INTRODUCTION

The ultimate measure of a man Is not where he stands In moments of comfort and convenience But where he stands At times of challenge and controversy. - Martin Luther King. The words entrepreneur, intrapreneur and entrepreneurship have acquired special significance in the context of economic growth in a rapidly changing socio-economic and socio-cultural climates, particularly in industry, both in developed and developing countries. Entrepreneurial development is a complex phenomenon. Productive activity undertaken by him and constant endeavor to sustain and improve it are the outward expression of this process of development of his personality.

WHO IS AN ENTREPRENEUR?
An entrepreneur is a person with a dream, originality and daring, who acts as the boss, who decides as to how the commercial organization shall run, who co-ordinates all activities or other factors of production, who anticipates the future trend of demand and prices of products. An entrepreneur is one of the important segments of economic growth. Basically he is a person responsible for setting up a business or an enterprise. Infact, he is one who has the initiative, skill for innovation and who looks for high achievements. He is a catalytic agent of change and works for the good of people. He puts up new green-field projects that create wealth, open up many employment opportunities and leads to the growth of other sectors. The entrepreneur displays courage to take risk of putting his money into an idea, courage to face the competition and courage to take a leap into unknown future and create new enterprises/ business. This creative process is the life

blood of the strong enterprise that leads to the growth and contributes to the national development. The entrepreneur will always work towards the creation and enhancement of entrepreneurial society. The best entrepreneur in any developing country is not the one who uses much capital but an individual who knows how to organize the employment and training of his employees. A classic example is that of Mr. Dhirubhai Ambani because he had all the dynamic qualities of a successful entrepreneur, as a result of which today, he was the owner of the largest private company in India. All decisions which he had taken to grow were instinct and no one had taught him to take decisions. We can define entrepreneur as one who innovates, raises money, assembles inputs, choose managers and sets the organization going with his ability to identify them. As per Peter Drucker- An entrepreneur is one who always searches for change, responds to it as an opportunity. Entrepreneurs innovate. Innovation is a specific instrument of entrepreneurship. As per Joseph A. Schumpeter- Entrepreneur is one who innovates, raises money, and assembles inputs, chooses managers and sets the commercial organization going with his ability to identify them and opportunities which others are not able to identify and is able to fulfill such economic opportunities. As per Walker- An entrepreneur is one who is endowed with more than average capacities in the task of organizing and co-coordinating the various factors of production. He should be a pioneer, a captain of industry.

The process undertaken by an entrepreneur to augment his business interests gave birth to ENTREPRENEURSHIP. ENTREPRENEURSHIP DEFINED: Entrepreneurship is an elusive concept. Entrepreneurship is based on purposeful and systematic innovation. It included not only the independent businessman but also company directors and managers who actually carry out innovative functions. Schumpeter In the above definition, entrepreneurship refers to the functions performed by an entrepreneur in establishing an enterprise. Just as management is regarded as what managers do, entrepreneurship may be regarded as what entrepreneurs do. In other words, entrepreneurship is the act of being an entrepreneur. Entrepreneurship is a process involving various actions to be undertaken to establish an enterprise. It is thus, process of giving birth to a new enterprise. Entrepreneurship is composite skill, the resultant of a mix of many qualities and traits- these include tangible factors as imagination, readiness to take risks, ability to bring together and put to use other factors of production, capital, labour, land, as also tangible factors such as the ability to mobilize scientific and technological advances. A practical approach is necessary to implement and mange a project by securing the required licenses, approvals and finance from governmental and financial agencies. The personal incentive is to make profits from the successful management of the project. A sense of cost consciousness is even more necessary for the longterm success of the enterprise. However, both are different sides of the same coin. Entrepreneurship lies more in the ability to minimize the use of resources and put them to maximum advantage. Without any awareness of

quality and desire for excellence, consumer acceptance cannot be achieved and sustained. Above all, entrepreneurship today is the product of teamwork and the ability to create, build and work as a team. The entrepreneur is the maestro of the business orchestra, wielding his baton to which the band is played. The basic two elements involved in entrepreneurship are as follows;-

INNOVATION Innovation, i.e. doing something new or something different is a necessary condition to be called a person as an entrepreneur. The entrepreneurs are constantly on the look out to do something different and unique to meet the requirements of the customers. They may or may not be inventors of new products or new methods f production but they possess the ability to foresee the possibility of making use of the inventions for their enterprises. In order to satisfy the changing preference of customers nowadays many enterprises have adopted the technique of innovation. For instance, pidilite industries innovated the new 5.rs pack of fevi quick which was accepted by the customers as it was easy to use when it was needed. Other example would be of the mobile enterprise which came up with the scheme for the customers of refill pack of 999.rs which says Zindagi bhar mobile raho which was accepted bye the customers. Since customers taste and preferences always

keep on changing, hence the entrepreneur needs to apply invention on a continuous basis to meet the customers changing demand for products. RISK- BEARING Entrepreneurship is the propensity of mind to take calculated risks with confidence to achieve a predetermined business or Industrial objective. The capacity to take risk independently and individually with a view to making profits and seizing the opportunity to make more earnings in the market-oriented economy is the dominant characteristic of modern entrepreneurship. In fact he needs to be a risk taker, not risk avoider. His risk bearing ability enables him even if he fails in one succeed. The Japanese proverb says Fall seven times, stand up eight. Though the term entrepreneur is often used interchangeably with entrepreneurship, yet they are conceptually different. The relationship between the two is just like the two sides of the same coin. Thus, entrepreneurship is concerned with the performance and coordination of the entrepreneurial functions. This also means that entrepreneur precedes entrepreneurship.

NEED FOR ENTREPRENEURSHIP

Entrepreneurship promotes small business in the society. Government has accepted the fact that small firms have a crucial role to play in the economic development of the country. Small businesses are an essential part of our future economic prosperity because of the following reasonsEMPLOYMENT GENERATION: Entrepreneurial development is looked at as a vehicle for employment generation through promotion of small business. India, being far more developed and forward looking country than some of the third world countries, can provide lead to entrepreneurial development activities. However, India can benefit from the well- documented success experiences of developed countries like USA, Japan and UK in the field of employment generation and small business promotion.

