Challenges faced by Small Scale Entrepreneurs

Abstract

The paper deals with the actual problems faced by the Entrepreneurs in micro and small scale industries; based on facts of author & experience of other entrepreneurs. It is very important to have proper location and partner for setting up a successful unit. If one desires to have the partner, he must have good business standing and should not be a defaulter of any bank. In one case due to financial constraints, a bank defaulted land lord was admitted as a partner and the entrepreneur lost one year to take off his project. In the same case as all R.M and finished market was within 5km radius, he was interested to set unit in the same area. Ultimately he chose to have unit in SIDC As a entrepreneur, he had an advantage of having all infrastructure at best price ; and he got loan facility from nationalized bank Earlier he was forced to go to cooperative bank where cost of interest was very high and had to compromise for inadequate cc limits. In few cases author observed that working capital was diverted for buying e.g. a house or a car. Majority of entrepreneurs divert the project finance for other purpose. Entrepreneur should postpone such purchases till he starts getting good profits and generate surplus funds. It is also observed that C.A. encourages showing losses, many times it erodes entrepreneur's capital; as a result his growth stops. This observation is in more than 80% cases. Entrepreneur's must learn fast about financial aspect, taxes etc. so that his dependency on consultants should be minimal or he should be in position to analyse the advice of tax consultant and its impact on his business. In another case, due to inadequate or lower profit margins, entrepreneur could not sustain changes in import policies resulting closing of the plant. According to author no project should be under taken unless and until cost of R.M. or components are 40 to 50% of selling price. One entrepreneur decided to expand his existing production in backward area, and he failed due to non availability of skilled and managerial personnel. Further he did not anticipate time taken to disburse the seed capital and other govt. benefits of backward area zone. The author has noticed failure of entrepreneurs when first time Centre Govt. introduced C.Ex. Concessions to SSI unit in 1978.Hence it is vital for an entrepreneur to have knowledge of direct and indirect taxes. While running a unit entrepreneur comes across various problems in administration, production, marketing, break downs in machinery, quality and delivery of products in time so on & so forth. For efficient management; building teams, treating the personnel as human beings, having the mission statement, vision, values, strategies, systems, empowerment of employees etc. is vital but due to ignorance of entrepreneurs on above qualities; they cannot progress. Hence banks must conduct or insist for training to entrepreneurs on these qualities which is the need of the hour.