Small Business in Nepal

Chapter 1: Introduction
1.1 Background of the research
Small business is the backbone of Nepalese economy. About 90% of manufacturing
establishment are small businesses. Small businesses are growing in slow in Nepal but it is going
in right direction. Small business have been in practice in Nepal since long time ago. It began
with the trade of food commodities, agricultural products etc. And these businesses practice have
seemed to evolve with the passage of time. The small businesses scene in Nepal has changed
significantly over the last decade with new and young entrepreneurs coming up with innovative
ideas every year and have seemed to occupy a lot of sectors. Nepal is predominantly an
agricultural and rural economy. Agriculture employs two thirds of the labor force. The structure
of the economy is changing however. The share of agriculture in employment has gradually
declined and rural areas are becoming increasingly accessible by roads and communication
facilities. Therefore, many small businesses are establishing day by day. The small business
includes (grocery, tea, stationary, café, restaurant etc.). In the past decade small businesses have
been flourished. In the current situation more and more people have started to be involved in
1 small businesses to uplift their economic standards. The official standard definition of small
businesses which assumes a lower limit of Rs 0.5 million to be defined as a small businesses. In
fact the very small businesses may involve couple of thousand rupees, and thus remain
unrecorded in official data.

A privately-owned and operated businesses with relatively small turnover and staff members,
typically seen as constituting part of a specific commercial or economic sector.

Some definitions by various sources:

The US definition is :(Small business Act 1953) A small business is one that is
independently owned and operated and not dominant in its field of operation

According to Nicholas Siropolis, Typically, a small business is …mom-and-pop stores.

Businesses .. may be looked upon as big or small, depending on the yardstick and cut off point
used.’

According to Timothy Hatten, A small business is independently owned, operated and

financed , has fewer than 100 employees and has relatively little impact on its industry.
 Small Business in Nepal

According to Longenecker, Moore and petty, A small business has financing supplied by one
individual or a small group, has geographically localized operations except marketing is small
compared to the biggest firms in industry and has employees usually fewer than 100

A local bakery that employs 10 people is an example of small business. The privately owned
corporations, partnerships, or sole proprietorships that have less revenue than larger businesses.
For example: An idea which was developed in Nepal and has gained some ground locally with
aggressive plans to expand internationally is CashOnAd, a mobile advertising platform that is
working to revolutionize the advertising world. The fact that CashOnAd’s android app on
Google Play has already been installed in more than 100,000 devices shows their success in a
comparatively short period. With the mobilization of local talent and the right growth strategy,
CashOnAd has the potential to be very scalable and profitable in a short period. 

 
Very small businesses comprise petty non-farm production, small trading ventures, small
2 shops and commercial agriculture such as livestock and vegetable farming. These non-farm
activities are providing employment and income opportunities in rural areas of Nepal. The
periodic plans and annual budgets present some policy guidelines for small businesses. Such
industries are required to register in government offices in the district, are ensured credit and
training supports, and are under the tax net. According to the MoF (2012) in 2010-11 about
fifteen thousand Small and Cottage Industries were registered with about Rs 15 billion
investment. Very small businesses however are informal undertakings, with small capital needs
of few thousand rupees, and are outside the preview of government data, regulations and support.
One of the overriding reasons for policy oversight for very small businesses can be the smallness
and low potential for revenue generation from such businesses. However, when considered in
terms of potential of providing employment and income to poor households, such businesses are
very important. Thus the policy oversight seems unjustifiable.

Lately, it seems that the government has understood the importance of promoting small
businesses in the country. The latest national budget has announced a Startup Fund of Rs 500
million. While making his budget speech, Finance Minister Dr Ram Sharan Mahat said that this
Fund, which is yet to take shape, will help cultivate the culture of entrepreneurship and promote
 Small Business in Nepal

fresh ideas by bankrolling promising startups. The government expects the private sector and
NRNs, too, to contribute to this seed fund, according to officials at the Department of Industry.

