

A strategy was outlined in a White paper by the Department of Trade and Industry (the lead department for SMME development) entitled: A National Strategy for the Development of Small Business in South Africa (May 1995). A year later, the National Small Business Act was passed by Parliament, which provided for the institutions to implement this strategy.

2. Description of Small, Micro and Medium Enterprises (SMMEs)

The National Small Business Act divides SMMEs into the following categories: Category SMME Survivalist enterprises of Description Operates in the informal sector of the economy. Mainly undertaken by unemployed persons. Income generated below the poverty line, providing minimum means to keep the unemployed and their families alive. Little capital invested, not much assets. Not much training. Opportunities for growing the business very small. Between one to five employees, usually the owner and family. Informal - no license, formal business premises, labour legislation Turnover below the VAT registration level of R300 000 per year. Basic business skills and training Potential to make the transition to a viable formal small business.

Micro enterprises

Very small Part of the formal economy, use technology Less than 10 paid employees enterprise Include self-employed artisans (electricians, plumbers) and professionals. than 100 employees Small enterprise Less More established than very small enterprises, formal and registered, fixed business premises. Owner managed, but more complex management structure

Medium enterprise

Up to 200 employees Still mainly owner managed, but decentralised management structure with division of labour Operates from fixed premises with all formal requirements.

Note: Women represent approximately 56 percent of the survivalist company category, 38 percent of micro-enterprises with no employees, and 15 percent of micro-enterprises with 1-4 employees. Small business can also be divided between established formal SMMEs (mainly white and some Indian ownership) in predominantly urban settings and emerging SMME economy (mainly African and Coloured) situated in townships, informal settlements and rural areas. According to the White paper, by far the largest sector is the survivalist enterprise sector. This means that most people are active in the informal sector where they have little institutional support. The governments national small business strategy seeks to address the following common problems faced by SMMEs:

An unfavorable legal environment Lack of access to markets and procurement Lack of access to finance and credit Low skills levels Lack of access to information Shortage of effective supportive institutions

4. Intended outcomes of the small business strategy

The White paper and Act sets out the objectives of our SMME development policy as:

Alleviating poverty, by making it possible for poor people to generate income to meet basic needs; Reducing poverty through employment creation; Redistribution of wealth, income and opportunities; and Contributing to economic growth, by improving innovation and thus competitiveness.

The national small business development strategy also seeks to strengthen cohesion amongst small enterprises and to level the playing field between big and small business.

5. Support for the development and growth of SMMES

The Act provided the foundation for the establishment of the institutions listed in the table below, and the transformation of others, to support small businesses.

In addition to the listed institutions, there are also NGOs, donors and private sector organisations (e.g. the programme by the Banking Council of SA) who support SMMEs. The Black Economic Empowerment Commission, an initiative of black business, also highlighted the importance of SMME development for broad based black empowerment. Institution Services Target

Centre for This is a Chief directorate in the Small Business DTI, responsible for policy and coordination of support Promotion programmes for SMMEs. It also mobilises funds and supervises the establishment of new institutions. Ntsika Enterprise Promotion Agency Provides non-financial support Targets survivalist, micro such as mentoring programmes, and very small enterprises. business advice, help with Majority of the LBSCs government tenders and focus on start-up business, technology support to small targeting unemployed, enterprises, through: women and youth.

Local business service centres (LBSC) Tender Advice Centres (TACs) finance Mainly targets very small, small and medium enterprises, with two small Khula Credit Guarantee programmes for the Scheme provide survivalist and micro guarantee products to sector. banks. Other institutions and NGOs, referred to as Retail Finance Intermediaries (RFIs) which borrow from Khula to make loans to SMMEs Khula-Start: access to access to


Provides through:

micro credit in rural areas NAMAC Two key programmes

Manufacturing advisory The MACs are mainly for centres (MACs), small and medium, more providing support for formal businesses. small scale manufacturing BRAIN for the entire businesses. Business Referral and spectrum of SMMEs. Information Network (BRAIN) information and a help line.

Provincial SMME desks

To provide a one-stop information centre to SMMEs and developing enabling government policy to support SMMEs in each province. Activities of the SMME desks include (though not in all provinces):

Keeping data bases of SMMEs in the province Developing SMME orientated procurement and sub-contracting policies for provincial government Targeted support programmes for HDIs, women, contractors, tourism entrepreneurs, small/micro manufacturers, etc

Land Bank

Finance agricultural businesses From small to large scale farmers. Supports and funds various Predominantly large scale


Development Corporation

industrial programmes.

development projects, but some small to medium enterprises. Has a specific BEE mandate.