Steady growth in consumer spending, expanding retail sales, a strong housing market, continued expansion of the service sector, low rates of inflation and of labour cost increases and failing interest rates contributed to a healthy environment for small business. In India, the government policies, political and economic environment greatly encourage the establishment of new and small enterprises. Selfemployment and small scale industry schemes have been further liberalized during the last decade. The employment in the small-sector increased from 9.00 million people in 1984-85 to 13.9 million people in 1994-95. This indicates an increase of 5.4% p.a in employment in this sector. SMALL BUSINESS DYNAMISM: Great dynamism is one of the qualities of the small and medium enterprises. This quality of dynamism originates in the inherent nature of the small business. The structure of small and medium enterprises is less complex than that of large enterprises and therefore facilitates quicker and smoother communication and decision- making. This allows for the greater flexibility and mobility of small business management. Also, small enterprises, more often make it possible for owners, who have a stronger entrepreneurial spirit than employed mangers, to undertake risk and challenges. BALANCED ECONOMIC DEVELOPMENT: Small business promotion needs relatively low investment and therefore can be easily undertaken in rural and semi-urban areas. This in turn creates additional employment in these areas and prevents migration of people from rural to urban areas. Since majority of the people are living in the rural areas, therefore, more of our development efforts should be directed towards this sector. Small enterprises use local resources and are best suited to rural and underdeveloped sector. This in turn will also lead to dispersal of industries, reduction in concentration of economic power and balanced regional

development. INNOVATIONS IN ENTERPRISES: Business enterprises need to be innovative for survival and better performance. It is believed that smaller firms have a relatively higher necessity and capability to innovate. The smaller firms do not face the constraints imposed by large investment in existing technology. Thus they are both free and compelled to innovate. Entrepreneurship development is accelerating the pace of small firms growth in India. An increased number of small firms are expected to result in more innovations and make the Indian industry compete in the international market.

FACTORS INFLUENCING ENTERPRENURESHIP

The emergence of entrepreneurs in a society depends upon closely interlinked social, religious, cultural, psychological, and political and economic factors. FAMILY TRADITION: Individuals who for some reason, initiate, establish maintain and expand new enterprises generate entrepreneurship in society. It is observed that entrepreneurs grow in the tradition of their families and society and accept certain values and norms from these sources. RELIGIOUS, SOCIAL AND CULTURAL FACTORS: Religious, social and cultural factors also influence the individual taking up an entrepreneurial career, in some countries there is religious and cultural belief that high profit is unethical. This type of belief inhibits growth of entrepreneurship. PSYCHOLOGICAL FACTORS: The psychological factors like high need for achievement, determination of unique accomplishment, self confidence, creativity, vision, leadership etc, promote entrepreneurship among individuals. On the other hand psychological factors like security, conformity and compliance, need for affiliation etc restrict promotion of entrepreneurship. POLITICAL FACTORS: The political and also the political stability of country influence the growth of entrepreneurship. The political system, which promotes free market,

individual freedom and private enterprise, will promote entrepreneurship. ECONOMIC POLICIES: The economic policies of the government and other financial institutions and the opportunities available in a society as a result of such policies play a crucial role in exerting direct influence on entrepreneurship. In view of the haphazard development of economic zones, Government is encouraging the entrepreneurs to establish their business in backward and tribal areas. This is primarily to arrest the migration of people from the villages to cities and to create employment opportunities locally. Government is promoting such development by giving incentives like tax holidays (both sales and income), subsidized power tariff, raw materials, transportation cost etc. QUALITIES OF AN ENTREPRENEUR
The skills required by entrepreneurs can be classified in to three main areas: 1. Technical skills involve such things as writing, listening, oral presentations, coaching, and technical know-how. 2. Business management skills include those areas involved in starting, developing and managing any enterprise. 3. Personal entrepreneurial skills differentiate an entrepreneur from a manager and include inner control (discipline), risk taking, innovativeness, persistence, visionary leadership, and being change oriented.

The qualities that contribute to the success of an entrepreneur are as follows: 1. Risk Taking: - Entrepreneurs are moderate risk takers. They enjoy he excitement of a challenge, but they do not gamble. Entrepreneurs avoid low- risk situations because there is a lack of challenge. They avoid high risk situations because they want to succeed. They like achievable challenges. They do not tend to like situations where the outcome of a quest depends upon a chance and not on their efforts. They like to influence the outcome of their quest by putting in more efforts and then experiencing a sense of accomplishment. A risk situation occurs when an entrepreneur is required to make a choice between two or more alternatives whose potential outcomes are not known and must be evaluated in advance, with limited information. A risk situation

involves potential gain and potential loss. As the size of the business expands the problems and opportunities become more numerous and complex. Business growth and development require an entrepreneur not to be afraid of taking decisions and certain risks. Most people are afraid to take risks because they want to be safe and avoid failure. An entrepreneur always takes a calculated risk and is not afraid of failure. 2. Self- Confidence: - A man with self confidence has clear thoughts and well- defined goals to achieve in his life. An entrepreneur gets into business or industry with a high level of self- confidence. He is able to evaluate his competencies and capabilities in a realistic manner. He can set realistic and challenging goals. He is confident of achieving these goals. He possesses a sense of effectiveness, which ultimately contributes to success of his venture. He puts forward his case confidently and gets needed help from concerned agencies/ authorities. 3. Optimist: - An entrepreneur is able to visualize the hidden opportunities in the environment and translate them into business realities. An entrepreneur exhibits a positive and optimistic attitude towards such opportunities. The entrepreneur approaches his task with the hope of success and not with a fear of failure. In the process of accomplishing his task he may also fail but the failure experience does not change his thinking. He is always an optimist in his outlook. The positive outlook develops a drive in the entrepreneur to attempt new things and innovate. 4. Need for achievement: - The need to excel known as achievement is a critical factor in the personality of an entrepreneur. People with high need for achievement have desire for success in competition with others or with a self imposed standard of excellence. They try to accomplish something new and try to innovate themselves in long term goals. They try to accomplish challenging tasks. They know their own strengths and weaknesses, the facilitating factors and constraints in the environment and the resources needed to accomplish their tasks. If the objectives are accomplished they feel elated. 5. Need for independence: - The need for independence is the prime characteristic that has driven the entrepreneurs to start their own business. These entrepreneurs do not like to be controlled by others. They do not wait for direction from others and choose their own course of action. They set their own challenging goals and put efforts to achieve this goal. The independence provides opportunity for trying out new ideas and helps them achieve their goals. 6. Creativity: - Entrepreneurs are highly creative people. They always try to develop new products, processes or markets. They are innovative, flexible and are willing to adopt changes. They are not satisfied with conventional and routine way of doing things. They

