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University of Nigeria Research Publications
ADEFUSI, Taiwo N
Aut
hor
PG/MBA/00/31656
Title
Survival Strategies of Small Scale Business Enterprises in Nigerian Economy:
A Study of Furniture Industry
Facu
lty
Business Administration
Dep
artm
ent
Management
Dat
e
July, 2002
Sig
natu
re
S U R V I V A L Srlll<A'liliGIES OF S M A V , SCALE 13LJSlN ESS ENrI'EIIP1<lSKS P R
T H E WORK IS DEDICATED
TO
ALMIGI-ITY GOD.
work.
My psolbuncl gratitude goes to the entire 111clnbcrs ol'stul'l'ol' I k p a r t n ~ c ~ ~ t
of Mariagemcnt, University 01' Nigeria, IJni~gu Campi~s.
1 wish to lastly express my tl~anlis to n1y Ii.ic~lcls anti collcagi~cs notni71!.
Major Tony Oltehim, Chika, lloris, U u n m i and Junwltc.
ABSTRACT
Soon, the huge Iinancial i n~~cs tment govci-111iicnt 111acle i 11 iiic hi;: Ii I - I I I S
failed to p~*oduce tlieir citlici. cl'licicnt goods and scrvice or- all!
privatelj owned s~nall scalcs nl'business were found to be ctoik~g well i l l
comparison to goveriiiiienl's large lirnis.
The eff'or-t in this study is gcal-crl tcwal-(1s liigliligllti~lg I ~ C .;irntcgics Ii)r
survival acloptccl by thosc s~iiall scale busiiiosscs that are sril l t h r i \ / i11g
and to recomnie~ld new stratcgics lo cxisting sniall scalc busi~icsscs ~ ~ c l
llCW OilCS.
( .. i
Chapter two o('1'crs the rcvicw 01'1-clated litcraturc to thc st~~rl \ l .
Chapter three dealt with the Rcscal-cl~ Mctliodology risecl.
Chapter Four gives tlle pl-escntation and analysis of the data ~olleclccl. tllc
hypotheses wcrc also k s t c d ;ind tile rcvicw o!' main Iindit~gs and its
sunmnry .
TABLE OF CONTENTS
CHARTER ONE INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The small scalc busiricss has attr-udcd :I
a 'difticult since there is little clocu~neritation of' t l x i r e ~ i s t ~ m - ~ . 'I'lic'sc
small scale busiricsses arc. ill tllc main sole businesses thus ilicir coil\ c )
into existence and subsequcrit clcrniscs arc not :qqx-opriatcIy
documented. Tlic publicly quoted firm are the only onc.; ~-ecluil-ccl by
1
1.2 STATEMENT OF PROBLEM
Many small businesses have gone into cxti~iction; ma:). otllers ;ire
sadcliecl with problc~iis a d ;~il~licnts that arc indicative 01' i~npcrd i l~g
ure. business F ' I
This work scelts to acldress h i s tlcspcrntc situatiun or tlie sinall bi~si~iess.
Though goverriment has dutili~lly supportecl tlicm, cases of- busincss
failure among them still :~bvunri.
I .3 OBJECTIVE AND PURPOSE OF THE STUDY
In spite of the noted ha~.sli cconomic conditions i n the co~int r y, riiarly 01 '
these sniall scale lmsincss units ar-e still tlwiving. The study tliereliwe
wants to uncovcr the strategies tliesc survivor businesses are using to
their advantage.
Specifically, the study wants Lo:
I-lighliglit tlie major problc1iis that endanger the S L I I T ~ V L I I 01' the
small busiriess.
I-lighl iglit tlie strategies these s111al l businesses iil;ve so J':IL.
adopted.
7
I .4 RESEARCH HYPOTHESES
,. scoie business.
1.5 SIGNIFICANCE OF THE STUDY
The prosperous ccono~nics of' tlie world owe much of' tiicir economic
provides to the activities ol' tlicir small scalc business sector. I'lic
continued haphazard manngc~ncnt and otlie~, problenis bcdcv i l i l~~ this
class 01' business Iinvc dcnicrl t l~c Nigerian economy 1111' ~ C I I C I ~ L S
accruable to it through the s~iiall scale I~~~s iness .
The importance of the sti~cly lies in thc Sact that the study wants
redircct prospective small scalc business managers ~vho want to invest
this class of busilicss.
This is achievable by higliligliti~ig tlie pitfalls inhereill in thc business
and tlie strategies that can bc e~~lpioyecl to overcomc tlie~n. T h i s will he
recorded in tlic s~~ggest iom and I-cco~ii~iicnclatio~~s tllat the s t i~~ l j will
make.
1.6 SCOPE AND LIMITATION OF THE STUDY.
The scope of this cvorlc is thc survivnl strategies oSsmall scale industries
in Nigeria Econorny. A st~lcly ol' the i;ur~~iture 111dust1-y. M y saniplc ol'
tlie furniture indirstry i s talten tiurn Lagos Metropolis.
A number of lirnitatio~is hrcatenccl the succcssSi~l completion of' this
research worI<. P ~ O I ~ ~ ~ C ' I I ~ among such p~vblcms is lack :>I' ti~lir~vx;
requ i d to pay Sol- the i ncl-casi ~ i g cost 01' research. 'I'ransportatio~~ cost
increased considerably likewise the stationeries required I'or ~ h c \~oi-li.
The unavailability of' aclecli~atc Nigcsia~r - based textbooks and otlicr
referral materials hindered this work.
The time available fijr this wol-ks was not sui'licie~~t to alloiv rilot-e
thorough research.
Element of Bias: This liinderecl the true responses ti-om the rcspondcn~s
to tlic questionnaire admiriistcrcd 011 them. '~Iius this aSfec::cd 1l1c ciala
supplicd to the researclicr by tlic ~*espontlc~~ts. I t is ~ionetliclc:;~; ~ h c I~clieI'
of the researcher that thc elcment ol' bias was not enot~gli to yicld a
signiiicant distortio~~ ol' ~ l l c overall r-esul ts.
LITERATURE REVIEW
2.1 CONCEPT OF SMALL SCALE BUSINESS ENTERPRISES
The sn~rlll scnlc husincss cntcrpr-iscs, as know tmlay is not a
phenomenon that origi~~atctl i l l tlic t\vuntich ce~tury. I'he early ~ncn
passed the stage oi' living a ~vanclering !ilk and started settling cl:,wn in
homes :!nd groups. 'I'l~eir occupation \vas agricr~lture. As ad\ :~r~con~ent
in the life of the early man continued t o occur, tlley started oliiur l o r ~ i ~ s
of earning n living.
This took the I'o~~ii of' Cot~agc i 11di1slr.y. 'l'lic cottage inclc~stry w s clelinccl
as industry cnrriccl out i l l 1l1c Ilt~r~ics. 'l'his il~volvcs activi lics S L I C I I as
malting of simple farm and household
and machetes; podc1ctio11 01' ~ 1 0 t h
tools such as;
tiom cotton
hoes, knivcs, spoons
and p*wc.ssing of'
'This cottage industry thus; is the ancestors of. what we tod ty call small
scale business. The 111iniite size of the cottage industries deprived tlieni
of any appreoial3le precognilivc and clocuri~t~itation, ~11~1s; v c q 1 i t t lc is
7
known about tlie~ii. i t is also note wot-thy that as cottage i~ l r lus~r ics
continued to adva~~ce, a hit c~l'spccializatinn becarlie nnticenblc so011 that
dil'krent com~nuni~ics spcciali~c. i l l irlaking cli~~lkrcrit prorluc-I:; rllus give11
impe'us to exchange.
The cottage industries used simple i d non-mechnizect tools
exclusively. The small scale business enterprise ol'toclay have attracted
better attention and e~iiploys a I5ir combination of siinple a n d
meclianized tools. 'l'he arc3 01' ope ratio^^ ol' tiw sniail scale business lias
also expanded to include repair ol' electrical and electronic applinnces,
fixture of nod ern amcnitics, shocs ancl clrcss ~ n a k i r l ~ ; i r t ~ l l i i ~ ' ~ i i t i i ~ - ~ '
production. I~kpcnynng S . IWO).
Many a scholar a id organizations have severally studied tllr: ! e m Small
Scale Business Enterprise. l'his has led to the varicly of'clc.iini~ions oi'
small scale business. The variations in clefinition are consequent o n the
. 'existence of different autliors with different perceptions din'erent
ecoiio~~iic circumstances and dil'l'et-ent inciustries.
The United Nations Industrial Development Organization ( .INIDO) has
located about fifty dil'lerent definitions of small scale industries in
seventy-live di t'lkrcnt c o i ~ ~ ~ t r i e s (Alii111-inacle, A. 1987). 'I'hcsc
definitions are arrived at by use ol' a ncrmbw 01' criteria, whicli
include installecl capacity i~tilimiiun, t ~ ~ t p i ~ t , e~~rl>luy~iicn!., capital outlay
and type of industry. 'l'lii~s thc United Nations Ind~;,;tric?l m c l
c C Development Organization ( U N I DO) defined s ~ i ~ a l l busir:mses an
economic venture" which bear the following characteristics.
Ownership and management being vested in the some person.
I-Ie owner on wlmn thc policy clccisinll rest p~.ovicles capital.
A situation or a vcnturc crmtrolling a a~nal l scalc of' the ~iiarlcct.
thereby constituting a little qilula in the large sized ~iiarltet.
Having a localizecl operational area.
The owner participating very activcly in a11 cIc.c:isii)~~-~iiaki~~g
processes on a clay-lo-day operation basis with a high clcgree of'
rigid control (Akinsinade, A. 1987).
The united state or America's Small Business Act oi' 1953 deli~ior. , m a l l
business as one, wliicl~ is ilirlcpctldcntly owncct and opel-atccl, ami I I O ~
dominant in its IieIci ofopcrntions ( I lubbnrtl ct. al 1988).
In Japan, small and medium elitcrpriscs is CIUIIIIL'CI by thc f :~~~~cli~~llcl l lnl
law of inccli~rm aiid slnall clltcqxiscs as c111c cit11t.r h a v i ~ ~ g cnpii.al
exceeding fifty 111iIlion yen or having ~ io t more than three hi~nd~.ed
employees in manuhcturing i11clust1-y and either capital not escwding
ten milliim yen or having not inore than firty employees in thc
cornmercy or service scctw, (0.1T.C.D. 197 1 ).
The Nigerian oSficial delinition ot's~iiall scale twsitiess is rl Ilciible as i t
is broad. The Fecleral Ministry 01' Inclustl-ies defines the s~iiall scalc
business as:
All manufacturing unit with a total capital investment (excluding cost 01'
land), up to N750,000 but including working capital, m c i paid
e~nployment of up to 50 persons. (Apuba, 1989).
Such an enterprise must belong to sct~edule I of the Nigerian L-~tcrprises
Promotion Decree 1977. 'I'lie i~nplication is that it ~ i i ~ ~ s t be wholly
I0
Nigerim owried. Additionally, the level o r outpul can still course a
business to bc decmcd m a l l in spitc 01' i t Iiaving investmm! and
e~nploly~iient in excess 01' thc li~i~ils. 11' h e scale ol' output is r.c_.lativcly
sii~all in comparison to psevalcnt size of plant and where labow intensive
technology is ilscd, tlic business is siil l callcd s~iiall.
The National Dir-cctor-~tc o f Ilniploy~ne~it clc.f~~iition 0 1 ' tllc . ;~ , in l l scirlc
business encompasses business with as little as five thousand naira
(N5,OOC)) and etnploying as Scw as three pc~.so~is (Iscniin. I. 1 %8). ' 1 ' 1 1 ~
Co~ilrnittee for Economic Dcvclopment (CF:D) in the Unikcl Stales 1) 1'
America defines s~nall scales business as one Iiaving ,:a1 Icast t ~ v o r>lq thc
under listed chasacteristics:
(a) Indejxndcnt Managen~ent
(b) Capital is s~tpplietl and ownership is held by one indiviclual or a
small group
(c),: Operation asea is localizecl.