Funded by government, it Large, but also small and National Empowerment provides funding for black medium enterprises. empowerment Corporation economic ventures

6. Promotion of SMMEs by government

The second National Small Business Conference organised by the DTI in 1998 focused on the role of local government in SMME support. Local councils do procurement and sometimes form partnerships with business to deliver services. The Local Economic Development approach encourages local government to also play their role in promoting small businesses. The Department of Provincial and Local Government administers a fund of about R42 million, to which municipalities can apply for their LED projects. Many of the approved projects relate to small business activities. The promotion of SMMEs has become an objective across government. Many departments have specific strategies in place, for example developing SMMEs in the tourism sector, or developing small and emerging contractors by Housing and Public Works, Land and Agriculture, Arts and Culture and so forth. The promotion of SMMEs is also an important part of the different spatial development initiatives and the Urban Renewal and Rural Development strategies. As part of the National Skills Development Strategy, the Sector Education and Training Authorities (SETAs) are also supposed to develop programmes that help develop small businesses in their respective sectors. There are a number of other parastatals which also support small businesses, though mainly at the upper end of the spectrum. These include:

Independent Development Corporation (IDC): tourism development, venture capital, low interest empowerment and emerging entrepreneur schemes. South African Bureau of Standards (SABS): through its missing links programme provide quality assistance and awareness to SMMEs. Centre for Science and Industrial Research (CSIR): product improvement and manufacturing assistance to SMMEs through their National Manufacturing Centre.

The Manufacturing Strategy (2001) of the DTI identified a range of sectors with potential for growth of SMMEs. These included tourism, agro-processing, business services, cultural industries, etc, with sectoral strategies to achieve this objective for each of these sectors.

7. Business management support services

The institutions and organisations mentioned above also provide a wide range of business management support services to entrepreneurs and small enterprises, such as:

Developing business plans Doing market research Managing a small business Legal requirements of small businesses Marketing Business development Advice on government tender processes, etc.

BRAIN, the business referral and information network, established by the DTI provides a national helpline and has a data base of services and organisations in each province which provide these services. Lack of access to finances continues to be the major problem faced by people who want to start their own businesses, or to expand their businesses to become more profitable. Commercial banks generally do not regard the majority of people as bankable or creditworthy. An important part of the national small business strategy is therefore to create an enabling environment for entrepreneurs and small businesses to access finances. Although a number of institutions have been set up, we still have a very long way to go. In the Medium Term Expenditure Framework, government has committed to establish an Apex Fund which will lend directly to micro enterprises, and has voted R10 billion to recapitalise the existing institutions like Khula and Ntsika.

Nationa Contractors Finance Corporation l Institutions providing finances to SMMEs

Business Partners (formerly the SBDC) Commercial Banks Community Projects Funds - CPF-SP Development Bank of South Africa Industrial Development Corporation - (IDC) International Tourism Marketing Assistance Scheme - (ITMAS) Khula Credit Guarantee Scheme

Khula Micro Credit Outlets Khula Retail Financial Intermediaries (RFIs) Khula Thuso Mentorship Scheme Land Bank Sizanani Scheme Zimele Business Finance Promotion Agency (Khula RFI) Community Entrepreneurial and Business Initiative Eastern Cape Development Corporation FNB Momentum Umsobomvu Marang Financial Services Free State Development Corporation Remmogo Business Finance

E Cape



Free State Gauten g

African Contractors Anglo Platinum Corporation Artpac Lending Services Basani Business Development Services FNB Momentum UYF Progress Fund Khethani Business Finance Land Bank Marketing Department landbank#landbankMarang Financial Services Sankofa Financial Services The Nations Trust Tusk Construction Support


FINCA FNB Momentum UYF Progress Fund Ithala Development Finance Corporation Khethani Business Finance (Khula RFI) KwaZulu-Natal Development Foundation Marang Financial Services African Contractors Anglo Platinum Corporation Artpac Lending Services Basani Business Development Services FNB Momentum UYF Progress Fund Khethani Business Finance Land Bank Marketing Department

Limpop o

landbank#landbankMarang Financial Services Sankofa The Tusk Construction Support Financial Nations Services Trust

Entrepreneurial Development Centre Mpuma Beehive Finance Facility (Khula Micro Credit Outlet) langa Ekukhanyeni Emerging Entrepreneurs Finance Service Centre Marang Financial Services Middleburg Micro Credit Outlet Mpumalanga Economic Empowerment Corporation (M.E.E.C) Siyakhula Micro Business Finance (Khula Micro Credit Outlet) Northe Remmogo Business Finance (Khula RFI) rn Cape W Cape FNB Momentum Khethani Business Landelike Nations Trust (Khula RFI)

UYF Finance Ontwikkelings

Progress (Khula

Fund RFI) Maatskapy

New Business Finance

9. SMMES established by women

The national small business strategy, since its inception sought to target women. However, women continue to make up the bulk of the survivalist sector of SMMEs and of the poor. During the last decade, a number of organizations and institutions were established by and for women entrepreneurs. These include: South African SAWEN identifies the origin of women entrepreneurs' problems as: Women Entrepreneurs Gender - despite the fact that women-owned Network (SAWEN) enterprises are contributing an increasing launched July 2001 share to national revenue, they are generally perceived to lack the capacity of their male equivalents.