involve themselves in finding new ways of doing the things for the better. 7. Imaginative: - Successful entrepreneurs possess a high degree of imagination and foresightedness. Entrepreneurs have a great vision. Knowing the present and the past the entrepreneur is able to predict the future events the business more accurately than others. It is because of their visionary nature and power of imagination that helps them in anticipating problems and evolving actions strategies for such problems. 8. Administrative ability: - A successful entrepreneur is always a good administrator. He knows the art of getting things done by other people without hurting their feelings of self- respect. He has strong motivation towards the achievement of a task and puts in necessary efforts in getting things done by others. 9. Communication ability: - Communication ability is the ability to communicate effectively. Good communications also means that both the sender and the receiver understand each other and are being understood. An entrepreneur who can effectively communicate with customers, employees, suppliers and bankers will always succeed in their business. 10. Clear objectives: - An entrepreneur has clear objectives as to the exact nature of the business, the nature of the goods to be produced and the subsidiary activities to be undertaken. A successful entrepreneur has the objective to establish the product to make profit or to render social service. 11. Business Secrecy: - An entrepreneur who is successful always guards his business secrets. Leakage of business secrets to trade competitors is a serious matter; therefore an entrepreneur should carefully guard it. An entrepreneur must be able to make a proper selection of his assistant since most of the time it is the assistant who leaks the trade secret. 12. Emotional stability: - The most important personality factors contributing to the success of an entrepreneur are emotional stability, personal relations, consideration and tactfulness. An entrepreneur must maintain good relations with the customers if he wishes to enjoy their continued patronage. He must also maintain good relation with his employees, whom he shall motivate to perform their jobs at a high level of efficiency. An entrepreneur who maintains good human relations with customers, employees, suppliers and the community has a better chance to succeed in his/ her business. 13. Open-mindedness: - Open- mindedness means a free and frank approach in accepting ones own errors and change for the better. An entrepreneur must be willing to learn from his past experience, mistakes and moulds himself for better. 14. Technical knowledge: - Technical knowledge implies knowledge about the product, process or technology used in manufacturing. An

entrepreneur who has reasonable level of technical knowledge will always be successful. Technical knowledge is easy to acquire if the entrepreneur tries hard to acquire it. 15. Patience: - Patience means ability to wait. Patience also means doing the work and waiting for the result. A certain amount of patience is necessary in any type of vocation. An entrepreneur should not wait for actions but can certainly wait for result for his efforts. 16. Hard working and energetic: - Ability and willingness to work hard is an important quality of an entrepreneur. A person having physical and mental stamina to cope with the hard work and human relation is fit to become a successful entrepreneur. By carrying out well- planned and systematic work, success is always the end result. 17. Good organizer: - Entrepreneurs are good organizers of resources like men, machines, materials and money needed to start and run the business smoothly. They can convince the employees, investors, customers and co- ordinate the activities of individuals and groups in the accomplishment of business objectives. An entrepreneur works like a coordinating force among the resources, mould and manages them effectively.

ENTREPRENEURIAL FUNCTIONS
An entrepreneur is said to perform the following functions: 1. Assumption of risk: - Risk bearing or uncertainty bearing is the most important function of an entrepreneur which he tries to reduce by his initiative, skill and good judgment. 2. Business decisions: - The entrepreneur has to decide a. To enter the industry this offers him the best prospects b. To produce goods that he thinks will pay him the most c. To employ those methods of production which seem to him the most profitable. d. To effect suitable changes in the size of the business , its locationthat are needed for the development of his business. 3. Managerial Functions: - The entrepreneur performs the managerial functions such as a. Formulating production plans b. Overseeing finances c. Dealing with the purchases of raw materials d. Providing production facilities e. Organizing sales In large establishments these management functions are delegated to professional managers an entrepreneur performs many useful functions such as Undertakes a venture Assumes risk and Earns profits

Identifies opportunities to start business either as a manufacturer or a distributor. The entrepreneurship exists in every field of economic endeavor. Entrepreneurship has also been developed in the trading sector. A manufacturing entrepreneur demonstrates his entrepreneurial talents by bringing out new products while a trading entrepreneur performs his entrepreneurial functions in creating demand for the business he deals.

ENVIRONMENTAL SCANNING AND SECTORAL STUDIES

Swot Analysis Entrepreneurial Environment Environmental Analysis Scope for Entrepreneurship in small business sector Entrepreneurship process of liberalization Changing Role of Entrepreneurship in the era of liberalization, privatization and globalization

Entrepreneurship as a Catalyst for meeting global changes Creativity & Innovation Key sectors for the new age Entrepreneurs SWOT ANALYSIS
The business environment keeps changing. Government policies and regulations, economic conditions, social conditions, technological factors, competitive situation etc. Undergo changes. The environmental changes may open up new opportunities or pose new threats. Constant monitoring of the environment is therefore, necessary to identify the emerging opportunities and threats. In order to understand to what extent a firm will be able to exploit the opportunities and fight the threats, it is necessary to evaluate the strengths and weaknesses of the firm. Thus, an analysis of the strengths and weaknesses of the firm and the opportunities and threats in the environment that is the SWOT analysis is essential for framing the business strategies. S- Strengths. W- Weaknesses. O- Opportunities. T- Threats.

STRENGTHS AND WEAKNESSES:

Strengths and weakness analysis is a real test for management. The strength and weaknesses would decide whether a company should continue in a business, take up new lines of business, as well as the strategy to be employed in doing so. For e.g. in case of some products, small scale units have definite advantage over large- scale units in costs. If a large scale unit were not able to compete with the small- scale units, in such a case, it would be wise on the part of the large unit to give up the business of such products. The strengths and weakness analysis is done by functional audit of different

areas like marketing, finance, design/ engineering, operations etc. The audit is to be done on the basis of the quantity and quality of skills and the infrastructures support 3 available facilities in terms of physical facilities, resource available, speed and flexibility in arranging them.

OPPORTUNITIES AND THREATS:

Monitoring of the environmental changes is necessary to reshape the companys business and products, if needed, to ensure survival and growth. Certain changes in the environment may bring about new opportunities for some companies while they pose new threats for some others. For e.g. the new industrial policy of India has brought about enormous new business opportunities but at the same time it poses new threats or challenges to many existing firms because of the increase in competition. The existing firms should therefore, frame strategies to effectively fight the increasing competition. The primary reason of the environmental analysis is to identify the threats as well as the opportunities developing in the business environment. The search for opportunities may start on account of increased aspiration for performance of the organization. While the analysis of threat is to examine the development in the environment that may affect the current strategies ineffective and irrelevant and thus, affect the survival of the organization. The threats or opportunities for any business developed because the needs of the customer keep on changing. For e.g. a customer who was happy with the product now wants another because of change in his needs. In view of the above, many companies have to reframe their objectives and strategies in order to survive in the changing business environment.

ENTREPRENEURIAL ENVIRONMENT
Entrepreneurship environment refers to the various facets within which enterprises- big, medium and small and others have to operate. The

environment therefore, influences the enterprise. By and large, an environment created by political, social, economic, national, legal forces etc influences entrepreneurship. INTERNAL ENVIRONMENT (Micro Environment)

A) PRODUCT: The business has to produce a product that people want to buy. They have to decide which market segment they are aiming at age, income, geographical location etc. They then have to differentiate their product so that it is slightly different from what is on offer at present so that people can be persuaded to give them a try. In other words product is a bundle of satisfaction that a costumer buys. It represent solution to a customers problem .It is in this context that marketing definition of a product is more than just what the manufacturer understand it. B) PRICE: To a manufacturer, price represent quantity of money received by the firm or seller .To customer, it represent sacrifice and hence his perception of the value of product.