7
(d) 1 he size of thc h u s i ~ m s is small relarivc to other i;rms in thc
industry.
Rrooin and longnecltcs adop~ccl this clefinitio~l but noted that while. a
Steel Rolling Mill is s~iiall i l ' i ~ c.mploys 2500 persons or Icss, tliai i l l tlle
householcl appliance. inrliistsy, a Iirml \\,oulcl bc. cor~siclcl-ccl SIII:\:! il' it
employs less than 500 ~ x r s o ~ i . (I3soo1n ct a1 I 07 1 ).
The definition using the criteria o f ~iurnber is vague and arnbiguo~~s. .-
This is borne out by the s~nall Business Act or 1953 passed in the United
States of American, which instructed Small Busincss Administrators to
employ such other critcrin as Salcs Volumc in niaking datnilccl tlclinition
(Small Business Ad~iiitiistratol' 107 1 ).
The Center for Mnnngen~ent llcvclopmcnt, Lagos in 1974 c o ~ d u c ~ e d a
research in which i t as nntccl that small business cannot Ix aclcq~iatei)
defined tising the parameters o r iiumbcr ol' employees, sales volu~nc.
asset e~nployed or any co~nbinatio~l ol' the above owing to the inhcritcd
fallacy that would bc embcdded in any such definition. Sollie
characteristics, which more o l i e ~ ~ were associated with large business,
were agreed on in the report.
* 111 s~nall business, ow~~ership and management arc vested in the
sanic individuals.
* The firm i~sually has a small share ol'the market (or altcmutively,
a significant share o f a higlily spccializeci low-voli~nic Ilia1 ltet) and
in general, is not in a position to sipnil?cantly inllucnce the size 01'
the markel.
* That the Chiel' Excculivc gcnclnlly pat-ticipates actively in i n t ~ i l
levels of the decision ~iialting process and in the clay-to-day
operations of the 17rms usually with inaclecluate specialis! suppo~-t.
=P The Chief Executive call know and hc lmown by all e~iiployecs
till-ocrghout the lii.111.
The I1icIustria1 Research I l n i ~ o f University 01' Ilk now ObaSani
Awolowo University Ile-Ire gives small scale business as one wlmse
total assets in capital, equipment and plant and working capital are less
and filly thonsand naira (N250,000) and cmpluying
time wol-Iws (1.IX.U. 1973).
than two hundrecl
less than fifty full
,,
'The funds for s~nall Scale Industry (FIJSSI) of the tlicn Ana111!7ra State
sets the coticiition Tor assisting any small scale business to he that any
small scale business 111ust !lave a capital investment ul'(01ie Iil~ndrccl and
fifty tl~ousancl naira or ~nclrc ill ~~incliinct-y and equilmcnt) N 150,000),
I3
Anambra State Edict No. 1 ol' 1970). I'his clclinition is no1 ,t good
criterion l'or cletcmining what simll scalc I~usiness is. Nwocha ( 1085).
showed in a study that about S5.41'% of- all the srnall scalt. business
studied had capital invcsl~ncnt ol' less 111:11i live tl~ousancl naira {NS,OUO)
thus applying this definition ~ v i l l disquality nialiy hc~sinc.sses li,~ I:LlSSI
assistance.
The Crer~it Guiclclines issued by thc Central 13ank o!' Nigeria rec.css to as
small all businesses with annual turnover 01' Srom one naira (:< 1.00) to
one hundred and fifiy tlroi~sancl naira ( N I SO,OOU) (Ola V. 1083). I'his
definition is deficient since the annual turnover ol'an Orgatiizatio~~ is the
function of a properly kept accounting record. Many lhil to ltcep any.
I'lius, this clelinitiwi is not a good yarclstick lix small scalc I7~1siness
classification in Nigeria.
The Federal Government dircctccl thc Nigeria Bank f'or c o t ~ m ~ ~ ~ w and I ,.
Industry (NBCI) Ihs the purposes of Co~nmescial Loans to regascl as
'small scale' any enterpsises(s) value no mosc than live hundred
thousand naira (N500,OOO) excluding the cost of land and including
wosliing capital. (Business I2spscss. 1985).
The Nigt~ian bank liw co~iiliier-ce and I~itltlstry rlurilig thc I C)XS/8Cl
session, officially tlelincd small scalc business as those e--ltcr-p~ise
investing not ~iiorc tlia~i seven Iiu1idr.ed arid li l iy thousand (N750,000)
exclucling thc cost o f lalitl 11111 i~icir~clirig working capital) Okr>~:ji, I < .
1996.)
The above two conflicting deli1iitions in operation at the same time
shows the extent of variation even within an economy of'the concept of'
'small scale' in relatiorl to husilicss. Wc ~.ccol.dcd cwlier tbat thc
definition of snzall scale varies with time and economic circulvstmccs.
This eviclenc.ecl by the second clcl?nilio~i by [lie sarne body Nigeria Bc?nI<
Sor Con111iei.ce and 1ncI~ist1.y (Nf3CI ).
The Nigerian Industrinl Ilevelopmcnt Bank ( N I D U ) statcs that small
scale businesses are those with capital not less than Ibrty tliousa~~cl naira
(N40,OOO) (Sullivan et al. 1980). ' , I
Indivic!uals as well made contl-ibutiolis to the clefinitioll (11' stnull scale
business.
Stephen Ekpenyong ( 1989) defined small scale enterprises as: l'liusc.
enterprises that have relatively little capital investment, that produce in
srnall clitantitics as a rcsult coiilrol a small share 01' the markct, that
employ not morc tharl I i l i y worltcrs and in which ~ i ~ a t i a g ~ ' ~ i i ~ ~ i t ,
marketing and entreprencurid lilnctions are vested in tlic propriek~~..
Philip Clark (1 982) opined that sniall businesses art. ol iun ~ l i c cl'td oi'
one owner-manager who operates the business alld tiiakes the
managenlerit clecision all by himsell: I lc stat-tcd fi~rtlier that such one
ownermanager find it extrcn~cly di l'licult t o cielegatc authority and
responsibility or to liccp ol'l' tiiani~gc~i~cnl li~nctions \vhicll lie is ~~scc l to
carrying on.
The multiplicity of concepti~alization of sinall scale business has indeed
hindered its development. Stanley ( 1 985) stated that this conisovel-sy i l l
the definition bas impeded clear thinking about the role ol' small scale ( .,
business in industrial developn~cnt ol'the country.
The definition ofthe small scale business givcn by the Nigerian Rank liw
Commerce and Industry which stated that small scale business r n d tllose
enterprises investing not mow than seven hutidred and fi l'ty thousand
naira excluding the cost ol'la~id h u t includi~lg working capital appears 10 - D_
be the most applicable. Sincc the delinition set only an upper limit 1.01-
capital investment and rnadc 110 ~ i~c 'n~ ion of- the r~u~iibcr or employees, i t
is believed that all busincsscs not ~nindi~ig how small t l~c capital or
-9pr number of employees qualifies to be treated as small scale business. - -
This will be adoptecl as our working definition [or the purpc-;e of this
research since i t accommodates Inany s~nnil scale enterprises operating
in Nigeria and especially i n thc area or 1:urniture n~alting i n Eni~gu State.
2.2 FEATURES OF SMALL SCALE BUSINESS
Small scale business i n Nigeria has a number 01' distinctive features
which 111ar.k them out from both medicrnl and large scaic Ousitiess
establishments. Prominent among these features are:
-
The Operatio~~s 01' the small scale busi~~css enterprises are tsuc to tht'ir
name, smalI. Though these small scale business enterprises occur in
evety sector of the economy, they
that clemancl little a~nouiil of cap
are more concentrated on activities
ital investment and technical know Am:
17
(Olakanpo, 0. 1972). Eki~kirian~, A.11. 1968 stated that the sl~iall scale
business enterprises out nun~bct. ~l ic ~i~ecliu~ii and large busincsws; they
- - account probably Sor over 80% US thc total nuniber of enterpri: ~ : s i l l 11ic --= - - country. He fi~rthcr stated t11at in spitc uS this nirmcrical stwnytli. It is
doubtful wliether their value -- addcd is 1117 to 30% ol'tlic' t u ~ a l -value-
added of all enterprises. 'T11is low operation is attributable to the .a -
problems hinclering the development of small scale business e~iterprises. --
Individuals own the majority of' bi~siness entesprises. *They si111 the
business as cwncr-lnanagcss (sole proprietors). The Re2,istrar of'
Companies a d of Business Nalnes show that li-on1 I970 to 197 1, thc
registration oS Li~nitt'cl Liabil ily Companies on the avcrqe was cmly
about 7.8% against 92.4% {'or sole psoprietorship anti partnerships.
Similar situation was also recorded i n 1973 and 1974 (Sullivan, B. 1980: -
153). inegbenbo, 1989: obscl-vcrl that many of the busincss registered as -T - -. A+. -- := T
iimitect liability firms art. still operated as a sole pt-oprietossl~ip since the -
owner co-opt his w i k and children as sharellolclers. This enhances thc
mortality rate 01' such husiness because tlicir ahil it? to cliangc with
changing business conditions is rlcli~nitccl drastically.
3 Locrdized (3/lr-lrrrlio1t.s
The small scale opcra~ions of' thc sn~all scale business restrict tlicir
activities to their immccliatc vicinity. Thus i t is noticed that a small scale
business operating in a tow11 is I ~ a d l y i l ' cver known in anotl1c1- town.
Consequent on the highly unattrnctive p s i tion the rurcl xea , the
businessmen insist on setting the b~~sinesses only in the urban areas.
Thus here is ;I Iocali'zation of' small scale busi~~ess enterprises in the
urban areas. This attraction tu the urL7an areas is accounted Ibr by thc
existence o r better lcvcl ol'demancl slid availability of the inli-astl-uctrire
they need to operate. The urban areas hold a pool of better ski:led Iabtmr
required by these snial l scale busi ncsscs.
Small scale b~isincssinen have consistently sho\v~l pre~cvence for
establishing their bilsincsses in thcir own home states thus showing
geographical i~nmoli l i ty alllong thcuz.
I!,
4. Ir!cfJicien~y
Resources available to the sriiall scalc bi~sitiess enteqvisc:; are not
efficiently utilized by lhenl. 'J'he reason lor this being t l ~ c lack 01'
acleqilatc infi-astructurai li~c-ilities ~~~.cclecrl l i w their- opc~-ations and poor
opet-ations p ~ ~ ~ e d u l ~ .
5. Poor Rccor~l Kctyi~rg:
Small scale business enterprises are highly apathetic to ~y::~emntic
rucordii~g ofopcra~iuns data a n d activities.
Simple accounting rccorcls art. ~liost haphazardly kept i l l ::.me and
complekly nm-existent in oll~er. Usually sma
lack proper education and managerial ability.
indif'fe~-ence towards ~ ~ ~ o r c l s . Whcrc rccords a
are unable to employ t l~e~i i i n ~nali ing his husi~icss clecisions. ' l l i ~ ~ s
losing all the arlvantages good ~.ecol-cl keeping could have tor! ii.1-I-eci on
his business. Non-accurate records keeping retard the g~-ond: oi' the
busine:;~. Obtaining credit or- loans li-0111 banks becomes inlpmsible, as
the Networth of the business is unknown. Setting competiti\il- psices I'os
pt-oducts and or services bcco~ncs a guesswosk tti~is enclangering
2 0
profitability and predisposing tile busi~iess to I'ailcrt-e. I:ur-!lic.t. 0 1 1 lllc
feature of Small Scale Busincss Enttrprise, Okaf'or I;. 0. ( 1088) iistccl
tlie following as clial-actcrizing the small scale induslt-y:
(a) It uses a simple and easily adaptable process technology tliari t l~c
Ii!r,gc soalc Imsi~lcsscs.
(b) The market 111. its protl~~cls is localizccl.
(c) Tliey require low capital investment.
Aciditionally, Brnoni ct'al ( 1982) listccl a ~iirliiber oi' rcatt~r-es, wliicli tlicy
1-efkrrec1 to as tlie q~inlitative cha~.acteristics of small scale business.
