Entrepreneurial ventures Vs. Small
Businesses
·
Small businesses are fewer than 500 (USA ) but in Kenya
·
They are found in both the formal and informal
sectors
·
The growing global concern of stagnation, decline in
economic growth, chronic unemployment and social problems lead to increased
search for strategies to stimulate economic activity
·
Small businesses have been found to have a higher
potential for job generation because of a lower cost per job created.
Small
businesses are defined (mean differently) to different people. Below are the
yardsticks (indicators) that are used by different personalities:
(i)
Financers
– e.g. banks and NGO’s define a small business in terms of
fixed asset/networking (overall value of business).
(ii)
Labour officers and policy members of
government use the criteria of the total number of persons employed.
(iii)
Traders and marketers use a selling
limit of sales volume
(iv)
Manufacturers use the criteria of
technology used in product or maximum level of energy required.
(v)
Service personnel may use the total
number of customers being served.
(vi)
Managers may use the degrees of management satisfaction.
·
In most places, the above indicators
are used in combination, however the criteria is not mutually exclusive e.g. a
business may use high technology but yet has very few employees – say 3 only.
·
Generally, most small businesses
involve business in formal and informal sectors and they include family
undertakings, sole-traders, partnerships, companies etc.
Entrepreneurs Contribution to National Development and general society
(a)
Economic
Roles (Contributions)
·
Small businesses are labor intensive and more
people are needed to conduct their operations than the more capital large
organizations (they are flexible, adoptable and able to create jobs).
·
They employ workers with limited skills who learn
on the job.
·
They spark new ideas and develop products and
services that create new enterprises.
·
Basic for developing a pool of skilled and
semi-skilled workers for future industrial expansion.
·
Improves forward and backward linkage between
economically, socially and geographically diverse sectors.
·
Provide opportunities for developing and adopting
appropriate technologies and managerial approaches.
·
Increases mobility for the improved development of
natural resources and contribute to increased participation in economic
activities.
(b)
Social
roles (contributions)
·
Enables one to move from one class to another.
·
Contributes to even distribution of resources
leading to reduction in crime.
·
Enables integration and interaction of communities
due to trade.
(c)
Political
roles (Contributions)
·
Have potential for democratization (expansion of
sector)
·
Increasing the number and spreading throughout the
society results into a new constituency of owner and employees.
·
Provide a base for a balanced rule between the
rural areas and the rest of the society and the government.
Note: Political
SMEs provide balanced development.
Entrepreneurship development success factors
How to tell that
entrepreneurship is succeeding in the society
·
Number
of new businesses started/ coming up
·
Growth
of the existing ones
·
Improvement
in quality of products and services
·
Number
of people buying/using new products or services
·
Newer
and better ideas in the market place
·
New
market –people who are not using a particular good or product and now they can
use it
·
Demand
for business development services e.g. Micro-financing, training and
·
High
awareness of entrepreneurship in schools.
Characteristics of Small Business
1.
Family
owned
2.
Labour
intensive
3.
Flexibility
and adaptability
4.
Easy
to start –easy to exists
5.
Smallness/simple
slender structures
6.
Easy
in making decision
7.
Use
semi-skilled workers (a pool of learning) and moving down they have short
learning horizon.eg. These strategic plans have 5-20 years
8.
Are
located within the community
9.
Very
low survival rate if they have low mortality rate
Distinguishing between small business & entrepreneurship ventures
|
Small business
|
Entrepreneurship business
|
|
(i) Survival oriented
(ii) They operate on limited
(iii) Labour intensive
(iv) Family based/managed
(v) They are resource based
(vi) Follow imitative patterns
(vii) They are profit oriented
(viii) Low risk ventures
(ix) Take minimum wealth for
|
(i) Growth oriented (they expand, diversify)
(ii) Have access to limited resources
(iii) Capital intensive
(iv) Professionally managed
(v) Not resource based
(vi) Are highly innovative
(vii) Sales oriented
(viii) They take moderate calculated risks
(ix) Tend to grow fast and get wealth rapidly.
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