The price must be high enough to cover costs and make a profit but low enough to attract customers. There are a number of possible pricing strategies. The most commonly used are:
PENETRATION

PRICING charging a low price, possibly not quite covering costs, to gain a position in the market. This is quite popular with new businesses trying to get a toehold. CREAMING the opposite to penetration pricing, this involves charging a deliberately high price to persuade people that the product is of high quality. Luxury car makers often use this strategy COST PLUS PRICING this is the most common form of pricing. Costs are totaled and a margin is added on for profit to make the total price. C) PLACE: The business must have a location that it can afford, and that is convenient and suitable for customers and any supplier. D) PROMOTION: Promotion means moving from one end to another. Promotion means all those tools that a marketer uses to take his product from the factory to the customer and hence involves advertising, sales promotion, personal selling, public relations publicity and merchandising. Customers have to be made aware of the product. The two main considerations are target market and cost. A new business will not be able to afford to advertise on national television, for instance and would not wish to because its market will be local to start with. Leaflets, billboards, advertisements in local newspapers, Yellow Pages and word of mouth would be more appropriate.

EXTERNAL ENVIRONMENT (Macro Environment)

External Environment: Also known as Macro Environment, are the uncontrollable factors which a company must monitor and respond to. They consist of economic, political, technological, social-cultural and legal. Economic Environment: It consists of factors that affect consumer purchasing power and spending

patterns. Markets require purchasing power as well as people. Economic conditions, economic policies and economic systems are the important external factors that constitute the economic environment of a business. For example, the economic conditions of a country, the nature of the economy, the stage of development of the economy, economic resources, the level of income, the distribution of income and assets etc. are among very important determinants of business strategies. Technological Environment: Technology is the most dramatic force shaping peoples lives. Factors such as technological development, stages of development, change and rate of change in technology and research and development affect marketing strategies. Also the cost of technology acquisition, impact of technology on human beings and the environmental effects of technology affect marketing decisions. Political environment: Political environment is composed of laws, government agencies and pressure groups that influence and limit various organizations and individuals in a society. The main political trends are: (a) Substantial amount of legislation regulating business. (b) Growth of public interest groups and (c) Changing government agency enforcement. Socio-cultural environment: The basic beliefs, values and norms shape the society and its people. Even when people of different cultures use the same basic product, the mode of consumption, condition of use, purpose of use or the perception of the product attributes may vary so much so that the product attributes, method of promoting the product may have to be varied to suit the characteristics of different markets. Even the value and beliefs associated with colour vary significantly between different cultures. Legal environment:

Government all over the world are an important aspects of their economy and even in the so called free economy, viz.US, government intervention in industry is a reality. The extent of intervention varies .while in US this is relatively low; in developing countries this is quite high. India ,for example ,has had a history of a controlled economy with the government deciding the rules of the game ,be it the extent of foreign private investment ,or goods to be exported or imported or even whether a unit can be allowed to produce a product Regulation in advertising ,like ban on advertising a specific product like cigarettes, pan masala, liquor and distribution of goods as in the case of kerosene and earlier in case of food product too, is the reality of Indian scenario.

ENVIRONMENTAL ANALYSIS
This integrated approach which is the key to the development of backward areas implies a very careful environment analysis or research study of the target groups of beneficiaries, their activities and differential needs and the practical modes of operation by which their activities can be linked with the covering enterprise. Unless these studies are made meticulously, the entire planning will only give unproductive results. Most of the development schemes fail to benefit the target clientele because elaborate linkages are not identified and built up. An imaginative study should 1. Identify the beneficiaries or target groups. 2. Analyze the environment for immediate feasible enterprises in an integrated manner. 3. Delineate the linkages and institutional arrangements. 4. Recommend appropriate organizational structures to provide necessary promotional support. Unfortunately, in most of the studies on backward areas, there is a tendency to make generalizations and ignore the specific details of feasible projects. As a result, immediate perception of concrete opportunities by interested

entrepreneurs is left in confusion. Sometime! Area studies make a general statement of demand and resources and recommend certain enterprises, which are not immediately feasible due to important reasons unaccounted for in such studies. It is also not seriously contemplated whether the recommended enterprises are feasible within the capabilities and investment capacity of the target- group. In short, most of the studies fail to disconcern the real issues of growth in the target area and fail to identify the concrete and specific needs of these endowments like resource skill etc. to flourish. Enunciation of general objectives, generic beneficiaries tend to blur the distinct contours of one homogeneous group from the other. Also, the extension of certain standard facilities or services does not serve their actual needs. All this possibly happens because in such basic studies we fail to identify clearly the targetgroups and their specific problems, and make theoretical studies on resources and demand in an impersonal manner, as a result of which even the schemes devised on the basis of such studies tend to become too impersonal and rigid. Sometimes, the scheme become so flexible on account of a standardized petrified approach that in some most genuine cases demanding a certain departure from the fixed framework, the scheme is incapable of giving requisite help. It is therefore, absolutely necessary that any action plan for a backward area must first identify the target- group, identify the specific services they need for monitoring their enterprises and devise an appropriate structural support for comprehensive coverage of their needs.

SCOPE FOR ENTREPRENEURSHIP IN SMALL BUSINESS SECTOR

Small- scale business provides good scope for the growth of entrepreneurial activities .An entrepreneur has good opportunity and vast scope in selling

service rather than manufacturing a product. The entrepreneur can achieve better results if the size of the business is small. It is for this reason that small firms have higher productivity, greater efficiency and low labour turnover. The scope for entrepreneurial activities in small business sector can broadly be classified into: 1. Industrial sector 2. Agricultural and allied industrial sector 3. Service sector INDUSTRIAL SECTOR Small scale industries occupy an important place in the industrial sector. They have contributed over 40% in the gross industrial production in 1998. Small- scale industries: The basic objectives underlying the development of small- scale are the increase in the supply of manufactured goods, promotion of capital information the development of indigenous entrepreneurial talents and skills and the creation of broader employment opportunities. This sector provides a wider scope for the potential entrepreneur to develop his or her own industry. There is a good scope and enormous potential to use technology based products in the small- scale sector. An entrepreneur can exploit a profitable venture in any of the industries reserved for exclusive department under the small- scale sector. There are as many at 384 items for exclusive purchase from the small- scale industries. Small- scale industries play an important role in increasing the national income, in meeting the shortage of consumers goods, in promoting balanced regional development, in reducing inequalities in the distribution of income and wealth and in relieving the economic pressure on land and over crowding in urban areas. Outdated technology, shortage of finance, shortage of raw material and inadequate marketing facilities are some of the problems faced by small entrepreneurs.