They are:
( i ) That thcl-e is iiiclcpenclcticc of' maiiagc~iicnt. Most . ~ l i c ~ ~ Llic
llla11ager arc' also OWIlCI-S,
( i i ) !'he owner supplies capital or ~ O I - ~ O W S i t li-0111 li-icnds arid
relations. Imans could be lso~n Iirlancial institutioi~s, o ,~xcrship is
also held hy an individual or a group 01' individuals callcd
s1iareIioIde1-s.
(iii) 'The areas of' operation is n ~ a i n l y local unlike the ~ i i ~ i l t i ~ ~ i ~ ~ i o ~ i ; ~ I s
that operation interriationally.
2 1
(iv) The busi~iess is us~~nlly s111a11 in size in co~npnriso~ 1 0 1 1 1 ~ - I J I ( 1 1 -
units in its inrlusll-4.
( v ) M ~ I - I ~ ~ C I I I C I I L is i~idcpc~~dc~if ~ I I I C I i n a pc~-so~i :~ l i~cd I I I ~ I I I I C I . : I I I ~ I
hardly irl lijr-~nnlizccl m;~n t~gc~ i i cn t SLI-LIL'IUI-C.
(vi) Majol-iiy 06' IIW cst;~lll ishmcnts art. 0 l i ~ 1 1 locntccl i 11 pri1 ; I ( \ *
huilclings not originally cicsig~ccl Ihl- industrial use. l ' l ~ t : I ~ I I T
goinrr, - I'catures s i ~ o w s that tlic S I I I R I I scale busiiitss ciil.~.~ p r i c l ~ : ~ :Iw
easily iclenti ficcl.
2.3 SCOPE OF SMALL SCALE BUSINESS
There are si~cccssliil ma1 1 1i1-ms i l l cvcry 1najo1- inclitstr)! ( N i c . l ~ r ) l ; ~ \ (. ' . 5
1978). Opporturlitics alxmr~cl li)l- thc srnafl sc.alc I i I I ,
~nultiplicity or nrcas within llic private scctoi-s of' tlic econolliqb. 1 r - 1 t l l ~ .
public scctor; tha t is, thc rlircct qm-ations 01' Crovcl-n~n~~~lr (bi:itio~~:ll.
Stntt or Local) ministries and parastatals. Small scalc I N I ~ : ' I I C Y Y C ~ I , I ( . ;
making incursions in t l~c form 01' Consultancy Services I'r.o\ ih i r 1 1 I , 1 1 1 1 1
contract Execution.
important in some arcas vl'thc ccollomy than in others.
exploitation.
Lo scrvc , t not - too wide 1 i 1 a 1 . 1 ~ ~ 1 . 1'1.odi1cLs S L I C I ~ ;IS I ) c s ~ ~ I ~ ~ I . s :;l:oc.:; : i r i ( i
( c ) Service I l ~ r l r ~ s l t - ~ ~
r 7 i his is ~ ~ c a r l y an esclusivc p.cserve of the m a l l busii~css.
b b Service is ctelined as an intangible econolnic good, noti - ! - L , ~ , L 7.sil) l~- c i ~
n o ~ ~ - ~ ~ : u r n a b l c , whose vali~cs docs not cicpencl pri~i~arily L I I ' ~ , I I V ) I I I L ~
material article that may or may no1 accompany the ~.c~idcr;ng, c I I ' ~ l i i '
service" (L3ac11nback, 1073).
The mineral exploitation is thus the branch ol'pri~nary procliictio!~
taltes on the task ol' co~iccntrating, smelting and alloy i~lg ol' 111
Small scale bi!sincss has wide opportuni tics li)!
2.4 THE ROLE OF SMALL SCALE BUS1 . ,,
DEVELOPMENT
in spite ol' the lager lirms. Akwaczc opinccl that s inal l scale cr-lz~-pt.isc.;
development objec.tivcs in Nigeria arc utilization ol' locally availal,lc
discuss these briefly;
scale 1,aundry a id Dry Clta~iing, I lair Ilrcssi~lg mil Kc I ~L I~~ I : I I I (
w. All these ancillary I~i~sinesscs scndcr scrviccs t o t l ~ c c ~ r k ~ ~ \ ih
small
the 111 t chanic village.
scalc business or t o sct u p thcis own s ~ ~ t a l l scale h ~ s i t i c s s uah ic l~
b 7 .
of ;,oorl and serviccs they p-oclucc. I hc larger lirms are Iiici1.e clista~~(
fl.01 I I t1w PCOPIC a11d W I I C I T t l i q IXXUIJIC I I I ~ J I I O P O ~ ~ C ' S , ( h ~ ' C'OIISIIIIIL~I-:~ ;I[-c
5 .
scale
- Training Ground for Slrills
TIIYW~II ca~.ryi~ig oi~t on-tlic-ioh t~.:li~ii~ip Ii)r its c~i~ploycc, 1 1 1 o \ l c ~ ~ l l : l l l
man11fhct~11-ings cntcl-131-iscs Iielp C ~ I ' ~ C I I tlic ski l I S 0 1 ' ~ ~ ( C I I I i ; l l
ind I rstrialist. These inclivicluals can as \vcll set "19 tlicir o\wl l~~~~;ir~c.:;s
t h u I - contribi~ting 10 the c i ~ r r ~ ~ i t qt~cst l i w i~~d igc~ io i~s t cc l~~~:*! ( .~y j : ~ I I ( I
indhrializotion. According IO I:xilk LI \d i~ i i industl.ics id(* [In.
c o ~ 1 petition the c t~s to~ncr is at the n1c.1-cy 01- tht . ~nonopolist ~\~:c:a~l~~c tllc
n to 1, opulist 11i:ly sct oli cxhorl?ita~lt price., witl1011t a I C ~ C ~ I I I ~ O ~ O ~ ~ ~ ( ~ ~ ~ I
dev k Iopncnt exclucle new co11ipctilo1.s or o~hcr\visc abuse 11 is 1)osl (i011 0 1
8. - I)cvclopmc~l t of I<o ral I;:cor~ouly
The ecol-~omics o l ' h I.LII.:II ;~~-cas arc c~iergizecl by thc presclicc ol small
I scalc business. l'hrough tlieir ~mdiiction activities, Ihey i~ k r x a s c \lit.*
P L I K 1 lasing powcr o t'the niasscs ol'their liost co~nmiinilics. I ,I): i l l 1ahoi11.s
bsor.bed by the smal l scale business thi~s cn l ia~~ci~ ig tll[ : i i . ~ I I ~ ~ I I I ~ >
Additionally, hy the clispcrsiorr o l ' s n ~ l
mere c! ven nationwicle cl is t~- ih[~t ion 01 '11
9. Co~isuniplion ol' Local Ii;iw M u tcrials I-
ag r i c~ / Iturz.l proclucts to ~iiincrals. l llcsc arc pr-occssctl 17) I l:c slli:~ I l
enter1 1 rises into very useful 1b1.m~ l i ) i salt to otl~cl-s. I:or irlstmicv, scr.;rp
2.5 PROBLEMS OF SMALL SCALE E'
Small
ITERPRISES
Ile s~nall scalc \-wsir~css i11
1 tl1c succcss ol tllc s1ll:lll
scale busiliesscs 1-cclr~cc \ v x [ a g c in ~I ic economy by S C I - V ~ I I ~ :I:, ; I
I busincss cnterpriscs lail to ~~nclcl-st:~~lcl thc i~~tr icacics 0 1 ' nl;~i~ltaiilinr~
acIeq~.tatc busincs? I-ecorcls 01- ~)repari~-ig liriarlcial s tntcnlc~~ts . I i na~lc.i:r l
data ma), b t available but thc I I lack t l i c I~CCC:;S: I I .~ 1 Itno\ ledge 01- q y w i a t i w i ol' tllci I. va l i ~ c to intcrprct a~!cl ~! , -c . [llcitl
~ i c l i h l i agreed with this vicw when he stntcd that small scnlc busi~lcss
i entei prises are plagued by inadequacies and- serious misuse ol' husi ncss
reco ds and busi tiess i 11 Somat ion. ' ' I
Osl 1 inbiyi (1 989) obsc~~rccl l l l ;~ t \\/lic~llcr i t is li,r thc c!st;l~~~is~ll?rc‘il~ t,l'~lc\\/ I
fina 1 ~ c i d crcdits has st i llcd 1 1 1 ~ . growth and cicvclopuac~~t ul' this sub-
L sect r. I-le, aciditionally tiotccl that thc comnicrcinl ba~il\ c-o~~lcl t rot
pro j bide the ~.equised capital li,r the dcvclq,ment of' snlall scale busitless
I enta prisr:~. 'I'lic banks demanci su l~s t~~~i t iu l col lalet-al sccurit ic:; 01ic11
to obtain the recl~~irecl loan.
~ a n k f i on their own par[ havc argued that they are discoul-ag(.cl Srwn
lendi A g to this sub-sector. siticc potential and csisli~lg s111all and I I I C C ~ ~ I I I I I
scale !f3 ntrepre~~eurs draw 1113 Scasibility report that arc not cconcrl~~ic.;lll!: .. 1
viabl . I-ligh percentage o f del'ault O I I repayment 01' loans is among tllc I
reaso d s that led to this suh-sector being regarded as a high-risk arca li)r
ownel{ managers owing to thc consequenl loss ol. absolutc control oucr
while
I the business, which it will engcncies.
h g ; from informal sources. Friends, relatives and clubs piVesent
It is not possible and cannot yield the level of firlancing
they avoid the banks and resist any investigation into their
requl ed in some cases. In oll~ers the lendcr might seek a voic: in the
activi t (Olaclele, 1 985).
Takin k on partners as a means oS raising capital is usually resisted by h c
manabernent of the business, which the owner manages IYOLIICI
vehe~ 1 lently resist. I
Government Policies and Re~ula t ion .
and growth of small scale business rely heavily on thc tone
1 of go ern~nent policies and regulations. Within the past few dec:cics wc
Thes, I3 are so pervasive that they easily make or mar small scale i)usiness
Policies such as impost reyulntions and financial control h a w
have witnessed inconsistencies i n govcrninent policies ancl segl.~iations.
far r k aching iniluence on small scale businesses. Keith Marsden stated
that small enterprises would ~ h r i v e i f they were economically efficient
wi 1 hout the numerous government interventions in the Sol-m of policy
varied filnctions, which he alonc 111ust perform within a sliost
he finds it difficult to find time for all the fi~nctions. He is
an d regulation ciianges.
51
Nlanagernent Succession: -
Th life span of a small scale business cleterminc its success. Must s111alI
i, scal business enterprises die with tlleir owner. Silcccssion by heir arc in
ma d y cases not successfi~l as somc of such hcis may not be interested i n
the b usirless so to sell it off or they might be unable to acleqi~ateiy
oper h te t+e business thirs causing i t to die soon allel- h e y talte over.
thus d onstrained to reap the re\vards of ion-discharge of his duties. This
6.
Reid
is so in the light of the fact that hc is the sole
enlpl I) yees. Even where there are employees, the , .i 1
T i m e Pressure: '
stated that for the lhct that the owner manager is saddled with a
manager ant! has no
duties assigned s i ~ l i
emp1dyees would usually not include managerial decision-lnaking. 'l'lic
lack d f time is further aggravatecl by the time committed t3 civic
activit I es, family affairs, hobbies and other recreational activities.
M isccllaneous
A umber of other somew!int minor problems aNlict t l ~ c si~iall scalc
usincss establishments. I i,
il he problem of ~ ~ n d e r t a l t i ~ ~ g psoduct, process and market I-cseal-ch. This
roble~n in mainly bccause of' lhc financial resoul-ccs and spec id iz~d
i . kiI1 required Sor such research.
I It takes time and ability Sor the owner manager to keep abreast of'
development in me!hod, processes and products in his line ol. husincss.
