CHAPTER ONE
INTRODUCTION
1.1 STUDY BACKGROUND
Small business enterprises are believed to hold the economy of a country as in accordance with (Agupusi, 2007). The small business sector provides flexible and fast satisfaction of consumer needs; it serves as an effective tool for resolving social and economic problems both at national and regional levels (Tengeh, 2013). Entrepreneurship can be viewed as an impetus for expansion and growth of cities and towns according to (Ngugi and Bwisa, 2013).Small businesses have no clear well known definition but according to (Ayyagari, Beck and Demiruc-Kunt, 2007),they are known to be owned and managed by individuals they normally have few workers. Small businesses are not defined by number of workers but also innovation, the acquisition of technical skill one has it produces the required result.
Small scale businesses contribute greatly towards the economic growth as it offers reduced levels of unemployment (Kelly,2010) asserts that small businesses are personal institutions individually managed and others run by partners at smaller percentage. They can be rated as per number of workers output assets and net profit they grow depending on regional economy. These small businesses are; shops, salons, photographers, hotels, guest houses, and others (Tengeh, 2013).
Globally, the importance of a thriving small business economy has been highlighted and entrepreneurship is classified as a tool for growth of such an economy (Tengeh, 2013, Klapper et al.2007), highlight that, a vigorous small enterprise sector has been perceived to hold the key to most of the socio-economic problems that plaque the developed economies, and most importantly, the developing economies. When compared with big businesses, small enterprises in
particular, are believed to contribute most to the economy and community development through job creation, poverty reduction, and equity distribution (Molapo, Mears & Viljoen, 2008). It goes without saying that expanding the stock of entrepreneurs in a country may provide a stimulus for the initiation of more viable small businesses, which in turn provide employment opportunies and reduction of poverty (Pinkowski, 2009).
According to Tengeh (2013), It is the duty of the entrepreneur to build the idea and manage it by analyzing the required resources necessary for the kick off of the business. Studies by Nichter & Goldmark (2009); Stokes et al. (2010); Van Praag (2003); and Yu & Bell (2007) says entrepreneur behavior and traits are key in setting up a business. Some argue that these bundles of traits , differ from person to person and also region (Kloosterman & Rath, 2001).
International Labour Organization (ILO) Report (1991) defines informal sector, which generally encompass most small business enterprises as, small scale businesses are the creators of goods and services which are sold in all areas mostly urban,the can operate with little capital,minimal or no skill and technology thus contributing to low outcomes. Majority of small business enterprises are unregistered and operate under individual owner’s names, limited to well established markets,loans,public amenities,training or information on their businesses.They are even not considered legal by the government. Government of Nigeria – GON (1986) outlined the broad goals of this sector as; provision of goods and services, rapid job creation to meet the needs of growing of labour forces and indigenization of economy through development. Small enterprise and Juakali development are thus a developing foundation for local entrepreneurship and stimulation of national development (Gathecha, 2007).
In America small business enterprises create 60 to 80% of the employment opportunities according to (Markova & Petkovska-Mircevska, 2009). It is the responsibility of the entrepreneur to mix both production and management factor for quick growth. In Sri Lanka small businesses are many unlike the established ones. However, Kodicara (2008) states that level of employment in Sri Lanka is low therefore to cub the problem he proposed to support both private and public sources of small businesses.
In Nigeria, the government ensures measures in developing the management of small businesses in order to assist the owners in smooth running of business easing the burden thereof. The government aims at developing small businesses thus reducing poverty level and improving economic growth with aim of attaining vision 2030 goals of sustainable development (Irene, 2009). According to the economic survey of 2003, the Small and Medium Enterprise (SME) had 74.2 percent of the population workers adding to 18.4 percent of the country‘s GDP in 2003.