AGRICULTURAL AND ALLIED INDUSTRIAL SECTOR There is a vast cope for entrepreneurial activities in the agricultural sector. By establishing a link between agriculture and allied industries, the rural entrepreneur can exploit opportunities in areas of farming, agricultural processing and marketing. The government has given priority to IRDP programme and ensured adequate flow of credit to small and marginal farmers through re-financing facilities and by establishing national bank for agriculture and small development. Trade: Trading takes place in wholesaling and retailing. It may be in domestic or overseas market. The retailer entrepreneur makes the goods available at the time and places the consumer wants them. He may decide to start single line store, specialty shop, departmental store etc. trade in overseas market is in wholesale. The business environment directly influences the growth of entrepreneurship in a particular line of trade. The trade policy of India has been directed to promote export. Hence incentives and facilities have been provided to the entrepreneurs to motivate them to develop export. SERVICE SECTOR The service sector has gained importance for the entrepreneurs because of its rapid expansion. Service sector includes all kinds of business and provides opportunities to the entrepreneurs in business such as hotels, tourist services, personal services such as dry cleaning, beauty shops, photographic studies, auto repair, electric repair shops, wielding repair etc. Transport: They provide time and place utilities in urban and rural areas to both men and material. The different modes or transport are of immense importance in the areas, which are not served by roads and railways. There is a scope for entrepreneur to design prototypes of new carts with the application of indigenous technology so that they may have better mobility and greater carrying capacity. The primary need in the rural area is an

efficient system of road transport. The rural economy has a good opportunity for an entrepreneur to develop some business. They can exploit possibilities for a venture in some shops or services. Entrepreneurship flourishes in small business sector for they have enormous opportunities in manufacturing and non- manufacturing activities. The government is keen in encouraging the competitive strength of the small scale producers and it has taken a number of measures such as:The establishment of a network of industrial estates through ought the country where work sheds equipped with the necessary facilities made available to prospective entrepreneurs on subsidized rental basis. The reservation of a number of products for the exclusive production to small sector The introduction of ancillarization programme under which large and small industries are to be linked in a harmonious productive relationship The supply of machines on hire purchase basis to the small entrepreneurs on easy terms of payment Technical counseling to small units so as to improve their efficiency and viability These are golden opportunities for the prospective entrepreneurs to selfemployed independent businessman. The future is very bright.

Everyone has wants some are for things like food or clothes, others are for entertainment, leisure, travel etc. In order to satisfy these wants we have to consume goods and services. It is through business activity that goods and services are provided. Business activity is any kind of activity that results in goods or services being provided that satisfy consumers wants . Goods are tangible while services are intangible. Goods sold to the public are consumer goods things like cars, sports equipment and games consoles, which are durable.

Consumer goods can also be non-durable like newspapers, magazines and chocolate. You use durable goods over a long period of time, whereas you use up non-durable goods quickly. Services are things like facilities to the public such as hairdressing, window cleaning, and receiving loans from banks. Business activity creates wealth the more goods that are produced, the greater amount of wealth. Wealth is not simply money, but the total of goods and services that can be given a monetary value. Goods and services are the outputs of business activity. In order to produce an output, the business has to use resources, or inputs people, buildings, machinery etc. These resources can also be called factors of production. These factors fall into four categories: Land All the natural resources mineral deposits, the site of the factory, water, timber etc. Labour All the human resources employees. Capital Tools, machinery and equipment, finance that the owner invested in the business. Enterprise The business ideas the entrepreneur has on how to use the above resources in order to produce a good. Sectors of Business Businesses are grouped into sectors, according to the types of products and services that they provide. Primary sector businesses These grow products or extract resources from the ground. Examples are mining, farming, forestry. Secondary sector businesses These manufacture products from raw materials. Examples are construction of new buildings, factories and ships, as well as products ranging from tinned food to TV sets. Tertiary sector businesses

These do not produce a product they provide a service instead. Examples are shops, hotels, banks, insurance companies.

Private Sector Organisations

There are many different types of organizations operating in the world . A definition of an organisation is a group of people who come together and use their resources and knowledge to achieve a common goal. Private sector organisations are sole traders, partnerships, limited companies and franchises. Sole Proprietorships (traders) These are one-owner businesses (owned and controlled by the one person). There are bound to be many examples of sole traders in your local area like retail stores or corner shops, hairdressers, workshops, bakeries, restaurants, laundries, tailoring and draper shops, drycleaners and dyers and other enterprises requiring small capital, catering to local markets, involving limited risks and the use of personal knowledge and skills , etc. Advantages The owner retains all the profits. You have complete control over all the decisions that have to be made. You can choose your own hours of work and vacation time. There is a greater personal service offered to your customers. This type of organisation is very cheap to set up. Disadvantages You have unlimited liability you carry all the businesss debts if it fails, even if this involves selling all your personal possessions in order to pay it off. Restricted sources of finance banks will charge you high rates of interest if they will commit to a loan at all. You have no one to share decisions with and you cannot share your workload with other people.

 The business has to shut down when you are on vacation or ill. Possible Sources of Finance Your own personal savings. Retained profits (profit kept back from the previous trading period and ploughed back into the business). Bank loans. Overdrafts. Government grants. Trade credit. Debt factoring. Objectives Survival Profit maximisation Create a good image. Improve your personal circumstances. Satisfying (generating a sufficient level of profit to satisfy the owner, while not making a high level of profit). Partnerships Partnerships are businesses with 2 to 20 partners people who own and control the business together. A Partnership Agreement is drawn up, stating the rights of partners and procedures to be followed upon the death of a partner, a new partner joining the business or a partner leaving. Allowances are made for solicitors, accountants and members of the Stock Exchange, meaning they can have more than 20 partners. You could also have sleeping partners people who invest in the business but have no control over the way it is run, the advantage being that they usually have limited liability, and will only lose their investment in the business if it fails (although sometimes this may not be the case if these people have been regular partners before becoming sleeping

partners, as any decisions made by them beforehand may still have an impact). These include medium sized service and trading concerns, like wholesalers, hotels, transporters, hire-purchase firms, confectioners, and professionals like attorney, lawyers, chartered accountants, architects, consultants, etc. Also, small manufacturing firms requiring simple techniques and processes. Advantages Partners may have different areas of expertise operations, finance, human resources, marketing etc. More finance is available to the business you can pool capital from all the partners. You can share the workload with other partners. You can raise finance from lenders more easily than sole traders can there is less risk involved. Disadvantages Unlimited Liability (possibly even for sleeping partners). Profits need to be shared (or appropriated) between partners. Disagreement may occur, with people having different methods and ideas. A new Partnership Agreement has to be drawn up every time a partner joins, leaves or dies due to the change in circumstances. Sources of Finance Personal savings. Retained profits. Inviting new partners to join (increases investment). Bank loans. Overdrafts. Government grants. Trade credit.