J h a inability to cnllduct. markct research may keep n proprietor ill ti^
dark ;IS to the most recent developments in his field of operation.
dhe iriadequacies experienced in our social infrastructure 1-acilities o f en
h I nder small scale business greatly the epileptic supply GI' electricity,
c 4 atcr and good roads and the very expensive cost of te1eco:nr-~unicatio~ls
rvices are not in any way helping the sti1a11 scale business to gl-mv. . . ' r
8. Misapplication of Aids to Small Scale Business:
~hvernment , Raving realizcd the importance of thc small scnlc b~isincss
se i: tor in the economy iilalces available to these small scale businesses
entreprkneurs of t11ese small scale businesses t ~ o not always properly I
through
utilize these assistance so advanced. '!'he aid given by govcrnmcnt arc
either in form of' materials goods such as sowing machines, hair t!:yurs
their agencies, diflerent categories of' aids. Unl'ort~mately, the
etc as1 in the case of the National Directorate of Emplo!,lnent
Appre b ticeship sche~ne or in ~nonetary form as in the case of the f r~nd for
small b calf: Indust~y (FUSSI) loans. Some of the benefiting s m i l scale I
busin d ss operators f?nd personal reasons to misapply these aids. The
I most abrised of these are the monetary ones. l 'hey (the small scalc I
busin i ss entrepreneurs) instead of using the loan to expand their I
k busin ss and procure more equipment clo many n time cl~oose to spend
the rrioney in getting married, buying household electrical app1i:wces or I
i n se I tling hospital bills, or on just miscellaneous spending. I t t:~ust bc I
noted that these aids are loans which must be repaid, and when ~ i l e y are
bee A an increase in unrecovered loans. This makes it difficult for that
thus b , ' ' 0
The
loa i scheme to be continued since people who borrowed could not pay
i
misapplied, it become dillicult to repay when it I'alIs due.
result of this attitude of many small scale business entrepreneurs has
I back. It has also derived government to take the pains of acquiring the
re d uired equipment themselves and giving it to the loan 1:cneliciarics
judt to reduce the amount of aid given in monetary form.
Th I3 small scale business et~terprises operate within the Nigerian
ec I nomy. Thus the general slow pace of economic activities in the
ec b nomy will no cloubt affect thein. Economists proved that the state of
tht! economy has a m~.~ltiplier cllkct on the activities of bu:.iness uni t s
1 !
thC t constitute the economy. Thus the Depression in tha Nigerian
ecbnomy with the accompanying high rate of unemploym~nt and low
w a ges will certainly have repressing effect on the s~nall scale business
enkerpises. For one, demand lbr their products would b- low thus
fo 1 xing them to have/expesie~~cc hard times.
e list of psoblelns presented here is not exhaustive, but i t is glaring , 8
m the foregoing that the s~nall scale businesses in Nigeria arc indeed
hdving a very difficult time. Many have been unable lo survive this I
p l k thoi*a of problems. Some are seen to be coping with !he problems.
w e will now go into the investigation of the strateyics l i ~ r :;ucc:rss h a t
th 1 se surviving businesses are adopting.
2J6 SURVIVAL STRATEGIES OF SMALL SCALE BUSINESS
. he survival of any business he it small o r large in an economy as we
1 hc ve i n Nigeria is not by chancc. Such survival must be planned tor and
ac 1 equate strategies mapped out to ensure success. The strategies, which
ahy brisiness will map out, is completely dependent on the peculiar
p i oblerns and econom'ic siti~ations racing it. Accorditig to Shcrtizcr ct al
(1980) the planning for the small firm's future should begin w i ~ h a biisic
st )I -ate;;y - an overall plan that relates the hm 's products and or sesvices
the needs of the market place and the offerings oS the con~t;etitors, He
ahded that, entrepreneur must remember that "the gain of managerial
g h me is return on investment", formulation of a business stsategy refers
. . d t the process which entrepreneurs assess and deciding on the necessary . i 8 ,
lange of a h~ndamental nature.
i Changes may be concerned with dangers to he avoided and an
I crppxtunity to be exploited. Fundamental changes may include:
competitors, 1 ging of physical equipment and changing consumer
values. ~ a s l o h (1 082) expressed the view that in a phiralistic economy, I
there is a for both large and small firms. The strategies the small
The more comhon ones include:
scale business
I 1. Finrrnci l Strategies
1 It has been sta ed earlier that the major problem facing these small scale
businesses is the sourcing of finance for their operations, the
convmtional s I urces of finance which include personal savings, loans
from relatives, clubs and fi-iencls yicld in most cases insufficitnt fund for I the operation. of the business. Non- fo~-m:\l moneylentiers charge
exorbitant rate,, L w%ch serve to fare the s~nall scale b~~s iness operators
living.
The small scal 1. business esiabl ishments have thus adopted the strategy
n f r n ~ k i n ~ . - ~ o d~~~~~~ctf~the~financial~SaciIities~~~~ovided~by~~ov~ernment -. -
owners have adopted to ensure success are numeiotis.
The Fund for S r ~ ~ a l l Scale Industries (FUSSI):
This agency was established and assigned the task of' malting
lclans available to indigenous entrepreneurs 01' sttlr~ll scale
industries. This fund was by East Central State GOV~IXIIT~CII~ in thc
second National Development Plan. On the creation of Anambra
and Irno States out of the East Central State, ownership changed
to Anambra and Imo States. FUSSI now exists in all the states
created later.
To obtain the loans, the applicant must f i l l the recl~~isite limns and
satisfy the ministry in charge that he has an equity 01. interest in
thr industry that ~ur~nagcmcnt capability is aclccli~atc and ;;ood.
Small Scale Inclr~stries Credit Scheme:
This credit was m a t e d under the third National Development Plan
(1975 - 1986) to provide financial assistance in the form of credits
t o s~nall scale industries. The scheme is fimded through a mailing
grant from the Federal Government and also the soLlrcc,i loans
/from World Bank and other International Financial institutions.
h i 5 Amd is meant specifically to assist in the improvemrnt :ind
kxpansion of existing small scale industries. It is also employed in
inarlcing new manufactwing ind~~stries that produce accessories
- >
bs components for other industries. I he scheme ot'l'ess ;I
Inoratorium period oftwo years lor its loans.
(C) - I ationd Economic Rcconstri~ction Fund (NERFUND)
khis fund created by the Federal Government in the 1988 budget.
kt was created and earmarked for mediilln and small scale
enterprises as a nleans of encouraging them with easy access to
loans. Some Merchant and Co~nrnercial Banks wcsc chosen to
1 dminister the loans on very favourable terms.
The I NERFUND decree 1989 provides that for any business to
benefit from the loans, ownership must be wholly Nigeria,,.
(D), ?Nil.rian Bank for Cu~t i~nerce and industry (NBCI)
IEntrzpreneurs also avail themselves if the easy financing p!-o\.ided
Jby Federal Government through the Nigerian Rank for cnnlmerir
land industry (NBCI). The bank in addition to psovicling equity
I, nd loan financing, it perforn~s consultancy services, carl-i~q out
keasibiiity studies and guarantees lcttes oI.credit among othi:r:;.
a (E) , mall and Medium Loan Schcme:
h e Federal Government also established this in 1989, to hclp
I, e trepreneurs to be more competitive and to engage in the
r d habilitation and expansion oi' existing enterprises and also
e d courage setting up of new ones.
(I;) JL N erian IndustrialJAncl D e v e l o p ~ ~ ~ e n t Bank:
~ l \ i s is yet another agency of the Federal Government thrci~gh
ich financing is cha~lneled to the sinall and ~nediuin scale
bu I3 iness establishments.
I Inadequate planning had been the same of a good number of small scale
k business ntrepreneurs. Their inability to made adequate planning for
their busi h ess is as a result of their generally low level of eclucatiori.
Currently,
the Train
these not too well cducateci entrepreneurs are making use oS
Management Training Workshops and Seminal b::! I#
cond~ictecl by tlie Funds for Small Scale Industries and State Minkt ry of-
I Corn1 wcl: and I~iclustry. By this means they are improving oll the I
abilith of nlan with a consequent g o d influence on their business.
3 . Mn nngenten f Srtccessinrr:
Befoi \ now many sinall scales business enterprises die with the cleath of'
imitator because the soils who inherit the business are not in anyway
traine dl . to run the business effectively.
d Own rs oi'srnall scale b~isiness are now co-opting their childrell i i ~ t c r thc
k busin ss such that the originator oi'the business tutors them. l 'hc aim is
to make !hem able to continue the business even afles the cleath ol' their
fashion their products to suit each customers taste. 9 y this
1 fathe (the proprietor).
meth d d, they keep their market open as they undertake to serve each I
4.
Small
custo h ers peculiar taste.
Biisiness Iimovufion:
scale business entrepreneurs are highly innovative. 'Throuyl~ their
innovative ability, and by varying models of their proodu~~cts.
5. I proved Use of Rccurrls:
I Another major problem the small scale industries havc is the virtual non-
compilation and use of business secords. Following thc .raining
progrlmmes 1 given tu the small scaic cntrcpreneurs in tllc limn of'
semin la rs and workshops, thc entrepreneurs are now employing the
k busin ss recorcls in the running of their business. Their ability at
inter&eting and using business records are now highly improved.
affairk as not have any interest in anything else. Small scalc business
6.
men hnd women are know to work very hard and long llours in the
JritIicinits Use r?f Time:
runnilng of their business.
OwiAg to the epileptic supply of electricity, most small scale business is
Smalf scale business owners are known to be not too active members of'
I now known not to rely on the public power supply. They nov~ invest in
owni1ng electric generators to power their machines and equipi.c::nt.
cli~bs
not h
they belong to. Liltewisc theis presence even in their I'ainilies are
ghly felt since they are i~si~ally so concentrated on their busitiess
The oheretors of small scale businesscs employ personal adver!isement
of the& swvices and goods. '17hey engage in personal selling of their
Jt produ s.
To i r n ~ r a v s on their sales volume, many small scale business operators
hawk their wares and grant inducements to buyers in the form of credit I
allowa h ces to customers. I
I Small &cale furniture makers also go out to seek contracts to supply
1 furniture to institutions' and establishments. This 'expands t!le sales
volume and this ensures lasge profit for the~n.
RESEARCH METHODOLOGY
3.1 METHODOLOGY
The Ldopion of any research method is invonned by the very n;:lure of I
the !esi:crch problem and the purpose for which thc s tudy i ; being I
con d ucted.
i I Due to the fact that the rcsearch is being conducted to investigate current I
cordlitions in the small scale business sub sector, the researcher adoptcd
the 'descriptive method of research. The researcher believes that this i I met lod is logical, sound and adequate for the research problem a t hand.
3.2' SOURCES OF DATA
~ h k researcher employed two sources of data lor this resewch work. I
(a)/ The primary source and
1 (b) The secondary source.
d i l r h y liom thc sample population by the rescarclicr h i m , : l I -
I thrdugl: the i ns t r~~mcn tn l i t y of the Q~~cst ionnai re .
invhlves the respondent reading and recording his ariswcl-s to the
By
quektions raised. Quostionnairc was administcrcd to the ouncs
Q~iestionnaire we mean a sel f-admin istercd pocess ; h ~ t
madagess of the small scale brcsiness involved in 1;usniture
~ a & n z i n e s , Newspapers and Textbooks.
the
The popu/ntion of small scale hr~sinesses in the fimiture sub sector used ' *.
in this' stukiy is twenty (20). 'I'hcy have same I'eaturus and opcrate under
1 i braries. The data come li.on~ relevant articles, Journals,
the same leconornic conditions. For the fact that thcir products
marketed hidely within Nigeria, inforlnation gotten from them will 1,c ;
I: ood representation of the general situation 01' most s~n:lIl ~ x a l c .
businesses in the economy. The proprietors of the i i l r n i t u~ -c bus i ncsz
L r e given questionnaires.