Small businesses are important in various ways. They help to provide employment to the
local workers, contribute government with taxes, contribute in CSR activities, increase the
economy level of the country etc. Besides this, Small businesses have an important share in
exports of Nepal. They are playing a major role in exports of woolen carpets, handicrafts,
garments, and agricultural products. Similarly, Small business supply inputs to large business
and distribute their products. Global companies and big houses have interdependency with small
businesses. It is the stepping stones for entrepreneurship development in Nepal most
entrepreneurial ventures start as small business. Further, Small manufacturing establishments
account for about 60% of industrial employment. They are largely labor-intensive. They create
self-employment and employment to others. Eventually these small businesses may grow into
larger cooperation which will turn out similar outcomes on a larger scale. Various researches
have been conducted about small businesses which talk about the establishment, operation
strategies, and difficulties in this sector.in the past few decades similar researches have been
3 conducted in India, Nigeria, Bangladesh etc. In the context on Nepal close to none researches
have been conducted regarding this topic.

Research Questions

RQ1: What has been the impact of running a small business in local community?

RQ2: What are the challenges in opening the business?

RQ3: How has this business helped to improve your economic condition?

RQ4: How have larger businesses been a hindrance to your business?

RQ5: Does culture, tradition, diversity brings obstacles in the business?

 Small Business in Nepal

1.2 Objectives of the Study

The core objective of this research is to study the small businesses currently growing in
Nepal. The research aims to study various business persons and their ventures. Its aim is to know
why people are starting their own business and to know what benefits they will get with their
own business. This research will find out the opportunities and challenges faced by small
businesses of Nepal. The research also examines the environmental factors that affects the
business. The research also studies about the cultural, geographical and political factors on the
businesses. Further, the research aims to focus on the impacts of small business in the Nepalese
economy and provide information regarding factors that affect businesses directly or indirectly.
Lastly, this research will help readers to learn about the weakness, challenges, strength and
opportunities surrounding small businesses in Nepal.

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 Small Business in Nepal

1.3 Scope of the study

The scope of the research is to look at the challenges and opportunities of small
businesses industry of Nepal. It also analyzes the various internal and external factors affecting
small businesses in Nepal. The research also analyzes the impact of such small businesses in the
Nepalese economy. The research also identifies various types of small businesses as well as their
scope in the Nepalese economy.

The research generally covers both male and female business owners with age group
between 25-60. Data are mainly collected from interview with the business owners. A structured
questionnaire is prepared to gather information regarding the small business industries.

5
 Small Business in Nepal

1.4 Literature Review

The following pages provide insights into previous researches conducted closely to the research.

Not much research has been conducted specifically on small businesses in Nepal.

Advantages and disadvantages of small business

Ashe-Edmunds (2010) made a study on the advantages and disadvantages of running a

small business. The result was that small business create employment opportunities for self and
others. New business ventures are an important source of employment opportunities. Small
businesses offers a greater possibility of achieving significant financial rewards than working for
someone else. Owning your own business removes the income restraint that exists in being
someone else’s employee. Many entrepreneurs are inspired by the mega-millionaire
entrepreneurs we see today, such as Steve Jobs, Elon Musk, Jeff Bezos, and Mark Zuckerberg.
In the context of Nepal small manufacturing establishment create about 60 percent of industrial
6
employment. These small businesses make an effective utilization of resources. This lead to
increase in production and productivity. Utilization on new technology also facilitates
productivity increase. Small businesses innovate to develop new products for the need of foreign
market. They tailor their products to the changing need of the foreign market. Exports help in
economic development. Businesses activities are the prime source of industrialization in
developing countries. Such activities provide employment opportunities. Underemployed people
in agriculture move to industries. People learn new skills and earn more income. Products
become cheaper and of good quality.