Size - Nearly all women-owned enterprises belong to the lower end of the SMME category, being either very small or micro sized companies. Men are predominant in the more lucrative sectors. Approximately 70 percent of informal businesses in South Africa are owned/controlled by women.

SAWEN seeks to affiliate all women enterprise groups, co-operatives, organisations and initiatives in to a national umbrella body that will represent and articulate the aspirations of all women entrepreneurs (potential and existing) that operate within the South African SMME sector, as well as lobby for their support needs. It also seeks to target rural women. Since its launch in 2001, it has established a number of provincial chapters. Women in Oil and Facilitates the participation of women in business Energy in South ventures in the oil, gas and other energy sectors. Africa (WOESA)launched March 2002 Technology for Aimed at enhancing the accessibility of science and Women in Business technology to women in business, in particular SMME's. It is a national programme under the (TWIP) auspices of the Department of Trade and Industry (DTI). The CSIR, as contracted by DTI, acts as an agent for DTI to implement the TWIB programme. South African Promotion and advancement of women in Women in construction; of education and contribution to the Construction betterment of the construction industry and the launched August enhancement of the entrepreneurial development of women-owned enterprises in construction. 1999

10.The Youth entrepreneurship programme

In 2000 government announced the establishment of the Umsobomvu Youth Fund, out of the proceeds of the demutualisation of Old Mutual and Sanlam. The fund started operating in 2001, with the mandate to facilitate the involvement of young people in economic activities. Umsobomvu implements a youth enterprise programme, providing both financial and nonfinancial support to youth enterprises. The youth entrepreneurship programme has three major projects:

Enterprise funding. Micro-finance. Business development services.

An estimated 700 SMMEs and 3 640 micro-enterprises will benefit from these projects over the next three years, and approximately 17 000 jobs are expected to be created. Enterprise funding Recently launched FNB-Momentum-UYF Progress Fund, which complements the Franchise Fund, launched in partnership with business partners. Focus on entry-level investments, and its pilot projects with the Nations Trust and Micro Enterprise Finance are funding micro-enterprises and co-operatives. Helps young entrepreneurs to access quality business support from approved service providers through vouchers, ranging in value from R1 500 to R23 000.


Business development services voucher

Take it to the Launched recently to create locally based economic People project opportunities for young people. The project focuses on income-generation and self-employment for young people living in 21 urban and rural areas identified as significant "poverty pockets". The project aims to develop local solutions to unemployment by investigating options for youth development in the form of micro and small businesses and co-operatives. It will work in conjunction with local municipalities and donors. Contact, information Aim to reach more than 730 000 young people over the & next three years, offering information and counselling support regarding career development, employment and


entrepreneurship through a youth line, advisory centres and an Internet portal. The first 12 of 33 planned advisory centres have already opened in the provinces of Gauteng, KwaZulu-Natal, Limpopo, Northern Cape, North West, and Western Cape.

School to Work Is designed to transfer high-level technical skills and to facilitate work experience for unemployed matric and tertiary graduates. It also aims to introduce black youth into previously inaccessible careers, such as IT and accounting. Youth Service Focuses on unemployed youth who have no tertiary education, enabling them to acquire the skills, competencies and experience they require to achieve economic independence. This is done through a structured learning programme and accredited through a SETA.

Government accords the highest preference to development of MSME by framing and implementing suitable policies and promotional schemes like policies and promotional schemes, providing incentives for quality upgradation, concession on excise duty and provides technical supportive services. Thus Government play supportive role in developing entrepreneurs. In this study, the relationship between small business development, economic growth, and poverty alleviation in West Virginia is analyzed using time-series data from

1980 to 2001. Four econometric equations in double-log form are regressed using OLS and 2SLS. The results of these regressions show that: 1) There is a robust, positive relationship between the relative size of small business and economic growth, even when controlling both for a number of many other growth determinant variables and for simultaneity bias; 20 2) There is a strong inverse relationship between the relative size of small business and the incidence of poverty; 3) There is a strong inverse relationship between the per capita Real Gross State Product growth and the incidence of poverty; 4) The autonomous impact of the relative size of small business on poverty rate is mild and insignificant, indicating that the strong inverse relation given in (2) is through economic growth rather than a direct one. Thus, the anti-poverty impact of small business development is mainly through its impact on economic growth of the economy as given in (1). The empirical result establishes the link between small business development, economic growth, and poverty alleviation. The study supports the anti-poverty impacts of small business development research findings. Besides, the empirical results and analysis show that unemployment rate has a strong counter-cyclical impact on economic growth and cyclical effect on the incidence of poverty. Government Transfer programs are positively related with the incidence of poverty, which may be because they act as disincentive to work or not high enough to put the recipient above the poverty line. This indicates that strong macroeconomic performance is a key factor for poverty alleviation.

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