I Iin order to achieve a wide representation, twenty small smi : ~ L I I - ~ i I ( I ri":;
- 1 - dusinesses were chosen from different parts os i.agos 5;n~c. 1 llc
distribution is thus: I
A E F E ~ 4
Ijana-Ipaja 4
Oshodu 4
Ikeja 4
Dopemu 4
T 1 ie researcher employed the method of random sampling s in( c :II I i i - l l : x
bhsimss are sorlghly of the same size and operates within ~ I K s:I:nc cir!, . I
, 5.5 METHODS OF INVESTIGATION
i TI e small scale business outfits selected for the researclicr \)isilcd [!:is I
stddy. The purpose was to personally administer the questionnaire to t hc
prbprietors and personally supervise their reaction to the qucs~ions, I
1 The iesearcher initially encountered some uncooperative attit~~clc I'rcun
the pkprietors who were apprehensive and uncertain as to thc scacnrc11c~-
motiv'ks for the visit.
Someof the business proprietors were uncomfortable with sni!-~: o f ' ~ l i c
questi 1 ns raised. On the researcher's explanatioi~s that thc clucstiLms arid
his vidit was purely on the proprietor disposition to the reseasch(-i.. 1 : m n
that &nt, the researcher enjoyed each proprietor's Full co-opcrel ion.
I
3.4 ~ E T H O D OF ANALYSIS r'
The ~fiethod of analysis employed in this study was the use ol' a
combihation of narrative and simple statistical tools. Tables, Pelrcnt ;~pc
and aberages I
were used to analysis data collected tIlro~1g11 thc
CHAPTER FOUR
DATA PRESENTATION ANALYSlS AM3 INTERPRETATION
ty questionnaires were administered to the small sc;iiik business
k hrn i ure owners by the researcher himself-: All the question11a:r.e~ \~.cr.c
mpleted and returned for analysis.
observed that all the twenty small scale business owners
y d are all male.
: 1 LGE DISTRIBUTION OF SMALL SCALE BUSINESS
. .-
ze Group Number Perccritagc I I
1 shows the distribution of the small scale business ov~!~icst-; I s nb to their age. It can be seen from the table that+; repsesenting
tlie total age distribution fall between age of 36 to 53 years and 4
ssnting 20% of the total distribution fall between nyc 54 to 65
;. This thus shows that able men between ages 36 to 5: years fi?rm
Irgest popirlation of the small scale business owners in th i ; san~plccl,
I scale business owners
AGE DISTRIBUTION OF THE BUSINESS ENTERPR1SE
Group Number Percentage of tot;^ 1
I I . . -- - - . -
4 2 0 0/:, I 15 years I - 6 30% .- -- --
-- -I ! 5 years I
2 2,, shows that 4 representing 20% of the total number o 1- the small
business owners have their business enterprise established bctwccr)
i 5 years, 6 representing 30% have theirs between 6 and I0 pears, 4
senting 20% have theirs between 11 and 15 ycars, while h
:senting 30% have theirs over 15 years.
Table 3 shows that 2 rcprescnting 10% ol' the whole :\IT Iiolci~:rs 0 1 '
4.3: ~ I S T R I B U T I O N ACCORDING TO EDCJC,/ZTION QC'ALIFICATTON
I total number of small scale business owners are senior seconclq :A i~crol
certilic: 1 te holder, and 2 ~qxcsenting 10% of the total havc . I ~ I I ~ ior
13crccn tagc 1 -- - -- - - -
I O'X, I I
- . - - I
40%
-PA-- -
10% 1 I
-p -.
40Y0 I
I
100%- i
-A -- I
- -- - - -
QuaIifica tion
NationA Diplotiia o f Bachelor's Degree --
Senior 1 Secondary Scliool ,Certificate --
Secondary Lert i ficate
First School Leaving Certi f i~a te Total 1
second&y school certificate and lastlyj8 rcprescnt ing 40% of t hc tot;) l
- - Number.
- - pp -- - --
2
-- -- 8
2
8
20
possess first school leaving certi licatc.
I BY MANAGERS
TABLE 4
TRAINING PROGRAMMES 3 - 8 1 1 0 - I O v e r
4.4
W ceks I o n e year 1 ycnr - - - .- - -C .
DURATION OF TRAINING PROGRAMMES AI1TENl)[+;~d
' ,I 1 , , TaRle 4 shows that only seven managers of the twenty tlian:lgcrs h ~ l c l
evdn been to training. The training lasted for only 1 - 2 wecks. S o ilxrm
en1 1 ghten~nent about thc management of their business.
I
the above it can be deducted that most of the managers I~avc l i t t l t
The seben managcrs that atkndcd the t raining progmmmcs clain~cd h t
d the pr gramnes were organized by the l i~nd lijr Small Scalc 111dil:;tr~~
(FUSS\). and they pay less t h a ~ i one thousand naira to pal-ticipatc in rhc
trainink programmes.
4.5: ~ ~ S T R L B U T I O N OF GOVERNMENT MOP:!~.TARV ASSISTANCE TO SMALL SCALE BUSINESS OWNER.
Business A~nor~nt Received Furniture A, D, E, F, G , M Less than N30,OOO hut
I Table 5 shows that 8 managers, representing 40% 01' tllc total f\\;cri\y
r received amount lesftlthan N30.000 but more than N5.000 nrld
this category of managers are the one with fisst school I c a v i i ~ ~
g r t f f i c L te. Also 2 people representing 10% of the total pcrccntqc
receive h more than N30,000 but less tlthan N 100,000 and this category ol'
rnanag d rs are the ones wi th Junior secondary scliool ccrtilicatu.
~ a h l e 5 also shows that 8 nionagers representing 40% 01. 111c IOI:II
managers received an amou~lt less than N100,OOO and thi~; :\IT l l l c
ma 1 lagers with Senior secondary sc.liool certificate.
J Th, table also shows that 2 nlanagcrs representing 10% oj' tht: I O I : I I
nil1 I iber of managers reccivecl an amount above N 100,000, av.' IJIC 'SC :\IT
thel111anage1-s that nttcndcd testiary institutions. I
TA 1, LE 6
4.61 PURPOSES b~ DISTRIBUTING THE MONEY TO SNlAl , ! . 1 SCALE BUSINICSS FURNITURE OWNERS
Amount Pu-scs . - -. I
money was to be addccl tr. thc \ \ to~-l, i i ip '
additional tools and for expansion - of'! -
111 / (< 100,000) Iixpecled to buy mechanized toots : the worltshop - --
iv I > 100,000) Expected to buy mechanized ton!.; a~
. - ' sinkcrely speaking, only four out ol. tlic twenty mnnnpers i:>tcl-
I
said they use their money Sol- the purposes it was meant. '[.en ( 5 0
of the twenty business owness interviewed said they use i t i l . building
thbir own house, six (30%) managcrs said they use i t !;)I- nai l
4.17: DIFFICULT TO MANAGE ASPECTS OF , L I E SRllr 1 SCALK BUSINESS -- --
I BUSINESS OWNERS
I Tie researcher used the l i ck ( d ) to indicate the :~spcct ol* tlhc 17~1si
e. ! ch owner has difficulty in manag i~~y and dash (-) t o show 'tlic :is\
tl e mmagers can easily manage. ' .. I
I Table 7 shows that small scalc business owner represented by fi nl
( 1, hich have National Diploma Nc Bachelors Degree) :~tiio[lp all /I:,, l l r ,
dmblem in their linancial record keeping and h i s is attri17~:oi,lc hi ihrir
I The evidence oS the responses
buhiness in the question thl-ec
given by the entrepreneurs of :;r~r;rll :..c;~lc
or the qucstiontiaire psovcs this. OLI[ o!'
the twenty sampled entrepreneur only two ( I 4 ) ancndd tc~-ri;~l-)i I institution. Eight (40%) had senior secondary school cerli licatc. .41i ( 11111.T
eigl 1 t (40%) had junior scco~~clary school certi licatc cvhilc t l x la51 IIYO
had only First scl~ool leaving certi l?cate.
1 Man gerial practices are something that are learnt at a higher lei~cl o!'
educ 1 tion fos instance at Polytechnics or Universities. Onc wit11 j u s t
senio. 1 secondary school education or below is thus not yet csposccl
11 to learn ~mnagerial practices.
1 The r sult of this poor educational exposure is s I~o \~ /n in the ent~.c:~rt'llcil~.
adequ 1 tc business records. This widcnced in section 2.2 (1c;it l11.e~ 01'
I small . a l e business) of chaptcr two o r the literature rcview. A poor
was discussed as a ~na.jor feature of thc small scnlc
poses a threat to survival tendencies pi' small su:\lc
busines S . I t was also explicitly shown that this inability to keep rccorcts
accusat 4 ,ly is as a result of the low/poor education of the entrepren:.Liss.
kg::in, from the response to question five, it was seen that only scvcn
I 1 lanagen (35%) of the owners' lnnnagers had attended t : . i - ? j r r ing 011 thc
I, I anagement of their businesses. 'I'hc other 13 (65%) had nwcr had si~cli
tl-aining I t was further noted that those who wcnt for training was li)r a
short duration and thus 1101 1nuc11 could bc learnt about t l ~ c l7usincss
~hanagement within such short span oS time. I
1 ddit.ional evidence of the inhibiting effect of poor managerial tt-ai11i112
i k found in section 2.5 (problem of small scale business) ol't.:ic Iitcrail~t-c I 1 1- v'ew. There the inaclecluacics of business records were ~ I - K F bcmonnctl
ah a 'Itiller' of small business.
don-existence of strategic planning as a huge hindrance to small sc:tlc
dusiness and it came up as a result of poor educational training 01. thc
I ' k YPOTHESIS TWO: Aids and incentives given by go\: :rnmcnt arc
rhisinanaged. Section 2.5 ol. the Literature lieview dctai 1s t I I C
I 4 isapplication of Aids to Snlall Scale Business. It was cxplaineti (hat
aids a1 I d incentives given by government are diverted by the recipients to
other d on-business needs.
I Likewise response to question 10 showecl that thc stnd
actualdy received aid (assistance) lYom govcrnmen
I scalc bminc.;sc\
t . Kesponst. lo
1 questit n I1 showed that majority of the assistance is it1 Inonetary Ihrm.
~ e s ~ o h s e to question 12 as tabulated in table 4 showed that all h: small
in fact I nismanaged the monetary aid givcn to t l~c~i i by governmen1
i scale l usiness enterprises did not collect equal sum of money In aid.
Respo I se to question 13 proves that tlic morlcy was act~ialiy intended l iw
i busine. s activities of different types while the response to qur:;tion I 4
The ab b ve evidence thus proves hypothesis two to be correct.
1
proves
IT HYPO HESIS THREE: The Sole Proprietorship structures *J' most I
small s r!Ie business render the111 easily vulnerable to changing bii~incss . . I I
L
that greater number of the small scale business e~it~*eprcneurs did
Eviden e show that there is the preponderance of Sole Proprietorship
i busines, structure among thc small scnlc bcrsinesses. Iiespunsc to
I que. tion I5 show that all the satnplecl small scale business entrepre11e~1t.s
are b ole Proprietors. Response to question 16 shows that tlio~~gli SoIr I
Pro d rietors, they (owners managers) haw cither empl;+:~ccs 01.
I app ntices. Responses to question 17 show that the m i o r attt-.lctiori ol' I
d the ,mall scale business entreprene~~r had in Sole Proprietorship was ~ h c I
desike io be their own boss and make their decisions independently. I
~ h u d , they are not willing to give up as showed in response to question
Responses to question 19 shows that being Sole Psoprielors,
ity of the entrepreneurs have difficulties in managing all aspccts 01'
Prop 1 ietorship. When some aspects of a business are not j:ropcrly I
their
lnana 1, ed, that business will not be in a position to change quickly
business. Where in lies the disadvantage of operati!~g Solc
b enoug,k io keep in line with change in the business envisonnien:.
Furth k 1- evidence 20 support this hypothesis is shown in the cf'l'ects of
roprieta~y on the business. I n section 2.5 (Problems of sm~11I ' .
Enterprises), items, such as; non planning, Finance.