Some disadvantages as seen are the business owners bears personal liability for losses.
The failure rate of new ventures is very high. There is no guarantee of success. New ventures
lack professional management. Owners lack vision and strategies. They practice traditional
management system. There is centralization in decision making. Owners lack leadership quality.
Nepal has an unstable government. Government policies changes frequently. This adversely
affects entrepreneurship. Facilities provided to entrepreneurs in terms of infrastructure, training,
 Small Business in Nepal

advice and tax incentive are inadequate.Entrepreneurship requires hard work, long hours and
high levels of energy. This may create emotional stress for entrepreneurs.

What Types of Business Have Scope in Nepal?

Nhisutu, R(2015) made a study on the the various scope and possibility for businesses in
Nepal. It has also identified various possible businesses that can be started in Nepal. He has also
mentioned that crisis are good opportunities for businesses in Nepal. It also sees unemployment
as a source for a good team a business can be built around. It has also identified tourism, energy,
agro based industries, infrastructure, commerce as a great scope for businesses in Nepal. It has
also said that Nepal being surrounded fast growing county ie: China and India is a great
opportunity for trade businesses.

DIVAKARA ET.AL (2018) Small businesses are the back bone of the economy in
developed and undeveloped countries. The economic contribution of small business to the GDP
7
and employment of the countries are more than 50 %, some of the developed countries the share
in GDP is more than 95%. Thus all the countries are keen on developing Small and medium
business sector as major part of their economy. However, it was significant that past researchers
citation on slow growth of the Small and medium businesses due to various constraints evolves
socially economically, technologically etc. The paper examined and categorized all recent facts
ofSmall and medium businesses under five hegemony such as definitions, global opportunities,
Innovation and R&D, Internationalization, Failures & Constraints of the Small and medium
businesses. Small and medium business consist of manufacturing, services, agriculture, mining
etc. as main segments. The review focused on social, technological and economic developments
of small and medium-size manufacturing industries in the world highlighting the similarities and
differences. The review finding contributes to updating the current stock of knowledge on Small
and medium business development and prevailing constraints to improve their sustainable
development. The study explored on current trends in cross-border marketing through
internationalization and competitive advantages to be in the competitive market.
 Small Business in Nepal

Smallbone et al. (1995) in which the authors investigated a panel of about 300 firms in
England over a ten-year period in the 1980s and found that firms which had experienced “high
growth” during the study period had made a number of adjustments to their business strategy that
were in sharp contrast to those made by firms that had merely survived the same period,
suggesting that even though both survival oriented and growth-oriented firms may co-exist under
similar environmental conditions, one can expect differences in their strategic responses to the
elements present in their environment.

The socio-political, economic, and cultural determinants of small business activity

The purpose of this paper is to incorporate the demand and supply‐side theories of
small business development in a series of stage‐based models that analyze how macro‐level
and contextual variables influence small business activity. The paper investigates the macro ‐
level influences, including the social‐political, cultural and economic factors that can
stimulate or impede the emergence of small businesses. To measure small business activity,

8 the authors used the Global Entrepreneurship Monitor (GEM) findings from the 2009 study.
Hierarchical multiple regression was used to test three multi‐level stages of the socio‐
political, economic, and cultural determinants of small business activity. The series of three
stages for all of the variables were entered in the following order: first, socio ‐political
variables; second, cultural variables; third, economic variables.  A three‐stage analysis
revealed that socio‐political variables accounted for 76 percent of the variance in the
activity.

Smit and Watkins, (2012)The inherent characteristics of small and medium enterprises
(SMEs) afford these enterprises the potential to absorb unskilled labour and to nurture and
develop entrepreneurial skills. However, in the South African economy, these benefits are not
forthcoming due to the high failure rate of SMEs. The impediments to SME success includes
numerous and varied obstacles. Studies conducted confirmed SME owner-managers ignorant
pertaining to the risks their enterprise face with risk management techniques deployed reactively
and ineffectively. By embedding a structured approach to enterprise risk management within
 Small Business in Nepal

SMEs, potential benefits such as reducing the over-management of risks and organisational
alignment towards the SME’s vision can be realized.

