Paper 3

A small scale business may be defined as a business with a small number of employees. The legal definition of a small scale business often varies by country and industry. For example, in the United State, it is basically 100 employees and 50 employees in European Union. Also, the capital based varies by country
A small business is the one which possess at least two of the following four characteristics-
Management: The managers are the owners of the business
Capital is supplied and the ownership is held by an individual or small group
The area of operation is mainly local
The relative size of the firm within its industry must be small when compare with the biggest units in its field.

It will be obvious from the foregoing definitions that the relative size of the firm usually determine in terms of sales volume, investment in asset, number of employees, profit level and other significant quantitative comparisons is considered the most important. In summary, a small business may be defined qualitatively and quantitatively as the one that is:
1. Independently owned
2. Independently managed
3. Highly personalized
4. Highly local in operation
5. Financed mainly from internal source
6. Small sales turn over

Generally, small scale business enterprise plays an important role to a nation
The role of the small scale business enterprise in nation involves more than just increasing per capital incomes; it involves initiating and constitutiting change in the structure of business and society. The change is accompanied by growth and increased output, which allows more wealth to be divided by various participant. What in an area facilities the need change and development? One theory of economic growth depicts innovation as the key, not only in developing new product for the market but also in stimulating investment interest in the new venture being created. This new investment works on the demand and supply sides of growth equation: the new capital created expands the capacity for growth (supply side), and the resultant new spending utilizes the new capacity and output (demand side).

It promotes industrial development in developed and developing countries, and its ability to enhance entrepreneurial and managerial skills

It increases productivity, national income, market leadership, gigantic technology, and industrial skills, increased utilization of local resources, improved spatial distribution of industrial activities and reduction or rural-urban population movement.


Small scale business has to assist in revitalizing areas of the inner-city.


PREVENT MONOPOLY: The existence of small scale industries preserve competition and prevent monopoly regional economic imbalance. Therefore, when there is competition the price of product will be reasonable and affordable.
INDUSTRIAL DEEVELOPMENT: Small scale in developing indigenous entrepreneurial and managerial skill.

EMPLOYMNT OPPORTUNITY: Small scale business helps to create business opportunity in a nation economy. The more employment opportunity, the better the standard of living.

Small scale business as a labour intensive industry is likely to b consistence with employment and income distribution objectives.

It can also enhance the exploitation of untapped industrial opportunities

Flexibility of small scale enterprises enhance their adaptation to change.

Small scale firm create for widely dispersion industries in the society and therefore enhance regional economic balance

Higher value added to domestic economics

Promotion of affective domestic production

Moderation of rural-urban migration..

Production of intermediate goods required production

Promotion indigenous technology