Time Pressure and ability of thc. owricr
b inanahel* to keep abreast ol' developments in his business arca
that ,any worsening wi 11 have li~rther negative effect which may bc I;lt:~l
on their 1,usiness.
r . Therefore, it is accepted tha~ hypothesis I'our is true. I IILIS, i t tail 1)c
asse/ted that the general improvement in the economic situ:;i;i)tl ol' thc
cou~ I tly will help the small business to susvivc.
li. HY OTNESIS FIVE: Fluctuation in government ibreign trade
clzahge in government important policy is so pervasive that i i . can makc
polikies hinders small scale bi~siness.
or 1 d . ar a small scale business.
It is
~ u d h e r evidence of the effect of government's frequent policy changcs
upplied by responses to question 29 - 35. Response to question 29
f
evidenced in item 4 of section 2.5 ol'tlie literature review that srn,rlI
stadd that small scale businesses rely on importation for some ol. the
I sca~k business will thrive in the absence of government intervention i n
of their policy changes, it is also showt~ that effect of li-equent
ma d hinery and raw materials. Response 30 showed that t l ~ s e ow~icr
mal/agers buy their requiremenls from the importers mainly. Responsc
I tc question 3 1 showed that they are not able to rece i~~e the required
1 I! aterial on time and in good quantity thus slowing down their business,
4 tl is situation is blamed on government's to the restrictive policies o n
1, in portation nccurcling 10 tlic response to question 32. I<~:~,ponsc to
i q~ estion 33 showed that tlic s~ntlll scale business units do not ~vnbaslc o n
in I portation by themselves owing to their small size and capital.
~ l ' l o w i n ~ importation of finished furniture products by gobwnrnenl a t
ti1 3, es do create more problems for the small scale local f i~rn i tu l -e makers
si d ce their products will now be conipeting with foreign products in the
rket, this is deduced fiom response to question 34, In theis response
to question 35, the owner managers advised that governine!~t sho~iltl
easy importation of machi~ics and materials whill? banning
I, irnk. orta.tion of finished product.
Ba 1 kerl by the aforementioned evidence, 1 conclude that Hyl:othesis livc
, tha 1 stated that fluctuations in government foreign trade policies hinder
sm 4 11 scale business is true.
4.4.0 SUMMARY AND REVIEW OF MAJOR FINDINGS.
The d b-jcctive of this study was principally to discover those strivegies,
which some small scale business entrepreneurs are adopting their
b ~ ~ s i n I, ss which has led to the success of.their enterprises evcn in t h e Ihcc
of mfriads of problems and harsh economic circumstances 01- this time.
In thls section; therefore, the researcher presents in summary his majos
4.4.4 MAJOR PROBLEMS THAT ENDANGER THE SURVIVAL
'OF SMALL SCALE BUSINESS
g list has been clt-awn of problems hindering the survival 01' s~nall
scald business units. The existence of these problems not only has ~nadc
life h ifficult for investors in small scale business enterprises b u ~ also has
deni I, cl the Nigerian economy as a whole of the benefit accruing fi-om the
exis ence of a vibrant small scale business sector. 1 (I
. I ' 1
Unhrtunately, it seems all the efforts committed to the assistance of*
the& small scale businesses by both Federal and State governments are
not b ieltling the expected results fast enough.
11
The h i j ; problems identilied arc:
~onJexis~.ence of' strategic planning, Inadeqoacy oS Business Rvco~-ds.
. . i, Fina ce, Government Policies and Regulations, Management succession,
~ i m d Pressure, Miscellaneous ( in ability to ondertakc market or product
I resa rch). Misapplicatio~i 01' aids and general econonlic recessicm.
~ e t d i l s of these problems are stated in section 2.5 of. the l iteratul-e rcvicw I
- .
1 - '" r
4.4 2 THE STRATEGIES THE SMALL BUSINESS OWNERS
1 HAVE ADOPTED SO FAR.
Th , Entrepreneurs of s111aIl scale busi~iesses are not idly waiting liw
go J lernment to solve all their problems; rather they are acticoly cloing
wh I t they can to ensure their survival in business even in the face of' all
h hin rances.
I Th y have invented and acloptcd a number OF strategies to ensusc thcir
con 1 inueci survival. TI~ese strategies include:
FliNANCIAL STIUTEGIES
( i ) The Fund to Sinall Scale Inciustries (FUSSI)
( j i ) Sii~all Scalc Industries Csecli t Scllcme (SSICS)
(iii) National Economic Reconstruction Fund (NERFUND)
(iv) Nigerian Bank Sos Commerce and Industry (NBCI)
(v) Nigerian Industrial and Development Bank (NIDB)
I141PROVEMENrT IN PLANNING
BETTER MANAGEMENT SUCCESSION ARRANGEMEN'I'
BUSINESS INNOVATION
IMPROVED GENERATION AND UTILIZATION OF
J-ECORDS.
JUDICIOUS USE OF TIME
XLLANEOUS STRATEGIES
he& strategies had been elaborately explained in section 2.6 of the
b Liter ture Review. Responses to questions raised in the quest,ion~~air-e
su b ply additional support to the use of these strategies. R ~ . . < ~ J o ~ s c s to
k qu stion 10, 1 1 , 12, (as tabulated in table 4) point to thc fact that the
sm h I 1 scale business. 1;inancial Stratcgics involve thc use oi 'govcrnmcnt
f h n c i a l \ aids given through their agencies. A response to question 5
sho L s that some of the training programines givcn to them enabled thcm
to i I, y m v e their planning and generation and use of' business rccorcls.
Res b o w e to question 3l- 38 evidence the better management sl~~.cession
al-rai I g~n-lent in which all the managers 100% responded t h a ~ 1 ficy will
d ha11 over the business to their sons when they are old.
Resp k nse to question 39 - 40 shows the way of achieving judicious use
of ti1 I le employed by the owners' managers in which they all responded
that t ley 1 1.a1te decision quickly, cielegating family duties to members of
the f !!I mily, delegating business duties to employees or apyl.cnticcs,
woski h g fils into the night and lot more.
.: L Respo se to question 41 - 42 evidence the miscellaneous :,i;ategics
adopt h by the managers to improve their product varieties as
I in roducing new varieties, getting new designs in magazines and
ca It alogues and all through all options given in the q~~cstionnair-cs.
~ i s o response to question 43 -- 44 evidence h c ~niscellaneom strategies
a d opted by the managers to canvas and win more customers by using dl
th k li,it.ed methods in the questionnaires and also their s l i c ~ ~ ~ ~ : - ~ ~ o ~ ~ i s they
alL 1 o claimed to give credit facilities to attract c~lstomcrs.
d R sponse to question 46 - 47 cvidence that the managers provide
alt i, rnative power supply Sol. thcir operations by the use of generators
I
THE ADDITIONAL SUPPORT GOVERNMENT S W U L D
GIVE TO THE SMALL SCALE BUSlNESS OWNERS.
~ h b u ~ h govermnents both l'edcral and state have already rlc.:lc a lot to
ai d the small scale business to thrive well, but much is still expected ol'
m. The government should make available aids to these small scale
. "bu. inesses in the light of the benefits it will reap from theis sl~svival and ,
' I gr d wth. In the area of financial, government has done mucli hy giving
lo A ns to these small scale businesses. Although governments grant loans t
buI the amount given is so sniall that it can do very little fc.1. the s~nwll
scale ertrepreneuss. Owing to
veJ1 expensive more so capital
the inflation in
qoods, especia L
the country. Goods arc
Ily niachines. The small
s u d of money government ndvancc as loan many a time l i i l 10 he
endugh to buy even one piece oTequipmcnt.
~ h d response to question 12 (tnbulatcd in Table 5 ) showed ti-Lot it was
onl/ two respondents that received up to one hundred thous-1 A,l .. naira in
loah; majority of the other got only between thirty thousand naira and
ty thousand naira. By current standards in the economy, this a l n o ~ ~ n t
of h 1onr:y is small for any ~ncaningli~l busillcss.
Th 1 s may be the reason for the widespread diversion of such loans to
otl 1 er ptmonal needs as shown by responses to question 4. Rc~ponses to
qu C stion 29 prove that indeed the small scale business owner-;: managers
exbeit more assistance from govern~nent
, J , G vernment is expected to provide more ii~aterial support l o r this sector.
~ h c h time machinery required are not locally availablc and government
opksate restrictive import policy. This posses a huge and crippling I
J pro lem to the sn~all scale business sector. So, government should assist
in p~&curing these materials.
NO I r r~a l~ scale business can sirrvivo i I ' it fails to sell ils ~ ~ ~ O C ~ L I C ~ S .
Gov d rnimnt a times undcr~ninc the cl'lbrts 01' the mall scale bus i~mscs
by a 1 lowing the influx of foreign goods which out compete local
prod^ 1 cts in the ~narket. 'This is deduced from the sesponses to questions
Also, training programmes are very essential to help the owncr manages
learn 1 110 to manage their busi~iess properly. This is the view t:xpressed
by th.. 1 owner managers in response to question 8. The need f i ~ more
traini d g is made more acute by the fact that nlost of these small scale
busin (4 ss owner managers are poorly educated as shown by anjwer to
questi b n 3. IWore training is rcqui~-cd to improvc the sltill of the
.&na d ers in making both long and short term planning. Also i n
genera 1 ing and utilizing business records, items 2 and 5 of section 2.6 of
the Lit k rature Review back this up.
4.4.4 1 OTHER STRATEGIES THAT CAN BE USED BY THE
I, The sl all scale business owner managers are already adop t i~g a good
numbe I of strategies, \vhich has so far accounted Sor their s~~svival . Mow
I possib e strategies were discovered in the course of'this research work.
.I These ~ncludes:
I Entrepreneurs who want to venture into s~nall scale business should
acquire at least a Bacheluss degree Ikom a University or a :-lighes I 1
Diplom from a Polyteclmic. The aim is to enhance his abiii;y and
innovat j ve sltills in running his business. The entrepreneur5 who are
already In husioesi sl~ould attend more training programn~es to en!imce
his skill, b . The evidence of the sesponses to questions 3 and 5 shows that
cation and training hinder the survival of small scale business
enterpri d es.
Similar1 ' J , sinall scale business managers should ensure the judicious use
of any a.sistnnce I (money or material) received From governmer.!. Any
amount 1 - f tnoney received must be used strictly fos business nc matter
1 how sina I. They (the owner managers) should bear it in mind that all
sucl 1 money will be repaid someday. The era of misapplication of aids as
disc 1 lssed in section 2.5 ( items 8) of Literature Review and evidenced by
b resp . nse to question 14 must come to 311 end.
One i, f the distinct features of a sinall scale business is the fact. that i t is
usua 1 ly a one nlan business. This is discussed i l l section 2.2 (item 2) of
L] the ,it?rature Review. One immediate consequence of this i; that small
scale business will have small scale operation (item lof: section 2.2 o r
Liter, 1 ture Review) and this makes i t more difficult for the business to
I survi fe. I
The 1 1 ve for sole proprietary is lirrther shown by response to question i 5
wher a all the sampled s~nall scale business iinits are all sole prclprictors
1 and tl cy claim to choose to be because h e y want to be their o w n boss.
But t lk benefits accsuable to tliern in other form of busincs; w i t s likc:
par-tne.ships, I co-operatives or private limited liability companies far
:outwe ' I 1 gh their desire to be thcir own boss. Thesc other forms of business
units < re 1 n~uch more stable and able to cope with changing business
1 conditrons. The sole proprietors find it difficult to cope with difficult
I busine. s activities as dedwxd Ii-om their responses to question 19 and
20.
One mny argue that the other lorms ol'busincss arc inorc C X ~ C ! ~ ~ ; ~ \ / C ' I O
form b!~t it is clcnr that whcn I-cso111-ccs asc pooled, i t hecomes cxsicr to
~ n o t h k r strategy that can bc deduced from the study is that sinal l scalc
I busine:ses shoidd pl-oduce only on orclcr. l'his will enable them avoid
b lioIdinb stock of finishkd goods with its o w n attendant costs. This is in
I-eactioh to tlic low demand and dil'fic~~lty in procuring raw matcrinls
engendered by the poor state of the cconomy as decluccd ? l . ! m the
resporikes to questions 2 1 -- 24 ol' the questionnaire.