Hurst and Pugsley (2011) determined most of the small business owners work for their
well-being while entrepreneurs desired innovation and growth of their businesses. Small business
owners usually strategize to provide an existing product or service to an existing market where
competition is imminent while entrepreneurs work toward providing new goods and services
with new ideas into an existing market or create a new market.

Jayshri J Kadam, Prof. Dr. V.N. Laturkar,(2011), Small Scale industries encompass vast
scope covering activities like manufacturing, servicing, financing, construction, infrastructure
etc. In view of Government of India’s ever increasingimportance given to the small scale
industries in the national economy more & more small scale industries are to be set up in the
years to come. By contributing it’s increasing share to the national production, employment &
9 exports, small scale industries also contribute to the economic development of the country.
However, these industries are also plagued by the problems of raw material, finance, marketing,
underutilization of capacity, etc. cash has become a big problem for small & even big businesses
today. Lack of finance has driven many small business units into bankruptcy. Unfortunately
many small businesses will become bankrupt because their owners have neglected the principal
of cash management which normally determines their successes or failure. Cash is like oxygen to
a business. lack of demand& shortage of working capital are the main reasons behind sickness/
incipient sickness of registered & unregistered small scale industries. Developing cash forecast is
essential for new business because early sales do not generate enough cash to keep the company
afloat. Better financial management can lead the company ahead in competition as well as it will
help the entrepreneur to avoid the situation of bankruptcy & industrial sickness.

Adeyemi, Sidikat Laraba, Dr. Aremu, Mukaila Ayanda,(2011)Small and medium

enterprises have been considered as the engine of economic growth and for promoting equitable
development. The major advantage of the sector is its employment potential at low capital cost.
 Small Business in Nepal

The labour intensity of the SME sector is much higher than that of the large enterprises. The role
of small and medium enterprises in the economic and social development of the country is well
established. The sector is a nursery of entrepreneurship, often driven by individual creativity and
innovation. The growth potential of the sector and its critical role in the manufacturing and value
chains. There wide spread in Nigeria and the multiplier effects they have on the rest of the
economy enable them to be the engine of economic progress. It was also noted that the SME
sector is the main driving force behind job creation, poverty reduction, wealth creation, income
distribution and reduction in income disparities. Most of the government interventions failed to
create a much needed transformation due to poor coordination and monitoring and policy
inconsistencies. SME sector also formed the vanguard of the modern enterprise sector and
presents the propelling force of economic modernization and growth in Nigeria. They are
important sector that need to be adequately factored into policy making and programme
implementation in Nigeria.

Ayozie Daniel Ogechukwul (2010)Small scale industries have a lot of important

10 contributions to make to the economic development of the country. By its less capital intensive
and high labour absorption nature, SSI sector has made significant contribution to employment
generation and also to the rural industrialization. This sector is ideally suited to build on the
strength of the traditional skill and knowledge, capital and innovative marketing practices. So,
the importance of small scale enterprise is a global phenomenon encompassing both the
developing and developed countries. In both developed and developing countries, the
government is turning to small and medium scale industries and entrepreneurs, as a means of
economic development and a veritable means of solving problems. Its contribution to the
mobilization of domestic savings and utilization of local resources is also a noticeable factor. It is
a base for the development of appropriate technology and provides a veritable ground for skilled,
unskilled and semi-skilled workers. It has provided productive self-employment to a number of
educated and less educated young men and women coming out of schools, colleges, polytechnic,
and universities
 Small Business in Nepal

Types of Small Business Activities

Siropolis ,N.C. (1998) conducted a study on the types of small business activities. He
concluded that are all together four types of small business. According to his study there is
manufacturing business which converts raw material into useful products which can be an
ancillary product for other manufacturers or products for consumer market. Another type is
wholesaling which consists of buying the products for reselling to retailers and distributes both
industrial and consumer goods also provides distribution efficiency. Retailing is also a major
types of business which sells the goods to the consumers by buying it from the wholesalers or
sometimes the distributors. It has independent ownership and it can be found anywhere. Lastly,
there are service prominent businesses as well which can be considered as a type of business
which is flourishing in the present business world. This type of business does not provide
consumable goods. It can be for personal need or consumer need and it consists of following
activities: professional service, financial service, transport service, construction service.

