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SMALL SCALE ENTERPRISES

(SSE)

SSE
THE POWER OF SMALL BUSINESS Because big business is more visible than small business, most people underestimate the role of the small firm in any economy. Small business is one which is independently owned and operated and not dominant in its field of operation.

Eligibility Requirements for SSE

Retailing annual sales\receipts not exceeding $3.5 to 13.5 million Services annual receipts not exceeding $2.5 to 14.5 million. Wholesaling yearly sales must not be over $9.5 to 22 million. Agriculture annual receipts not exceeding $1.0 to 3.5 million. Construction general construction with annual receipts not exceeding $17 million. Special Trade Construction annual receipts not exceeding $7 million. Manufacturing- maximum number of employees may range from 500 to 1500 depending on the industry.

Economic Contributions
Employing more than 50% of the nations private sector workforce Creating 66%of all new jobs since early 1970. Producing 48% of the nations GDP Accounts for 53% of the sales Growing by 800000 to 900000 new ventures each year.

Common Measure for SSE


Most commonly used measure for small business is the number of employees on a firms payroll. The White House Conference on small business definition is: A firm employing 500 people or fewer.

Criteria for SSE


A small business must meet two of four stated criteria: 1. Management is independent. 2. Capital is supplied and ownership is held by an individual or a small group. 3. Area of operation is mainly local; markets need not be local. 4. Size is small when compared to the biggest unit in the field.

Causes of small business failure


Poor operations management managers lack the ability to operate a small business. Lack of experience many owners start businesses in industries in which they have no experience. Poor financial control many owners start with too little money and with little understanding of financial spreadsheet applications. Weak marketing efforts unable to market their products. Failure to develop a strategic plan no plan to guide the business in the long run. Uncontrolled growth unplanned growth can be fatal to business. Poor location location are chosen without proper analysis, investigations, and planning. Owners choose cheap sites and locates themselves straight into failure. Improper inventory control neglected duties(largest investment of the owner) Incorrect pricing - prices for the finished products are not done properly.

Usually inexperienced management and lack of financial stability results in a higher business failure rate.

Benefits of SSE
Opportunity to gain control over your own destiny Opportunity to make a difference Opportunity to reach your full potential Opportunity to reap unlimited profits Opportunity to contribute to society and be recognized for your efforts Opportunity to do what you enjoy

Potential Drawbacks
Uncertainty of income Risk of losing invested capital Long hours and hard work Quality of life until the business gets established High levels of stress Complete responsibility

How to avoid common pitfalls


Knowing your business in depth Developing a solid business plan Managing financial resources Understanding financial statements Learning to manage people effectively.

Microfinance
is the provision of financial services to lowincome clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services. Microfinance is the supply of loans, savings, and other basic financial services to the poor. As these financial services usually involve small amounts of money - small loans, small savings, etc. - the term "microfinance" helps to differentiate these services from those which formal banks provide.

MFI
A microfinance institution (MFI) is an organization that provides microfinance services. MFIs range from small non-profit organizations to large commercial banks. Credit unions and lending cooperatives have been around for hundreds of years. The nature of microcredit - small loans - is such that interest rates need to be high to return the cost of the loan. Interest rates are high because they need the same amount for staff time for meeting with the borrower to appraise the loan, processing the loan disbursement and repayments, and followup monitoring.

There are cases where microfinance cannot be made profitable, for example, where potential clients are extremely poor and risk-averse or live in remote areas with very low population density. In such settings, microfinance may require continuing subsidies. Whether microfinance is the best use of these subsidies will depend on evidence about its impact on the lives of these clients.

Benefits of Microfinance
Microfinance helps very poor households meet basic needs and protect against risks The use of financial services by low-income households is associated with improvements in household economic welfare and enterprise stability or growth; By supporting women's economic participation, microfinance helps to empower women, thus promoting gender-equity and improving household well-being; For almost all significant impacts, the magnitude of impact is positively related to the length of time that clients have been in the program.

Disadvantages

Microcredit may be inappropriate where conditions pose severe challenges to standard microcredit methodologies. Populations that are geographically dispersed may not be suitable microfinance candidates. Microfinance may not be appropriate for populations with a high incidence of debilitating illnesses (e.g., HIV/AIDS). Dependence on a single economic activity or single agricultural crop, or reliance on barter rather than cash transactions may pose problems. The presence of hyperinflation, or absence of law and order may stress the ability of microfinance to operate. Microcredit is also much more difficult when laws and regulations create significant barriers to the sustainability of microfinance providers (for example, by mandating interest-rate caps).

FOOD SECURITY

Food security refers to the availability of food and one's access to it. A household is considered food-secure when its occupants do not live in hunger or fear of starvation. Food security exists when all people, at all times, have physical, social and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for an active and healthy life.

Government role Population growth Poverty Scarce resources.

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