The slipall scale business owner should employ more labwll-, i ,alxx~s i s
cheap 111 Nigeria lbllowi~rg high rate ol'uncmployment. '['his will makc
u p for highly expensive machines 30, 3 1 ,I 1
~n t se~heneur s of slnall scale husiness
1 , 32, 33 and 34.
[nus t [easn to delegate duties to
meinbers, woskel*~. and or appser~ticcs. Thcy must also a\(oid
ation of membership of social clubs, town and age gsade
\ mee i:lg. This will enable them enough time to conccntrate on ki~sincss
matt i, rc. This is deduced ti*om response to qucstion 39. Fioncthclcss,
The J must attend meetings with business associates, ~ v h e r c they can
I learn more about their business.
Gun- 1 ntly, most of' the small scale busincss operators arc shying ~7\!*;1y
from Radio and Television advertisement claiming that i t is loo
expe 1 sive, but these media create\r)rder ~narliet for their produc!~ and i l l
the lo 1 ~g n ~ n , the snnall scale business will have more returns !I;:in \vhat
I The SI ?all scale business entrepreneirr slio~~ltl try to explore the hreign
I marlte :s by embarking on expostation 01' their psoclucts. This wi I1 hclp
1 them a-cess 3 wider market and co~wquentiy achieve a I~ighcs levcl 01'
cleman~I. 1 'LVorld over, many known small I?rms have achieved rapicl
expansion of operation by venturing into foreign mxlctts by
of their products. Nigerian s~nall scale entreprenc ;..I-s may
start thi I ; with other countries in the West African sub segion
Any small scale business depending on this irregular supply i I 1 l1:1 \ ' c3 I pro1 leins. The small scale business entrepreneurs are thus :# .lviscct t t l
~ n o h i e r stlategy the small scale business entseprcncurs could : ! I
is that of Total Quality Maintenance in thcir pr-ocl~l~ls .
in each un i t 01' product tirr11 out: a good ilu:\lit!i
When ci~stomers discovel- that a pxt ic~: I : i t - s1naI1
scale
to b iv
1 achie e reduced cost of production that will make their pricc c~:cnpc[-.
businessman produces high quality goods, they \ \ / i l l ;d\v: . s I ~ A ' c : ~
I ' from such man cven when his prices arc slightly I ~ I I ~ I I C I . ~ i ! : i i l
Soin 1 , saw materials rcq~~ired by the small scale business ihr produciio~:
exist locally. Finding and utilizi~lg these locally available m;ne~-i;~l:, i c .
' very .nuch cheaper than buying imported ones. By this strategy, tlic! 'an
One 1 m i o r fault lbuncl in smnll scalc business~ilen cvl~o procl i~~-c
custol i ~ i z e d goods is their almost complete inability to deliver tlw g o ~ c Is
b on th due date. One strategy that cvoulcl enhance their- cc.lstocncr I
I confidence in them.
Finally, ci[stomers appreciate it MI
1 purchcses. This moves tllem to con
discou I it.
From 1 he above-discussed Ihcts, it is clear that tl~crc csist It~ts ol'
strateg I es the small scale business entrepl-eneurs can adopt in aclcl;tion t o
their already adopting stralcgies.
CHAPTER FWE
I SUMMARY RECOMMENDATION AND CONCLwS1oN.
In this concluding chaptcr, thc r~csearcl~cr sets o u t LO p.csc!it i l l ~1111111 ~ ; I I . >
the I I lain ihdings of the research in linc with thc hypothesis di.;~.$\*r~ ancI
k then ,o on to profl'cr recom~~~enclatio~is that will fi~rthcr c o n t r i b ~ ~ ~ : to the'
survi \ ial cf small scale business establistiments.
e! In p r sent;ng the rescarch 111ain Ilnclings, lhe ~xxarclicr was g ~ i i r l c ~ l I n
5.1
the re, 4 easch hypothesis, which wcsc pl-esentcr! earlier.
SUMMARY OF THE FINDINGS-
that the s~nall scale business owncrs arc i l l ts:~i~~cci it1
This has been amply supported by the scspt ::scs io
I a numl el. of questions in the qucstio~~naire. 'I'he consequential ci ' i ~ t r I I '
I?-aining of the small-scale br~siness entrepreneurs 1;r: I ~ Y J I
ely exposed in sections 3.2 (item 5) and 2.5 (items i and 2).
Addit 1 onally, in response to question 28 of thc questionnaire 1 ~ 1 1 ~hr .
salnpl k owner- managers expressed their dcsir-e l o r 111orc train i 11::
I progralnrncs to bc organized I'm thcm to cnliancc tlleir ina!~-t~:criL~l
1 practi cs.
i, Aids ' nil incentivcs givcn by government are I i s ; I'ljc
I litesatu -e revcw (Section 2 5 ) gnvc a wcll-cletailcd evidence 10 I > L l ~ l i up
this hy b, nt11t:sis. Mose support for this hypothesis was fo%d in rcsponsc.;
P given to question 10-14 of t l x questionnaire. In section 4.4 i~ WAS
I aclvised that small scale I-wincss ocvncr managers shoulcl insis[ on
judiciois 1 application o!' aids and incentives received to h ~ ~ ~ . i r ~ c s s
I activities.
i The solc propl.ietol.shil-,sietorslii structuscs 01' most small-scalc husinc:.~~ :<c.~\clc.l-
I them ea. ily vulncrablc.
The ow 1 er managers sampled showed the hypothesis to be true tl l l-o~~gh
onse to number of questions in the questionnai~-e.
In an C wcr to a number of cli~estions (19-34) the respondents sho\ved
flucti 1 ations in gove~-nnicnt Iorcign trade policies is a ~n;ljnt- I :~c:r) i .
make or Inas a small scale business. Over rest~-i!.;io~~
t l l a t
111:11
0 I
1 imp0 taticm as well as over restriction of export generate p r o l ~ t c ' ~ ~ ~ ~ l i ~ r
the s i i ' scale businesscs. 'l'his implies illat a delibcratc h a l n ~ l c c must be
maint, I, ined in the Import-Export policies and each policy reached sl ic~~lc!
1 be allowed to operate Ibr a good length of time before any revicw.
Thus br, the researcher iws attempted the study of all-i~npor!:j~i~ ~ c c l u r
5.2 CONCLUSION.
in thd !'a,, of the harsh cconotnic conditions ill the nalio~;. T l ~ c
of the
resear ‘l h ~ r has identified what small businesses arc, a ~ c l tilc\ 1.1-oI3lc.111
i 7 . hinder ng their develop~nent and survival. I rernerido~is el'liwts l;o I.:II.
economy delineate the survival strategies ol'small scalc [-l :~si~lcss
made b y governtnent to assist these sinall scale businesses ~ \ ~ c r c ncrtcd " , I
especi., ' " k Ily in the area of providing easier financing.
l~ave a 1 so rmde some good ei'forts to achieve success oS their h ~ ~ , i n c s s . I
d Th strategies tlicy have thus !:,lr adoptcd were studied and ;I lot ~IIVI-L.
I recc m:n:nded for their use. Also some additional assistance :.:cli~ircd of'
the k cl:ler~ime~lt by h s c snldl scale bt~s incss wcrc liigl~liglitcd
T i . 1 re5earch was concluctctl o n swnc twenty-selected s n l ; ~ l l :icalc
busi b css2s in the rumitut-e scclor. 'l'he research holcls that the l indi~ics .-
tho$h tmed on a sample in representative cnougli of thc small sc:llc
1 furn ture business. The researcher therefore bclicves that i l " 2111 t l l c
surv 1 val strategies recommended arc conscicntiousl y apy l lcd jvi111
I continued government assistance, the survival sate or the s:-,l;~ll sc:~lc.
I busimss *will be tremendously increased.
i-inclings, tile researcher now olI'c.1.s :.I
5.3
numb=r 1 o F recommendations, \,vhich are envisaged to givc somv in, ) I T
RECOMMENDATION
life t d tlic s~nall bi~siness sector.
" ' 1 . Th k research disconnected that there are myriad of ~ ~ r t ~ h l c r ~ ~ . ;
Following the ma.jor research
b op . osirig the survival of' the s~nall scale bi~siness in tlic bIigc.~-i:~~~
ec d con-y. These incluclc;
Non-existence of strategic planning stands out as [Jric. ol'tl~c
problems. I t is a popular saying that one who fails lo p l a n ,
plan to I j i l . " 'l'hc i~lnhility ul'tlic small scalc busincss o w ~ ~ c ~
to appreciate the 1,olc of planning in their business s ~ ~ c c c s s is
largely attsibutablc to their l o ~ v levcl of education. W o i l l c l
be investors in thc small scalc sector shoulcl er1s111-c t h q v
attain a high level of education. Those alreacl~* in tlic
business should seek help i l l training progranmes.
Inadequacy' 01' business records is another const ,lucncc. 01 '
the entrepreneur's low lcvcl ol'education. I t is no\ su c : w
compile records wlicn one in not so easy to compile ~.cc.ot+cls
when one is not wcll educated. Again, these entreprencui-s
Sail to appreciate the neccl liw record Itecping. One r ~ i ' t l ~ c ~ i ~
(the owner managers) in 3 cIia1 said kctping rccv~.:ls is , :
waste of time ant1 energy sincc for him, once yclri have
spent your money; recording it on paper will no! l:l-ing i t
back. I t is well !mown that there cannot be any c!'tkti~:c
planning without rccords.
Limited financing has been ;I very csippling problcm to a l l
businesses especially s~nall scale businesses. Govcr-n~ncnl
had lnadc appreciable el'fijrts t o aid small scale businch.;
IinanciaIly but Inorc need to bc clo~ic. I t is known tIi:~t rill thc
m v x ~ n t of money niappcd out fi)r advancing loans 10 s ~ n ~ ~ l l
scale business are not uscd. Efforts shoulcl be 111:1clc. t n
ensure increased disb~~ssemci~t.
giving aids to these small scale businesses. I t is a l w
necessary that government should increase the sizc ; I I ~ I O L I I I ~
of loan advanced pel. perso~i. This will cnsul-u its r l sary liir
business purposes and enl~ance the chanccs I'or sepa-, 1 ~ 1 ~ 1 i t .
7 7
Government policies and regulation tlucti~atc. I hcs'
fluctuations have far-reaching consequences on ~ln ; i ! l scnlc
businesses. Government 111ust endeavours to makc p j l i c i w
and regulations that will remain stable for at least a good
length of time. 'I'his will inakc it possible Sor the s~nall scalc
business to sun smoothly.
v >
'vi)
Small scale business operators arc advised to start early to
induct their heirs so that if IIC retires ur dies, thc child \A i l l
be able to contir i~r the busincss.
Over involvcmcnt in the activities ol'social clubs, t l~c sinall-
scalc busincss cntl-cp~-cncurs bccausc ol'thc limc co,rstrai~l[s
should avoid agc graclc and town meeting. Also d r legation
of duties (family or business) must be used by I I : ~ ~ ownu-
managers to help 1i.w swnc ol'thcir timc.
'vii) It is essential for any business to undertake m;l~.lict :~ncf
product research to test the clemancl and usef~~lness 0 1 '
products. The owner managers arc aclvicc to scck t l ~ c
assistance o!' management consulta~~cy outlits. 'I'o I,ccp
abreast with the dcvelopments in that ficld of busi~~css , ihc
owner managers n ~ i ~ s t be regular in attcnd;ricc t o
workshops and seminars and meetings of menlkls ol' t l ~ t
business. Also, where possible, the o\vner managers shoi~lc!
get periodicals, n~agazines, or Newsletters published b!' thc
Association of members in that business.
3. Governt 1 elit llacl already clone niuch; but there arc many thins:; to Iw
. . . (-, 1111 i Every effort must be ~nade to revive the Nigerian o(:,Inorny.
done.