Reasons For The Survival Of Small Business In Nepal

11 Maskey ,B.K. (2001) conducted a study on the reasons why small businesses have a
greater chance of survival in the vulnerable market of country like Nepal. The main reason is the
large number of small businesses presence in the economy of Nepal. Small businesses are
present in large scale all over the country. Next being simplicity as small businesses are free
from any bureaucratic procedures. They are simple to start, operate and even closing them are
very simple. Amount of capital being the very important resources of establishment of business
is small and management of the small businesses are not very difficult it is family based. Another
reason is the market, small business carter to market niches as they maintain close relationship
with the customers and provide individual personalized services to the customer to make them a
recurring customer rather than thinking about transaction and transactional customer.

Small business are flexible which can be taken as another reason for the growth and their
sustainability in the market of Nepal. They are able to change with the changing environmental
forces and changing market. Being qualitative is another reason for the growth. They focus on
the quality aspect which is the most important for their customer and their survival. Small
businesses also have a backward and forward relationship with the large businesses in Nepal.
They supply raw materials and components to large businesses. Lastly , small businesses can
 Small Business in Nepal

operate in lower operating cost which the major reason for the small businesses survival in Nepal
as many people doing businesses are not rich.

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 Small Business in Nepal

Conceptual framework

Dependent variable Independent variable

Economic Factor

Technological
13 Forces

Enviromental
Factor
Small Businesses in
Nepal
Legal Factor

Demographic
Factor

Political Factor

Figure 1. Conceptual framework for small businesses in Nepal.

Here, the dependent variable is

 Small Business in Nepal

 Small Businesses in Nepal

Whereas the independent variable are:

 Economic factor: Businesses should be able to provide employment opportunities for the
people.
 Technological forces: Technological factors are variables which relate to the existence,
availability, and development of technology. Simply, all externally generated
changes in technologies and processes which are used (or may be
used) by the company or its competitors.
 Enviromental factor: Environmental factors affect many different important aspects of
business. Examples include customer willingness to buy a product (who needs heaters in
a hotter climate), employee efficiency, and crop/resource availability.
 Legal factor: Starting the business in any field first requires it to be legal in the
prespective of the countries law.
 Demographic factor: Demography is concerned with the size and composition of a
14 population. Changes in population dynamics occur slowly but can be significant for
businesses.
 Political factor: Not all countries law are as supportive. So, sometimes due to the
corruptive behavior of officials it becomes difficult for entrepreneurship.
 Small Business in Nepal

1.5 Methods of the study

This research is conducted to find out the advantages and disadvantages of being an
entrepreneur in Nepal. Quantitative method will be used to collect the data.

The data will be collected from the people doing their business. The survey will be send
to the people engaged in their business at their office time. Close ended questionnaire will be
send to the participants. Mostly the participants doing very good business for more than 2 years
will be targeted to get more detailed result for the research. The survey will be structured. The
data will be collected by using Google Forms and analyses will be done accordingly.

Quantitative methods is used because if qualitative method is used it will consume more
time and the research question will not be answered.

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 Small Business in Nepal

Chapter 2: Descriptive Analysis

2.1 Data analysis and presentation
The research will explore on identifying the major contributors to the challenges affecting
small businesses in Nepal. Study used survey method for research. The primary data collection
was taken with the help of interview with ten respondents who agreed to complete responses to
structured and objective questions. Secondary data sources used for the study include
management books business, journal articles, reports on seminars and websites. The research
generally covers only both male and female entrepreneurs with age group between 25-50 years.
It collects data from an interview with male employees and female employees to know their
perception toward small business opportunities and challenges in Nepal. IBM SPSS (Statistical
packages for social sciences) is used to analyze, transform, and produce a characteristic pattern
between different data variables. Different figures and tables have been used to present the data
given below :

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 Small Business in Nepal

2.1.1 Gender Categories of Respondents:

Gender

Frequency Percent Valid Percent Cumulative

Percent

Male 18 60.0 60.0 60.0

Valid Female 12 40.0 40.0 100.0

Total 30 100.0 100.0

Table 2.1.1 Gender Categories of Respondents

17

Figure 2.1.1 Pie chart showing gender of respondents.

