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Abstract

This study is on factors affecting the performance of small and medium scale business. The total population for the study is 200 staff of selected SMES in Uyo, Akwa Ibom state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up managers, secretaries, content developer and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

 

 

 CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Small and medium scale business constitutes the highest percentage of business establishments in the country both at the national, state and local levels. Since they are of great importance to the nation’s economy and industrial development, one therefore, wonders why such businesses are prone to poor management. However, the poor management of the rise and fall of these businesses daily are not of major concern to most of us. This according to Omlekwusi, (1995) is that people tend to sing success and hide failure. Basically, the aim of any businessman is to maximize profit and achieve success.  However, the achievement of his objectives depends on this managerial skill and the quality of those employed. Madu, Nwaogwugu and Ohiri (1988) noted that incompetence on the part of entrepreneurs accounts for over 35% of failure in business. This, therefore, is traceable to their inability to employ the right caliber of people, with relevant experience and personal qualification. To underscore this point, Frame (1975), Iwuoha, (1993) and Onvekwusis, (1995) believed that most business collapse within a short period as a result of poor management t by entrepreneurs and lack of qualified officer workers. Since these people lack certain qualifications, they sometimes believe that business is only run by capital. According to Nolan, (1967) and Pophan, (1971) the knowledge of business education makes one not only a good business manager but also better sales manager. Similarly, Jackson (1975) stressed the need for developing competency in payroll procedures, he believed that any community that have many small businesses need to have knowledge of accounting (pay rolling) in order to survive. Since majority of those who run small and medium scale businesses are people who are unable to complete their education or those who could not go beyond the JSS 3 and are prepared for self reliance, it is important that they understand that business education is for business and about business. To what extent the operators of small-scale businesses have the knowledge of business education or education for business is still unknown. This project, therefore determines the extent to which the operators of small and medium scale business are knowledgeable in their areas o operation, examines the factors responsible for this and suggestions where necessary. Therefore, Yewande (1991) quoting the Federal Ministry of Industries an others defined small-scale business as one that has a total capital investment of up to 50 persons. The World Bank defines it as an enterprise whose total fixed assets (excluding land) push cost of investment does not exceed N10 million in constant 1998 price index. While the Third National Development plan puts the capital investment of small and medium scale industry at N150,00. Some years ago the Central Bank of Uyo LGA further defines small and medium scale industry/business as one with Annual turnover not exceeding N500,000. It is therefore, clear that there is no universally acceptable definition of small and medium scale business for the purpose of this project, a working definition of small and medium scale business enterprise will be one with a working capital of N100, 000 to N150,000. Small and medium scale business enterprises have greater flexibilities which allow this survival of economic ship as compared to the large scale enterprises. Moreover; the decision making and renovation process in large scale enterprises are in habited by rigid bureaucracy. Therefore, small and medium scale business enterprises development is important and needed by the nation.The rote of the government and support institution in the development and growth of small and medium scale business enterprises cannot be over emphasized. The government’s role in encouraging entrepreneurship is not just limited to providing and economic environment conductive for business and a stable political scene. To stimulate economic growth entrepreneurship, it must be able to provide the right combination of political and incentives to attract individuals to become entrepreneurs. Since government resources are limited, it is then the role of the support institutions to fill the gap between the resources needed by entrepreneurs and what the government can provide. This can be in the form of financial assistance or non-financial services to both enterprises and would be entrepreneurs. The continued effectiveness of the small and medium scale business enterprises, it is imperative that an analysis of this be made from the perspective of the entrepreneurs themselves.

1.2 STATEMENT OF THE PROBLEM

Despite the wide spread economic reforms by the state government, small and medium scale business enterprises, seem to face a variety of constraints owing to the difficulty of absorbing large fixed costs, the absence of economies of scale and scope is key factors of production, improper monitoring mechanisms  by the government, and lack of management knowledge. From the preliminary discussion with some enterprise, the government supporting institutions do not have formal feedback mechanisms to check whether the assistance given to small and medium scale business enterprises are adequate and effective.  The small and medium scale business enterprises are unable to introduce modern equipment machinery to improve their product due to financial constraints. It seems that access to finance remained a dominant constraint to small and medium scale business enterprises in Uyo LGA, credit pertaining to working capital is of permanent concern to small and medium scales business enterprise. Lack of managerial know-how places significant constraint on small and medium scale business enterprise seem to attract most people, they can hardly compete with larger forms. Association providing a voice fro the interest of small and medium scale business enterprises in the policy role compared to those of larger forms. One major problem in Uyo LGA’s business environment is in adequate power supply. This and other factors are responsible for the problems and low performance of small and medium scale business enterprises and these problems seen to defied all efforts by government to address them. The problems over the years have equally kept foreign investors on the run despite Uyo LGA’s efforts to lure them to invest in the country. It’s difficult to make it in business under this environment “the rate at which power supply is being rationed these days cannot help any businessman. And by so doing, you will discover that the rate of turnover becomes so low that one keeps losing customers at the end of the day. Power supply is nothing to write home about. Business operation here is being starved to the extreme. At a time like this, government should put more effort to salvage business operations in this country. Supply has not improved even after the so called privatization this is killing business

