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2nd CHAPTER Starting Small Business

Bcom, 5th sem



Small Scale Enterprises

small scale enterprises are genearlly concerned with land,building, environment, infrastructure, rules and  regulations. these are to be formulated to safeguard interests of the entrepreneurs.
• Rules and regulations in general ensure.(DO’s)
• rapid growthof SSEs
• Develop new products and markets
• produce quality goods
• p02r/0o8/1m4 ote healthy developement of human resource

SSEs Dont’s
• pollute or degrade the ecosystem(environment)
• intervene with or exploit labour
• cheat the customer on any counts
• there are about 133 Acts and orders pertaining to SSEs about which the entrepreneur or his legal advisor should have knowledge. some of the important Acts worth studying are.

Definition of small scale enterprises
• An industrial undertaking is one in which the investement in fixed assets in plant and machinery, whether held on ownership or on hire purchase, does not exceeds Rupees One Crore-(Rs.3 Crores
earlier was reduced to Rs.1Crore)

Tiny industries :
• All Small Scale units wherein investment on plant and( machineryexcluding land and building ) upto Rs. 25 lakhs are classified as tiny industries.
• unit is treated as Tiny industry where investment in plant and machinery does not exceed Rs. 25 lakhs.

Export oriented units:
• All small scale units which exports more than 50% of their output is classified as Export Oriented Units.
• Definition of Small Scale Service Enterprises (SSSBE)Industrial
Business related/ serviceb enterprises with investment on plant and machinery upto Rs. 10 lakhs excluding land and building is registered under SSSBE. Specified activities eligible for SSI Registration up to Rs. 5 Crores There are certain types of
industries/activities wherein investment on plant and machinery upto Rs. 5 crores can also be registered under SSI category and such list of industries are available in Info-help.

Ancillary industries
• Ancillary industries are those which manufacture parts and components to be used by larger industries. Eg- Companies like GE (ancillary) produce engines for the aircraft industry.
• The ancillary workers in an institution are the people such as cleaners and cooks whose work supports the main work of the institution.

Cottage Industries
• An industry where the creation of products and services is home-based, rather than factory-based. While products and services created by cottage industry are often unique and distinctive
given the fact that they are usually not mass-produced, producers in this sector often face numerous disadvantages when trying
to compete with much larger factory-based companies

Characteristics of Small Enterprises :
“Small Enterprise is Beautiful” because of its following Important Characteristics :

1) A Small Enterprise is generally a “One Man Show”. Even Small Enterprises which run by a Partnership Firm or a Private Limited Company, in most cases, the activities are mainly carried out by one of the Partners or Directors. In Practice, the others mainly assist in providing Capital / Funds.

2)Owner himself / herself is also a Manager of the Enterprise. Thus, a Small Enterprise is managed in a personalized manner. The Owner has First Hand Knowledge of all aspects of the Enterprise & knows what is actually going on in the Business. He takes effective participation in all matters of Business Decision Making.

3)A Small Enterprise has lesser development Period (the process of early development) compared to a Large Enterprise. i.e., the period after which the return on Investment starts.

4)Small Enterprises generally carryout their operations so as to cater (provide water and food for cetain peoples) to the Local & Regional Markets.

5)Small Enterprises use indigenous(originating)resources & therefore can be located anywhere subject to the availability of these resources like Raw Materials, Labor, Transport Facilities etc.

6)They are fairly Labor Intensive with comparatively smaller Capital Investment than the Larger Units. That is, for the same Investment, a Small Enterprise provides more jobs to the people compared to a Large Enterprise.

7) Using Local Resources, Small Units are decentralized & dispersed to Rural Areas & Smaller Towns.Thus, the development of Small Enterprises in Rural Areas & Smaller towns promotes more Balanced Regional Development & thereby prevents influx of job seekers from rural areas & smaller towns to bigger cities & urbanizing centers.

8) They are more flexible to adapt changes like Diversification to New Products, adopting to New Production Techniques, substituting New Raw Materials, Changes in Organization Structure, New Market etc.

Thank you

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