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Financial Problems Facing Small Scale Industries
[A CASE STUDY OF GLOBAL SOAP AND DETERGENT INDUSTRY ASA-DAM ROAD ILORIN]
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1.4 RESEARCH METHODOLOGY
The approach to this research consist of fold work questionnaire have been distribution to a randomly selected investor within the town and where some of the respondent cannot read and write the research has helped to fill the questionnaire on their behalf. After the questionnaire have been completed and returned to the researchers the data been transcribed into analysis data sheet and prepared for small scale industries.
The questionnaire had been divided into such a way that it had shown a section for personal information capitalization staff strength and a section dealing with problem of incorporation and useful suggestion for future development.
Data were collected through personal interviewed journals text books business and daily newspaper financial reports by eminent personalities and periodicals.
1.5 Hypothesis
Hypothesis can be defined as a tentative assumption made in order to draw out and text its logical and empirical consequences it can be denied as a position condition or principle which is assumed perhaps without behalf in order to draw out its logical consequences and by this method test its accord with facts which are known or may be deteremined. Four hypothesis were formulated to determined the factors responsible for poor investment in small scale industries.
i Poor financial affect the success of small scale industries.
ii Lack of credit facilities from banks and other financial institution affect the chance of success in small scale industries
iii Poor management is largely responsible for the inability of the small scale industries to survive in the small scale industrial sector enjoy little patronage from the government.
THEORETICAL CONCEPTS AND ITS CHARACTERISTICS
The definition of small scale industry concepts at any point in time could this is because the industrial covered by a university acceptable definition of small scale industry in any particular state or country no means definitive. As far as the industry of kwara state is concerned the term small scale industry has undergone a lot of revision through time. For example at the inception we used to refer to such industries concentration in the financial bracket of N500. This was later revisal to industries with invested capital of between N1000-N5000,000 to be given to small scale industries.
Today, definition also permit the inclusion of establishment employing up to fifty people. Nevertheless, it is regarded as feasible option to solve problem of industrial development. As a result of small scale industries have been assigned very important roles in economic developing countries. The centre of management studies. University of Netherlands. has classified small scale industries into four groups, These are;
i. Handicraft and cottage industries which are usually establishment employing up to nine person.
ii. Small scale industry which are establishment employing 10-99 person.
iii. Medium scale industry employing 100-249 person.
iv. Large scale industry employing 250 person or more.
The same centre defined a small scale industry as an industry in which managers personally perform all the functions of management without taking active part in the production. Since in almost all cases in establishment employing below ten person, the manager or proprietor actually participates in production . Handicraft and cottage industries will be excluded from the centre are accepted.
CHARACTERRISTICS
Small scale industry is most often characterized by the managers being the owners. Independent in this case means that it is independence from outside share holder control over management decision. The same manager or proprietor handles or supervises the financing production marketing and the personnel of the enterprises.
Equity capital is supplied by an individual or group this places the small scale industries is contract to companies where equity stock are traded on stock exchange .
The manager or proprietor finds it difficult to borrow shot term or long term capital through organizational financial institution but relies heavily on relations money under personal savings or profit of enterprises.
The operations of small scale business are essential local, one interpretation of this is that the local may varies with weather there is saves retailing whole sailing or manufacturing . however, local usually means that the employee and owner live in the same general areas. For whole selling and manufacturing business particularly market may be else where but production of the warehouse function would usually be in one location. The industry closely integrated with and meet only the immediate need of wider or distance market.
The establishment is generally weak poorly equipped and relevant to request or even accept assistance for reason of ignorance prejudice or fear that information about the enterprises might reach the tax authorities or a near by competitor.
The rate of failure is high because of the dominance of the sole proprietor. Although since it is relatively easy for single individual to start a small industry the replacement rate is not also high and the number of unit has a tendency to multiply.
Little or no account of business cost and revenue is kept and the banking system is hardly utilized is kept and the banking system is hardly utilized the result is that banking facilities for business financing and expansion are exported to only few of the industrialist.
The level of education of the proprietor is usually very low with a consequent low level of business management techniques skill and market information.
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