 Debt factoring where a specialist factor provides finance against any invoices which have not been paid (around 80% of the total amount due), the balance (20%) being paid back when the customers settle the invoices. An administrative charge and service fee is payable by the business to the factor. Objectives These are the same as a sole traders objectives. Sole traders and partners are often referred to as being selfemployed, as they own the business that they also work for. Private Limited Companies Private limited companies are companies whose shares are owned privately not available to the public on the Stock Market. There is a minimum of one shareholder (owner) in a private limited company, and a director or most commonly, a board of directors runs the business. A shareholder can be a director, and there must be at least one director and one company secretary (who keeps all the company records). The company must produce a Memorandum of Association and Articles of Association that state the details of the company, responsibilities of its directors and the rights of its shareholders. Private limited companies tend to be family businesses, although this is not always the case. Examples of private limited companies are Arnold Clark and Baxters (soup). Advantages Shareholders have limited liability they only lose their invested capital if the business fails. More finance can be raised from shareholders and other sources. Control of the business is not lost to outsiders who have no knowledge of it (like public limited companies). Disadvantages Profits are shared among more people. A legal process has to be adhered to when setting the company up.

 Shares cannot be sold to outsiders it might be more difficult to raise finance. You have to abide by the Companies Act requirements. Annual accounts have to be published for the business, although these do not have to be made available to the general public. Sources of Finance Company profits. New shareholders joining the company. Bank loans. Overdrafts. Government grants. Trade credit. Debt factoring. Objectives Profit maximisation. Growth. Status. Sales maximisation. Public Limited Companies A public limited company, or plc, is a company whose shares are available to be purchased on the Stock Market. You need to have at least two shareholders and 50,000 of share capital to start one up. The same legal documents as a private limited company have to be drawn up. A board of directors appointed by shareholders controls the company. Public limited companies can also be called corporations. Examples of public limited companies include the mobile phone giants Vodafone and TMobile. Advantages

 You can raise immense amounts of finance. Plcs are usually market leaders. You can borrow money from lenders easily due to the size of the business. Disadvantages There are a lot of set-up costs involved prospectuses and underwriting (an insurance against some shares remaining unsold, meaning fees have to be paid to the underwriter who must buy these unsold shares) need to be set up before gaining the interest of investors. The Companies Act must be adhered to. The business has no control over who buys the shares on the Stock Exchange in the long term, although they can choose whom they wish to sell to when trading begins. You must publish annual accounts and make them available to the general public upon request. Sources of Finance Retained profits. Selling shares to the public. Bank loans. Overdrafts. Debentures. Government grants. Trade credit. Debt factoring. Objectives Profit maximisation. Growth. Maximise sales. To be dominant in their market. Image. Plcs may be global companies, or multinationals (having manufacturing plants in more than one country. In doing so, they can:

 Take advantage of economies of scale buying more products at a lower unit cost. Avoid legislation in the home country that might have a negative effect on the businesssprofitability. Avoid restrictions on quotas (number of imports brought into the country). Receive tax benefits and government grants from more than one country. Franchises A franchise is an agreement that allows an individual or group to use another businesss name and sell their products and services. The individual is called the franchisee, and the business selling their name is called the franchiser. A small percentage or fixed sum is given to the franchiser in return for using their name and products/services. Examples of franchises are the BSM (British School of Motoring) and McDonalds. Advantages (to the Franchiser) You can increase your market share without a great deal of investment. Revenue is reliable (you get a set payment or a percentage of profits each year). Risks are shared between the franchiser and franchisee. Advantages (to the Franchisee) The franchiser will undertake its own marketing strategy; therefore you will not have to carry out much advertising on your own. The franchiser may train you in the operation of machinery or the routine that you must follow. The risk of failing will be reduced because the business already has a good reputation. Disadvantages (to the Franchisee)

 You have to pay the franchiser a percentage of profits or a royalty payment. The franchiser might not renew the franchise after a certain period of time, leaving you without the backing and permission to continue. The products you sell, the price you sell them at, and the layout of the shop may be dictated by the franchiser, meaning you will be less able to make your own decisions.

Voluntary Organisations
Charities A Register of Charities is kept by the government, which also regulates the activities of charities. Professionals working for them often run charities, and the charity is usually exempt from paying some taxes. Examples of charities include Capability Scotland and Cancer Research UK. Sources of Finance Public and private donations. Government grants. Lottery grants. Profits from sales in charity shops, raffles, jumble sales and mail order goods. Objectives To be recognised as a charity they must have one of the following aims: To relieve poverty. To advance education. To advance religion. To carry out activities beneficial to the local community. Voluntary Organisations These are usually run and staffed by volunteers. Examples include the Scouts, local youth clubs and some sports clubs. Voluntary organisations bring together people with similar interests, and are run by a committee of elected volunteers.

Sources of Finance Grants from the Lottery, sports councils or local authorities. Fees payable upon joining or for use of facilities.

Public Sector Organisations

Public sector organisations are owned and controlled by either local or central government. Local Government Organisations Local authorities/councils provide services including: Education. Recreation. Housing. Refuse collection. They are set up by central government and are run by locally elected councillors. The dayto- day running of the services are organised by council employees. A local council aims to meet the needs of the local community and provides services that might be considered unprofitable if handled by private firms, for example libraries and archives. Sources of Finance Central government. Business rates. Council tax. Charges for using services, e.g. leisure centres and parking. Objectives To meet the needs of the local community. To make cost-savings. To stick to budgets set down by central government and at local level. Central Government Organisations The House of Senate and National House Assembly provide important services nationally from departments such as the

Treasury, Trade and Industry, Health, Transport and Defence. Politicians are elected to be overall in charge of the departments in line with the best interests of the population, however employed civil servants run them. Sources of Finance Taxation Objectives To improve society. To make best use of the funds available to them. To manage taxation to protect people who are in a less favourable position. Public Corporations Corporations are companies that are owned by central government. A government minister appoints a chairperson and board of directors, or governors, to run them on the behalf of the government. The Post Office and the BBC are examples of public corporations. Sources of Finance Central government. The public TV licensing, merchandise etc. Objectives To provide a quality service. To manage their funds efficiently to make the best use of them. To serve the interests of the public. Privatisation The last 10 years has seen the government selling off key public corporations as a cost cutting measure. BA (British Airways) used to be run by the government, as well as British Rail, which has been split up into two components Network Rail (which used to be Railtrack), the company which manages the lines across the UK, and franchises who

run trains on Network Rails lines, e.g. Stagecoach, Virgin Trains, etc. The government has sold these companies off because: The Treasury can receive a huge amount of income from the selling of these corporations. They were very poorly managed and did not make a profit; they could be profitable if someone else managed them. They wanted to increase share ownership and let the public have a chance to benefit from the success of the economy by buying into these businesses. However, they were, according to business analysts, sold off too cheaply because this was the only kind of price thought possible and privatising them has not always led to greater competition or efficiency. The BBC might be the next corporation to be sold off as a private company, since it no longer has the leading market share of television and radio. With so many smaller entertainment channels setting up, their share has decreased dramatically.