Table 2.1.1 shows that, 60 % respondents are male and 40% respondents are female in a
survey. The primary data collection was taken with the help of interview with respondents ( 18
male and 12 female) who agreed to complete responses to structured and objective questions. . It
collects data from an interview with male employees as well as female employees to know their
perception toward small entrepreneurship in Nepal. Above pie chart also shows the ratio of male
and female respondents taken in an interview.
 Small Business in Nepal

2.1.2 Age Categories of Respondents:

Age

Frequency Percent Valid Percent Cumulative

Percent

25-30 12 40.0 40.0 40.0

30-35 9 30.0 30.0 70.0

35-40 5 16.7 16.7 86.7

Valid
40-45 3 10.0 10.0 96.7

45-50 1 3.3 3.3 100.0

Total 30 100.0 100.0

Table 2.1.2 Age Categories of Respondents

18

Figure 2.1.2: Age Categories of Respondents

Table 2.1.2 shows that 40% of respondents are below 25-30 years of age, 30% of
respondents are below 30-35, 16% of respondents are below 35-40, 10% of respondents are
below 40-45, and 3% of respondents are below 45-50.
 Small Business in Nepal

2.1.3 Business Survival according to respondents:

Business_Survival

Frequency Percent Valid Percent Cumulative

Percent

2 years 14 46.7 46.7 46.7

2-4 years 7 23.3 23.3 70.0

Valid 4-6 years 5 16.7 16.7 86.7

6-8 years 4 13.3 13.3 100.0

Total 30 100.0 100.0

Table 2.1.3 Business Survival According to Respondents

19

Figure 2.1.3 Business Survival according to respondents.

Table 2.1.3 shows that 14 respondents out of 30 have survived their business for two
years, seven out of 30 respondents have survived for 2 -4 years, five out of 30 respondents have
survived for 4-6 years and four out of 30 respondents have survived for 6-8 years.
 Small Business in Nepal

2.1.4 Annual Revenue of Respondents:

Annual_Revenue

Frequency Percent Valid Percent Cumulative

Percent

100000-150000 7 23.3 23.3 23.3

150000-200000 12 40.0 40.0 63.3

Valid 200000-250000 6 20.0 20.0 83.3

250000 above 5 16.7 16.7 100.0

Total 30 100.0 100.0

Table 2.1.4 Annual Revenue of Respondents

20

Figure 2.1.4 Annual Revenue of respondents.

Table 2.1.4 shows that 7 respondents out of 30 had annual revenue of 150000-200000. 12
respondents had income between 200000-250000. 6 had income between 250000-300000 and 5
respondents had income above 300000. Respondents whose income were below 300000 were
engaged in small scale businesses.
 Small Business in Nepal

2.1.5 Essential Factors to Run a Small Business Acoording to Respondents:

Essential_Factors

Frequency Percent Valid Percent Cumulative

Percent

Finance 10 33.3 33.3 33.3

Personal Relation 11 36.7 36.7 70.0

Valid Experience 5 16.7 16.7 86.7

Expertise 4 13.3 13.3 100.0

Total 30 100.0 100.0

Table 2.1.5 Essential Factors to Run a Small Business Acoording to Respondents

21

Figure 2.1.5 Essential Factors to Run a Small Business According to Respondents:

Table 2.1.5 show that 10 out of 30 respondents ticked that finance is the essential factor
to run the business, 11 respondents have marked that personal relation is the essential factor, 5
respondents have marked experience as the important factor and 4 respondents have marked
expertise as the important factor to run the business.
 Small Business in Nepal

