Introduction to small business

POKHARA UNIVERSITY

1. Introduction to Small Business Chapter Two

2. Concept of Business The term business denotes activities related to trade, commerce, profession, occupation and industry carried out to make profit. It is engaged in the production and marketing of products to make profit through customer satisfaction. The primary beneficiaries of a business are its owners.

3. Products Products are the focus of all business activities. A product is anything that satisfies the needs of customers.

4. Types of Products Goods Services Ideas Events Information Properties

5. Definition of Business A business represents organized efforts of enterprises to produce and market products to make profits through customer need satisfaction.

6. Characteristics of Business Activities Profit Customers Competition Diversification Change

7. Goals of Business are Many Profit Growth Survival Leadership Efficiency Social Responsibility Corporate Citizenship

8. Meaning of Small Business It is just like business discussed earlier. The small business owner establishes and manages the business to attain personal objectives. The business is an extension of the owner’s needs, objectives and personality. More than the growth of the business, the aim is to continue operations over a period of time.

9. Characteristics of Small Business Management is independent Closely held ownership Local operations Small size Number of employees Fixed assets Annual sales volume Capital investment

10. Definition of Small Business US definition: “A small business is one that is independently owned and operated and not dominant in its field of operation” Nicholos Siropolis : “Typically, a small business is … mom-and-pop stores. Businesses … may be looked upon as big or small, depending on the yardstick and cut-off point used”

11. Types of Small Business Activities Manufacturing Wholesaling Retailing Service Professional service Financial service Transport service Repair service Construction service

12. Differences between Entrepreneurial Venture and Small Business Goals Practices Size

13. Large versus Small Business Size Ownership Impact on industry Flexibility Economies of scale Innovation Quality Customer relationship Life

14. Evolution and Classification of Small Business Evolution Phase one: Owner-Manager Phase two: Owner-Manager + Employees Phase three: Owner + Managers + Employees

15. Evolution and Classification of Small Business Classification of Small Business Manufacturing Merchandising Services

16. Features of Small Business in Developed and Developing Countries Similar Features Independent management Closely held ownership Local operations Small size

17. Features of Small Business in Developed and Developing Countries Dissimilar features Definition differences Activities Facilities

18. Importance of Small Business Encourages innovation and entrepreneurship Complementary to large business Flexibility in operations Job creation Maintains close relation with customers and community Simulates competition Higher financial rewards

19. Strengths of Small Business Independence Innovation Responsiveness Employment creation Financial performance

20. Indicators for measuring success in Small Business Profit Competitive advantage Flexibility Innovation Quality Customer relationship

21. Weaknesses of Small Business Risk of failure Lack of homework Financial loss Economic downturn Inadequate management Laws and regulations Marketing problems Technology Poor financial management

22. Challenges of Small Business Serving a well-defined market Acquiring sufficient capital Acquiring and using human resources Staying informed Managerial know-how Time management Coping with government regulations

23. Opportunities for Small Business Technology Knowledge Women and ethnic groups Occupational and industry shifts

24. Small Business in Nepalese Economy Small businesses are backbone of Nepalese economy. Ancient and medieval Nepal witnessed the growth of small businesses related to art, craft and cottage industries. During the Rana Rule, their growth was slow and haphazard. The era of planned growth since 1956 facilitated their growth in various activities.

25. Small Business in Nepalese Economy Definition of small business in the context of Nepal 2001/2002 census: 86% establishments had capital in fixed assets not exceeding Rs. 10 million. These establishments accounted for 56% of employment. More than 75% of economically active population is self-employed in agriculture and small business.

26. Small Business in Nepalese Economy The number of registered cottage and small industries increased from 5727 in 1992 to 7572 in 2003. This indicates important role of small businesses in creating employment.

27. Importance of Small Business in Nepalese Economy Economic backbone Employment creation Entrepreneurship development Complementary Exports

28. Problems of Small Business in Nepal Management Employees Technology Market Finance Information Strategic alliances Government policies Sickness

29. Reasons for Survival of Small Businesses in Nepal Large number Simplicity Market Flexibility Quality Inter-relationships State patronage Low operating costs

30. CASE STUDY Case 1: Namuna Tailoring Case 2: Mangale Sarki