 

1.3 OBJECTIVE OF THE STUDY

In the context of the above mentioned problems, the main purpose of this study is to analyze the factors affecting small and medium scale business enterprises in Uyo LGA. The following are the specific objectives.

  1. To identify what the government and support institutions are doing to facilitate and encourage entrepreneurship
  2. To find out whether small- scale business enterprises in Uyo LGA have any association that project their interest.
  3. To investigate whether lack of managerial knowhow has affected small – scale business enterprises Uyo LGA
  4. To find out whether small – scale business enterprises in Uyo LGA actually have access to finance in the area of working capital.
  5. To study the links between the government and non-governmental agencies that support small and medium scale business enterprises.

1.4 RESEARCH HYPOTHESES

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H0lack of managerial knowhow has not affected small – scale business enterprises Uyo LGA

H1lack of managerial knowhow has affected small – scale business enterprises Uyo LGA

H02: small – scale business enterprises in Uyo LGA actually have no access to finance in the area of working capital

H2small – scale business enterprises in Uyo LGA actually have access to finance in the area of working capital

1.5 SIGNIFICANCE OF THE STUDY

Small and medium scale business enterprises are believed to be a sure room for the development of an economy like that of Uyo LGA. This study therefore shall be of immense benefits value to the following:

Small and medium scale Business Enterprise

The research project will be a source of assistance to the managers of small and medium scale business enterprises, it will provide a clue to how they could solve their financial and administrative structure.

The Government and Supporting Institution

This research will provide valuable assistance to government and their supporting institution in the area of suggestion on how to have feedback on the capital they have advanced to the small and medium scale business enterprises.

Future Researchers

The findings of the research will serve as a source of reference to future re researchers who may wish to replicate this study.

1.6 SCOPE AND LIMITATION OF THE STUDY

This project work is restricted to small and medium scale business enterprises in Uyo LGA. It will bother on government with small and medium scale business enterprise, provision of finance and managerial problems of small and medium scale business enterprise

The researcher encounters some constrain which limited the scope of the study;

  1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
  2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
  3. c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.

1.7 DEFINITION OF TERMS

 

The researcher wishes to define some important terms used in this study so as to bring about better understanding o the context in which they are used. These terms and t heir definitions are as follows:

Small-scale Business: According to the Act of 1953, (in America) provide that a small business concern is “one which is independently and operated and not dominant in its filed of operation”.  That Act also authorize the small business administration, in making a more detailed detonation to use such criteria as number of employees and sales volume.

Retailing and services – $1 million or less annual sales.

Manufacturing – $ 5 million or less annual sales.

Business Ownership: This refers to the various forms in which a business can be owned such as sole proprietorship, partnership, cooperatives, small business etc.

Economic Development: Introduction to Business by I.R Onoja and A.B. Epkah (May 2002) in the basis for continuing industrial progress in any organization.

Poverty: This implies not having enough to eat, unfit shelter, high infant mortality rate, low life expectancy, poor environmental conditions etc.

Entrepreneurship: This is a force that mobilizes other resources to meet current market demand. It is also the ability to create and build something from practically nothing.

Illiterate: A person who has no formal education up to secondary school level although can speak, read and write.

Finance: It is an activity concerning revenue, expenditure and departmental operation and other effect on the economy.

Industry: it is agglomeration of different firms producing similar commodities under separate management.

Assets: This is a valuable property that a person or a firm can sell especially to pay debts.

Resources: This can best be defined as the sources for economic wealth or means of achieving something.

Profit: It is money gained or benefit obtained from investment.

Gross Domestic Product: Total Product produce within a country in a given period of time.

National Development: This is the transformation of the society from one state of being to another, changing from traditional way to modern method.

Development: This is the structural changes in the society and the economy.

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study.

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