2. The
already
( i ) ~dd i t i ona l financing arrangement is needed. The exi.:ing oncs
The small scale business cali~wt hopc to thrivc ~ \ l c l l i l l a
cleyressecl economy.
researcher firrtlicr I-econimends thc confirmation ol'tlie strateglcs
adopted by the smt~ll scale entrepreneurs. Their uscs havc
31'- d 110 longer working as required. They either Sail to disburse.
a noticeable positive effect on their cxistetice.
the available Iinance or divert tlicln to othcr sccto~-s of' thc
1 (ii) Go ernrnent must lead by example; they sliould buy tlw
pro h uct:~ of the small scalc busincss and thus conviric:~ th rc
pol 4 illace that their PI-oducts arc good enough. This wil l Iwlp
I, surl the insistence o n Ihrcign products by Nigerians.
( i i i ) i t is necessary that governnient operate selective foreign tr:~de
ioiicy such that importation of new matesials is made easy and
1 t~nisbecl products made impossible.
l . , I Concerted \ efforts should be ~nade to give ac1equa~:o
slnall scale business man:rgers to enhance theil'
training to
ability to I' ,
n/annge. Government should direct all ministries of commerce
ahd industry and all chambers of commescc. to conduct
I t r i ining programmes I'm the s m ~ l l scale business at least on a
I q~ arterly basis.
( v ) G b vernment should discourage sole proprietary and encourage
ot I, er forms or lwsiness. This will encourage the small scale
I, bu,.inessmen lo adopt other fbrrns of business and :hus reap the
in1 1 erent benefits.
AcIclitional s~rategies, \vhich tlic small-scale business units may W I S I I to
I adopt, irrcluc es:
( i ) They ,110~1lcl d attempt eslm-ting their products to othes countries as
a way bf getting n wider market.
. h e y should acquire their own electric generating sets as .: mean
droducts, higher price attracts customers.
$he small-scale business should employ locally av:~ilabie
r k sources as far as it is possible. This will give them lower cost ( i l '
tl)wu by the customers; fililnre LO do this undesmil-(2s thc
I cmfidence ol'the custotncrs fur them.
di-anting customers discount and or credits 11cip thcm increasc
ti I eir purcl~nses. Credits may not bc possible but discount cnn bc
d e d to a great e.ffect.
2 hkamiokhor, G.A. "Financing Small Scale Entcrpriscs I I ~ I - O L I ~ I I
/he Stock Exchange:' The Bullwn. Vol .8. No. 7. 1973.
3 I Altrrnrinadc; A, "Stiinl l Scnlc Entcrpriscs: I3ncl.rl:,vnc o 1 '
I Industrialimtioni'.' The Niceria I3itrcprcneur: vol.. 2, no. l l ~ g o ~ . I 1 " QLI~I- tcr 1987.
S B II ~11111>ack, C. M. et..nl; I-low to Organize ~ I K I O~CI';IIC S m : ~ f l
f3bsincss.c Iinylewootl CIi 118, N..I p - c ~ ~ t i c c I 1311.) 1077.
6 BI I om N.1-I and Longneclcer J.A; Sniall Business Manago~ncnt, t., , [I !
~ d i t i o n (Ohio. ~ o u t I ~ Publishing Company, I 986.)
7 ~ l k k s o n , F.J. SuccessTul Management of the Small and > ! ! d i ~ i i ~ i
i sizA Business. (New .lcrsey, Englewood clilTs; prcnticc : d l I I I C . )
9 I Hally, 1'; Small Business Ventures; 2"" FEditim, (Cali l ; > / i : ~ .
hadwor th Publishing company, 1983).
I 10 1;nclustry Committee, Organization l i ~ Economic C_'o-opc~~;lt i r ) i ~ a ~ i c l
d i x t l business^ ( Paris. 197 1 ) .
I 1 1 I.et?lin, 1: " S~nall Scale Industries In NigcriaW- ICON Nc\vh
(Lagos, July 3 1 ", 1988).
I 12 Ilqeze N; "Some Issues Connected with the Managcmcnt nl'
~ k a r c c Financial Resources In Nigesia; Nigerian . ~ ~ L I I - I I : I ~ - nl.
~ l s i n e s s Management vol. 1 I , No.3.
I '1) 13 Mwsden, I<; " Proble~ns ol' Small 13usiness; Odocluma 131 : 8 i ~ i c s s
.Io\!rnal No 17, 1983.
I 15 ML rpl~y, T.p; A Business of your ow! Yol-k; Mc Gsaw, I ! i l l 1
16
'l'ilnes; April 1 7, 1 086. ' 7
Nicholas, C.S; Small Bi~si~less Managclncnt: A ( ~ ~ r i c l c 10
I?ntrcp~-cncursI~i,>; 3"' IZdition. (Boston, I-lough:~i~l W l i l i i m
Company L,td 1978).
17
18
- 3, I qjioko 0 .G; " Problems of' Sli~all Scale G11te1-psises In I.4igct-I il ,
Nwakohy, C;"~anl i s 1-inanciny of Small Scnlc I ~ n [ e q ~ ~ - i s c ~ : '
Business time?, July 25, 1958.
Nwoclia, C ; "Small Scale Industries in thc I'sogsamnir ol' V\'L:II
. - Dwelopmcnt: A case oS Anambra State;" In NWOSLI, I:..! (4.)
Achieving cvcn Dcvclop~ncnt in Nigeria; I'roblcm and . ' q . ospcc~ \ .
( Enugu, Fourth Division 13i~blisl~css).
1 The i los i~~esr Administrator; vol. 15 (UNFC 1987).
)ladele, 0. " Why Cotnmescial Banks shun S~nall 13~1sincsscs".
business ~ i m e ~ i ~ u g i r s t , I 885 . VOI . I NO 3 .
iiied, A.S. c t al; The Survival 01' Small Smal lw Colilyl:r~~ics; 1 ''
~3clition~(London, Business Books Ltd. 1980).
24
25
Rice, G.H. "Strategic Decision Malting in Sinall t3~~siriess:'
Journd or Gcncral Managcnwnt; Vol. 0, N o I . A u t c r ~ n ~ i , 0 8 0 , 111
tlally, P. S~nall Business manngcment,(~aii iijrnio \ V : ~ ~ i s ~ w r ~ l ~
Publishing C O I I I ; ~ ~ ~ , 1983).
Oshogbemi, 1'.A " Small Business Managcnicnt In Nigc~.i:i:
[ ~ a ~ o s ; Longman Nigeria I A . 19853
Oshiinbiyi, 0. "Ensuri~lg Si~rvival 01' Srnnll Scalc I n c l ~ ~ ~ t r - i c ~ . ; ' , ' l
Roger G., "A Practical Planning for Small Rusincss'.' I l a n ~ n ~ d
[~usiness Time April 10, I 989.) I --
Business Review Vol
Saha, A. K; " S~nal
State;" Problems And
1 30, Sayre, 1I.S; " Economic Environment m c i Private I n t ~ l - j ~ i s c i n
. I West Africa'.' In 0. Tet-iba and M.O. Kayode (ecl) In(fi~st~*i:~I
beve~o~ment ' In Nigeria; Patterns, problems, anti pn,spcc,.
tbadar,, University press, 1977.) 7;. ,
32 \ rjtein11ofT D., Small Business Management Funda~nc-itals ( N c w
3 1 Sisopolis, N.C, Small Business Management ,(Boston; I 'ougl~tr>~l
MiI f i r~n co. 1977).
I cliffs N.J.prentice- I-Iall lnc. 1987) In Brown I-I.N, el. al . Smnl l
33
I scale Business management; 5"' Edition (Ohio, South, l'i~hlislli~lg
\-ork, MC Graw- I-iill International Book Co. 1974).
Vesper, K.1-I.. New Vcntures Strntegics; 1"' Edilion ( E n p l c ~ ~ w ~ d
/ Company 1986).
34 Williams .I., starting A Small vent~wc. 4"' Edition( Londol, j;ongoi~
p a p Ltd. 1932).
QUESTIONNAIRE TO THE SMALL SCALE BUSINESS OWNER MANAGERS
~ h k cpestions listed below have been designed to aid a rescarch being
cakied out on the survival strategies of Small Scale Business Entei-priscs
in i\ligeria Economy. Your business has been chosen for s t ~ ~ d y as a
san 1 ple of the other small scale business units.
The,researcher 1 would be vely grateful i T you would give apprupriatc and
1 1
factional answers to their questions. You are assurecl the whole csercisc.
is pdrely for academic purposes and will be kept strictly private.
INS k RUCTION
plea& :ick (4) the appropriate box (es) to indicate the c h o s c ~ options.
Fill iA your answers in the spaces provided.
\ 3. iEducation Qualification
1.
- ,2. ,
1 0 National Diploma or Bucl~eior's Degree
Sex: 0 Male 0 Female
Age: 0 18-35 years 1 36-53 years 0 54-65 pears
I a Senior Secondary School Certificate
I
I
Junior Secondary School Certiiicate
First School Leaving Certificate
When was this business established?
L 2 - 5 years ago 5 - 10 years ago
I 1 1 - 15yearsago L__1 15 yew and abw; -
Have you had any training on ~nanagement of' your bl.:sZ!.c.ss'!
L_J Yes 0 No.
I f yes, how long did the training programmes last?
1-2 1 ,clay - 2 weeks 0 1 - 5 weeks
Who organized the training programmes?
Nnd for Slnall Scale Industries (FUSSI)
State Ministry of Commescc and Inciustry
United Nations International Development Organization (UT\BDO)
Private Organization.
8; ( Do you think more of such programmes is necessary for you to ' 0 . / improve on your business? I Yes I No.
I 9. 1 How much did you have to pay for the programmes? -----------------
I
L_1 Availability of Spare parts and raw material
I
I U Availability of working capital I I I L_1 All of the above.
If the state of the economy improves, what do you expec; to be on
ff the state of the economy worsens, what do yo12 expect will happen to yoiir business?
I 1 ; I Business will become better
I Business will slow down I I C
/ 0 Business will liquidate I
/ 0 Noeffectatall .
27. (DO you think government should give more assistance/e~~~?port to I
'small scale inclustries (Business)? I Yes 0 b'o.
1
25. [In what form should the assistance be given 0 Fi:-mcid
( ~1 Patronage for products Training progralnmes I
I . All of the above.
. I
'29. " r - I\ re there tools, machinery or other material, which you use in
))OUT business that has to be imported? n Yes 0 No
El Yes 0 No
18.
As a Sole Proprietor, are you able to effectively managc a1
aspects of the business all by yourself: Yes oNo.
'#odd you want to change the form of your business?
If no, to the question 19, what aspect of the business can you no
manage adequately?
U Financial Record keeping.
0 Marketing Output
0 i inagerial Decision Making
0 Miscellaneous
( Nigeria? 0 Booming 0 Recession
21.
22. I Do you think the state of the economy affects your business i n
Elow would you describe the general economic situation i n
(anywayr? 0 Yes
.' 2 i . I what aspect of your business does the state of the economy affect
23.
most?
What is the effect on your business? OPos i t ive 1 Xegativc.
0 Supply of raw material
I Demand for product
How do you get such materials?
I I buy from merchants who import them.
I try to find local substit~~tes
0 1 produce with only local materials.
Haye you been able to get these materials in the required quantity and'hne? 0 Yes I NO
If No, what major reasons are responsible for that?
The merchants complain of import restriction.
i The merchants are i~tiablc to supply enough mater~ds I
I Limited Capital
0 All of the above.
Why would you not import these materials yourself!
What other government policies/policy undcr your busi~less
j 5 I What can be'done to overcome their influence'?
Who takes over this business when you art old?
LJ Your wife 0 Your Son L_I Any of the chi1clrt.n
who is interested in the business 0 you will sell the business.
What is your major consideration in choosing a successor in tlw
business? --- ..................................................... ------------
..............................................................
I f any member of' your ramily i s to take over, what arc you doing
to educate the person on the business?
-----------------------------------------------------------------.. ----------
--------------------------------------.--------------------------..----.-----------
Mow easy is it to combine business Family and social activitics'?
I How do you cope with all the activitiesr?
LZl Taking decision q ~ ~ i c k l y .
I Delegating business duties to employees or appseriCces
I Working f@ into the Night
I All of the above and more.
ave you been able to introduce variety to your furniture
Yes 0 No El
