CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Research and other investigation have shown that some of the business enterprises in Nigeria today started as small businesses.

These business organizations perform or carryout various functions which include and not limited to manufacturing of goods, distributing of goods and services and retailing of goods to the final consumers.

There are numerous business organizations in Nigeria. All these enterprises are established mainly for profit maximization. Most of these organizations are relatively small in size and may be seen as operating on a small scale. However, small businesses have not received a widely acceptable definition but are viewed differently by various scholars among which are;

Stanley et al (2005), argued that business employing below 100 workers can be defined as small scale industries.

Also, the Nigerian Federal Ministry, of industries in 1972, defined a small scale industry as one with total investments not exceeding N60, 000 and employing not more than 50 persons, Again, according to the government small-scale industry development programme small scale industry in Nigeria is any manufacturing, processing and servicing industry with a capital investment not exceeding N150, 000 in manufacturing and equipment alone”.

Baridam, M. (1995), opined that using a qualitative criteria for the definition of small scale business, a business enterprises is small if it possesses two or more of the following characteristics.

1. Independent management (usually the manager is also an owner)
2. Owner – supplied capital
3. Mainly local operations
4. Relatively small – size within the industry.

On the other hand, the American small scale business Act of 1953 has also  advanced a far reaching definition as  they defined small business as “one which is independently  owned and operated, is organized for profit, and is not dominated in its field of operation”.

In Nigeria, small businesses operates in various segments of the economy, the case with which it can be     started coupled with the inputs provided by the Nigerian enterprises   promotion decree of 1977, provided tremendous encouragement and conducive business environment for small scale business in Nigeria such that Fubara (2003) argued that “in  every major industry in Nigeria, there are small firms which constitute over  75% of the firms in that industry”.

Most of these businesses so mentioned engage in bakery, carpentry, printing, block moulding, poultry retain trade and transport services etc.

The attention and focus that is given to small scale business both within the academic and government circle is justified not only because small enterprises provide the logical starting point for big   business, but because they also serve as a spring – board and training ground for big business in form of entrepreneurship.

Virtually in every industry in Nigeria today, there are successful small scale businesses, the small firms in most cases complement the activities of the large companies because large firms cannot function effectively without the assistance of small business.

1.2 STATEMENT OF THE PROBLEM

The mortality of small businesses in Nigeria is high and alarming. Most small businesses in Nigeria fail before reaching their maturity stage.

There are numerous reasons for the failure of these businesses which affect or pose a problem in the development of this sector of the economy. There are tremendous problems which tend to retard the development and cause the failure of small scale business.  The failure of any business of this kind depends on the environment of the business. The failure of any business of this kind depends on the environment of the business.

Generally, military against or constituting a problem of small scale business is “Resource proverty” which according t o Welsh (2000), is an obvious and general problem peculiar to most small scale businesses.

Again, Oshagbemi (2004), argued that insufficient preparation may be fatal to a small scale business.

Basically, the problems of small scale businesses can be categorized under the various functional areas of business which include: Finance, marketing, production, personnel, research and development.

The problem of finance arises from the fact that the sources of fund available to the business are few and far limited.

The problem of finance or inadequate fund poses a problem to and restricts specialists from undertaking product and market research.

Other problems include management problems, wrong choice of business, government fiscal and monetary policies, poor location of business, poor channels of communication, depend and supply factors and communication.

1.3 OBJECTIVES OF THE STUDY

The main objective of the study are to examine the failure of small scale businesses and its implication to the Nigerian economy. The specific objectives are as follows:

1. To examine the extent to which small scale businesses can influence the Nigerian economy.
2. To x-ray the role of small scale businesses in any environment.
3. To examine the contributions of small scale businesses on the Nigerian economy, and the satisfaction derived by entrepreneurs in the operations of small scale business.
4. To make valuable and substantial recommendations useful to the economy based on small scale businesses operations
5. To bring to knowledge, the importance of small scale businesses on the Nigerian economy.

1.4  SIGNIFICANCE OF THE STUDY

The small scale business operations and its attendant importance need not be over emphasized.

We believe that the significance of the study covers area such as providing adaptability, mobilization of saving.  Employment opportunities as it provide opportunities for young school leaves to express their skills.  The study will be useful to businessmen and women, scholars and the society in general.

1.5 RESEARCH QUESTIONS

The necessity to investigate the failure of small scale businesses, in relations to the implication on the economy of Nigeria is born in mind by the researcher in the course of carrying out this study; for this purpose afore-mentioned, the following research questions will be considered.

1. How important or of what relevant is small scale businesses to the Nigerian economy?
2. Does small scale business affect the economy in any way?
3. What are the constraints retarding the growth and development of small scale business in Nigeria?
4. Is any environment identified to be suitable for the operation of this business?
5. What are the factors necessary for the success and growth of a small scale business?
6. Does the government of Nigeria have a part to play in the running of small scale business?

1.6 SCOPE OF THE STUDY

The aim of every good researcher is a proper fact finding that will enhance the obtaining of relevant information for decision making and an improvement of knowledge.

The scope of this research work therefore is intended to consider the failure of small scale business and its implications to the Nigerian economy.

As an important topic, it also seeks to provide some basic understanding to the positive side and contribution of small scale businesses in improving the economic situation of Nigeria. The factors influencing and affecting the performance of the business in Nigeria will also be covered. Most importantly, this study seeks to influence its readers on the reasons why small scale business should be desired and encouraged in Nigeria, we think that the appreciation of this topic and concepts would enhance the performance of the operations of business organization in Nigeria.

1.7 LIMITATION OF THE STUDY

In the course of investigation, some limitations were encountered. The limitations in the study are as follows.

1. Finance posed a major constraint in this endeavor.
2. Time and distance factor also posed challenges to me the researcher.
3. Lack of research material especially in the library
4. Poor responses to questionnaires.

1.8 DEFINITION OF TERMS

Business: This refers to any profit oriented economic activities that are organized and directed towards providing goods and services to people.

Economy: Economy is the relationship between production, trade and the supply of money     in a particular country or region.

Growth:   An increase in size, amount or degree to which a population grows.

Implication: This is the possible effect or result of an action or a decision.

Management:  This is said to be the organ of society specially charged with making resources productive for organized economic advancement.

Motivation: This simply means to drive towards a goal, a drive to satisfy a want or achieve a goal satisfaction.

Organization:  This is said to be a group of people who form a business or club together, in order to achieve a particular aim.

Satisfaction:    This is referred, to as the contentment   already experienced by an individual when    a particular want is satisfied.