CHOICE OF FORM OF ORGANISATION

As explained earlier, a business enterprise can be organised into several forms. Every form of organisation has its own merits and demerits. A businessman has to keep in view these merits and demerits while selecting an appropriate form of organisation. The choice has to be made both at the time of setting up a new enterprise and at the time of expansion and growth of an existing concern. At the time of launching a new business enterprise, the choice of the form of ownership is dictated by several factors as given below : 1. Nature of business Service, trade, manufacturing. 2. Scale of operations Volume of business (large, medium, small) and size of the market area (local, national, international) served. 3. Degree of direct control desired by owners. 4. Amount of capital required initially and for expansion. 5. Degree of risk and liability and the willingness of owners to assume personal liability for debts of business.

6. Division of profits among the owners. 7. Length of life desired by the business. 8. Relative freedom from government regulations (flexibility of operations). 9. Scope and plan of internal organisation. 10. Comparative tax liability It must be noted that these factors are interrelated and interdependent. For instance, the amount of capital required and the degree of risk involved depend upon the nature and volume of business operations. The degree of control and the division of profits are both related to risk and liability. Therefore, an entrepreneur division of profits are both related to risk and liability. Therefore, an entrepreneur should not consider these factors in isolation. The interrelationship between these factors should be duly considered. The impact of each one of these factors on the choice of a suitable form of ownership is described as follows. 1. Nature of Business The nature of business has an important bearing on the choice of the form of ownership. Business providing direct services, e.g., small retailers, hair-dressing saloons, tailors, restaurants, etc., and professional services, e.g., doctors, lawyers, etc., depend for their success upon personal attention to customers and the personal knowledge or skill of the owner and are, therefore, generally organised as proprietary concerns. Business activities requiring pooling of skills and funds, e.g., wholesale trade, accounting firms, tax consultants, stock brokers, etc., are better organised as partnerships. Manufacturing organisations of large size are more commonly set up as private and public companies. 2. Size and area of operations Large scale enterprises catering to national and international market can be organised more successfully as private or public companies. The reason is that large sized enterprises require large financial and managerial resources which are beyond the capacity of a single person or a few partners. On the other hand, small and medium scale firms are generally set up a partnership and proprietorship. Small scale enterprises like generally hair-dressers, bakeries, laundries, workshops, etc. cater to a limited market and require small capital. The risk and liability are not heavy and the management problems can easily be handled by the owner himself. Therefore, the owner likes to be his own master by organising as a sole proprietor. He can maintain fact-to-face relationship with his customers which is important in small service enterprises like painters, decorators, repair shops, beauty parlours, etc. Medium-sized enterprises and professional firms, e.g.,

health clinics, chartered accountants, etc. are predominantly partnerships. They pool their capital and expertise to operate on a larger scale and to avail of the benefits of specialisation. Large scale enterprises and enterprises involving heavy risks, e.g., engineering firms, departmental stores, five star hotels, chain stores, etc., are normally organised as companies. These enterprises require huge capital, heavy risks and expert managers. Proprietary and partnership forms are unable to provide these resources. The company form is, therefore, best suited to large scale enterprises. Similarly, where the area of operations is widespread (national or international), company ownership is appropriate. But if the area of operations is confined to a particular locality, sole proprietorship or partnership will be a more suitable choice. 3. Degree of Control Desired A person who desires direct control of business prefers proprietorship rather than the company because there is a separation of ownership and management in the latter case. In case the owner is not interested in direct personal control but in large scale operation, it would be desirable to adopt the company form of ownership. 4. Amount of Capital Required The funds required for the establishment and operation of a business have an important impact on the choice. Enterprises requiring heavy investment, i.e., iron and steel plants, etc., should be organised as joint stock companies. A partnership has to be converted into a company when it grows beyond the capacity and resources of a fewpersons. Requirements of growth and expansion should also be considered in makingthe choice. There is maximum scope for expansion in case of a public company. Where the funds required initially are small and scope for expansion in case of public company. Where the funds required initially are small and scope for expansion is not desired, proprietorship or partnership is a better choice. 5. Degree of risk and liability The volume of risk and the willingness of owners to bear it, is an important consideration. A single individual may have large financial resources sufficient for a medium scale enterprise but due to unlimited personal liability he may not like to organise as a proprietor or a partnership. Due to limited liability and a large number of shareholders, there is maximum diffusion of risk in a public company. But an enterprising individual not afraid of unlimited liability may go in for sole proprietorship. 6. Division of Surplus A sole trader receives all the profits of his business but be also bears all the risks. If a person is ready to bear unlimited personal liability and

desires maximum share of profits, proprietorship and partnership are preferable to company form of organisation. 7. Duration of Business Temporary and a hoe ventures can be organised as proprietorships and partnerships as they are easy to form and dissolve. But they lack continuity and stability. Enterprises of a permanent nature can be better organised as joint stock companies and co-operative because they enjoy perpetual succession. A business requiring a long period for establishment and constitution should be organised as a corporate body. 8. Government regulation and control Proprietorships and partnerships are subject to little regulation and control by the Government. Companies and co-operatives are, on the other hand, subject to several restrictions and have to undergo several legal formalities. But this face is not very important and it can be helpful in making the choice only when all other factors are unable to indicate a clear-cut choice. 9. Managerial Requirement Organisational and administrative requirements depend upon the size and nature of business. Small businesses using simple processes of production and distribution can be managed effectively as proprietorships and partnerships. On the other hand, giant enterprises involving the use of complex, techniques and procedures require professional management. Such enterprises can be managed efficiently only as joint stock companies. Due to identity of ownership and management, motivation is very high in proprietorships and partnerships. Such motivation is lacking in a company due to separation of ownership from management. 10. Flexibility of Operations Business which require a high degree of administrative flexibility should better be organised as proprietorships or partnerships. Flexibility of operations is linked with the internal organisation of a business. The internal organisation of sole proprietorship and partnership is much more simple and less elaborate than the internal organisation of a joint stock company. Moreover, the objectives and powers of a company cannot be changed easily or without legal formalities. 11. Tax burden Various forms of ownership are taxed differently under the Income-tax Act in Nigeria. If the expected volume of profit is very high it may be profitable to start a company. A company is taxed at a uniform rate, i.e., the rate of tax remains the same irrespective of the volume of taxable income. DEFINITION, CHARACTERISTICS AND BENEFITS OF SMEs

Definition: The concept of SMEs is relative and dynamic. The definitions change over a period of time and depend, to a large extent, on a countrys level of development. Prior to 1992, different government agencies in Nigeria such as the Central Bank of Nigeria tended to adopt various definitions to reflect differences in policy focus. However, in 1992, the National Council on Industry streamlined the various definitions in order to remove ambiguities and agreed to revise them every four years. Small Scale Enterprises were defined as those with fixed assets above N1 million but not exceeding N10 million, excluding land but including working capital, while Medium Scale Enterprises are those with fixed assets, excluding land but including working capital, of over N10 million but not exceeding N40 million. The definitions were revised in 1996 with Small Scale Industry defined as those with total cost, including working capital but excluding cost of land above N1 million but not exceeding N40 million with a labour size of between 11 and 35 workers; while Medium Scale Industry was defined as those with total cost, including working capital but excluding cost of land, above N40 million, but not exceeding N150 million with a labour size of between 36 and 100 workers. And at the 13th Council meeting of the National Council on Industry held in July, 2001 Micro, Small and Medium Enterprises (MSMEs) were defined by the Council as follows: Micro/Cottage Industry An industry with a labour size of not more than 10 workers, or total cost of not more than N1.50 million, including working capital butexcluding cost of land. Small-Scale Industry An industry with a labour size of 11-100 workers or a total cost of not more thanN50 million, including working capital but excluding cost of land. Medium Scale Industry: An industry with a labour size of between 101-300 workers or a total cost of over N50 million but not more than N200 million, including working capital but excluding cost of land. Large Scale An industry with a labour size of over 300 workers or a total cost of over N200 million, including working capital but excluding cost of land.

Characteristics: The SMEs are characterized by limited access to financial capital, simple management structure resulting from the fusion of ownership and management by one person or very few individuals. SMEs tend to strongly revolve around the owner-managers, rather than as a separate corporate entity. There is often greater subjectivity in decision taking, and prevalence of largely informal employer - employee relationships. As a result of their greater use of local resources, they are widely dispersed throughout the country. They are also closely attached to the products that launched them; many are labour-intensive although modern SMEs are increasingly employing reasonably high technology.

Entrepreneurship Development in Nigeria Small and Medium Industries (SMIs) have been widely acknowledged as the springboard for sustainable economic development. In particular, developing countries including Nigeria, have since the 1970s shown increased interest in the promotion of small and medium scale enterprises for three main reasons: the failure of past industrial policies to generate efficient self-sustaining growth; increased emphasis on self-reliant approach to development and the recognition that dynamic and growing SMIs can contribute substantially to a wide range of developmental objectives. These objectives include efficient use of resources, employment creation, expansion and development of indigenous entrepreneurship and technology as well as income distribution, among others. Consequently, programmes of assistance in the areas of finance, extension and advisory services, training and provision of infrastructure were designed by the government for the development of SMEs to enhance the attainment of these objectives. However, the full potential of the SMIs in the developmental process have not been realized, owing to various constraints. A major gap in Nigerias industrial development process in the past years has been the absence of a strong and virile small and medium enterprises sub-sector (SMEs). The little progress recorded from the courageous efforts of the first generation of indigenous industrialists were almost completely wiped out by the massive dislocations and traumatic devaluation which took place under the Structural Adjustment Programme (SAP). The policies of SAP are rooted in the neo-classical theory of perfect competitive markets whose assumptions do not adequately reflect constraints on SME in developing countries. With over 120 million people, productive farmlands, rich variety of minerals deposits, Nigeria should be a haven for Small and Medium Industries. The human and natural resources base is a significant feature that gives the country a special status in Africa. However, like most less developed countries, the country is witnessing a rapid population growth and this contrasts with the less than average rate of development in communication, technological and social infrastructure. Instability and high turn over have impacted negatively on the performance of primary institutions responsible for policy monitoring and implementation, resulting in distortions in the macro economic structure, and low productivity. These problems constitute hindrance to the development of Small and Medium Enterprises. The problems of SMEs in Nigeria are enormous and ranges from: (1) Inadequate and inefficient infrastructural facilities which tend to escalate costs of operation, as SMEs are forced to resort to private provisioning of utilities such as road, water electricity, etc. (2) Lack of adequate credit for SMEs, traceable to the reluctance of banks to extend credit to them owing, among others, to poor documentation at project proposals as well as inadequate collateral

by SME operators. (3) Bureaucratic bottlenecks and inefficiency in the administration of incentives which discourage rather than promote SME growth. (4) Weak demand for products, arising from low and dwindling consumer purchasing power. Lack of patronage for locally produced goods by those in authority. (5) Incidence of multiplicity of regulatory agencies and taxes which has always resulted in high cost of doing business and poor management practices and low entrepreneurial skill arising from inadequate educational and technical background or many SME promoters. The historical experience of economic development in the developed countries is replete with success stories of the role of SMEs in industrial development, technological innovation and export promotion. The Industrial Revolution (1760 to 1850) is a testimony of the innovative spirit of SMEs, which is increasingly challenged in the present century particularly after winds of economic change and industrial liberalisation have swept various economies of the world. Contrary to the general impression, SMEs are as much an important economic catalyst in industrialised countries as they are in the developing world. In many developed countries, more than 98% of all enterprises belong to the SME sector. 80% of the total industrial labour force in Japan, 50% in Germany and 46% in USA are employed in smaller firms. In USA, small business contributes nearly 39% to the national income. Figures in many developed countries are even higher. Many studies have indicated that the revival of interest in SMEs in the developed economies is due to technological as well as social reasons, namely, the growing importance of knowledge and skill-based industry as against material and energy-intensive industry. This is also due to a paradigm shift to new processes of manufacturing based on flexible systems of production. The social reasons include the need of generation of more employment through self-employment ventures and decentralised work centres. In the absence of a universal definition of small enterprises, it is difficult to obtain exact and comparable figures on SMEs for developing countries. Nevertheless, it is obvious that the role of small business is equally important in the economies of developing and developed countries. Small domestic markets, inadequate infrastructure, high transport costs, shortage of capital and foreign exchange as well as surplus of low quality labour are the general characteristics of developing countries. Table below gives a broad overview of the contribution of SMEs in some Asian economies.

Exports of the SME sector range from 30 to 50 percent in developed and developing countries. In tune with the latest developments in the global economy, their role in future is likely to be even greater and more pervasive with a demonstrable impact on the emerging world trading order. Almost every country provides some assistance to small-scale enterprises. The emphasis is more on facilities and supportive services than on protection and subsidies. This is generally a hallmark of an effective strategy for promoting the SME sector. Assistance provided by governments is making available commercial finance, venture capital, information, training and retraining, R & D support and infrastructure. The facilities are provided through local authorities and industry associations with increasing involvement of non-governmental organisations (NGOs).