2.1.6 Factor Affecting Small Business according to respondents

Factors_Affecting_Business

Frequency Percent Valid Percent Cumulative

Percent

Financial Factor 15 50.0 50.0 50.0

Political Factor 5 16.7 16.7 66.7

Valid Resources 4 13.3 13.3 80.0

Geographical Factor 6 20.0 20.0 100.0

Total 30 100.0 100.0

Table 2.1.6 : Factor Affecting Small Business according to respondents

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Figure 2.1.6 : Factor Affecting Small Business according to respondents

Table 2.1.6 shows that 50% of the respondents from among the 30 respondents feel that
financial factor is the factor which affect the small business in Nepal. 16.7% of the respondents
feel that political factor of the country affects the small businesses in Nepal and remaining 13.7%
of the respondents believe the it is the availability of the resources that affect the small
businesses in Nepal. And 20% of respondents believe that geographical factor accects the small
business in Nepal.
 Small Business in Nepal

2.1.7 Companies Location according to respondents:

According to the respondents more number of companies have more than one locations.
The questionnaire show that 23 out of 30 respondents have more than one location and 7
respondents don’t have more than one location. Its very hard to maintain the locations so more
than one locations is also the burden to the company especially the small companies.

2.1.8 Marketing channels according to respondents:

According to the respondents they mostly prefer to market their business through the
internet because its best and the cheapest way to advertise the companies. 10 out of 30
respondents chosen newspaper to market their companies, 20 respondents chosen internet to
market their business and other 2 channels of marketing have zero respondents.

2.1.9 Online Business according to respondents:

According to the respondents more number of people are involved in the online business
as well because it helps to enhance the market and increase the profit. Among the 30 respondents
25 people are involved in the online business as well and rest 5 respondents are not involved in
the online business.
23

2.1.10 Company serves according to respondents:

According to the respondents company serves the consumer and the business. In this
research the respondents mostly serves the direct consumers rather than the businesses. Out of 30
respondents 21 businesses serves the consumers and rest 9 companies serves the business houses.

2.1.11 Are mentors required?

While asking the above question with the respondents most of them replied that it would
be like the cherry on top of the cake if the young and enthusiastic entrepreneurs are provided
some mentorship as they will be able to sharpen their available skills so that they won’t have to
face the problem of not being able to deal with the future business situation as they would
already have been kept in similar situation before by their mentors who have experienced such
situation before in their time of working in the field.
 Small Business in Nepal

2.1.12 People Employed according to respondents:

People_Employed

Frequency Percent Valid Percent Cumulative

Percent

5-10 14 46.7 46.7 46.7

10-15 5 16.7 16.7 63.3

Valid 15-20 6 20.0 20.0 83.3

20-25 5 16.7 16.7 100.0

Total 30 100.0 100.0

Table 2.1.12 People Employed according to respondents

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Figure 2.1.12 People Employed according to respondents

Table 2.1.12 shows that 14 out of 30 respondents ticked that 5-10 people are employed in their
company, 5 people marked 10-15 people are employed in their company, 6 people marked that
15-20 people are employed in their company, and 5 people marked that 20-25 people are
employed in their company.
 Small Business in Nepal

2.1.13 Condition of Women Entrepreneurship

While asking with the respondents, it was found that women-owned firms are still in the
minority, and the hurdles faced by women who have embraced entrepreneurship are vast and
often very different from those experienced by their male counterparts. Many of the respondents
agreed that raising capital is even more difficult for women-owned firms. The bankers put
unrealistic and unreasonable securities to get loan to women entrepreneurs. Women still face
more difficulties in obtaining credit, often due to discriminatory attitudes of banks and informal
lending groups. Women do not have property or assets to their name. Hence, they create a
problem while applying for loans due to lack of collateral. The challenge found commonly in all
women entrepreneurs is building social networks. With the majority of the high-level business
world still being dominated by men, it can be hard for women to blaze their own path and
facilitate the introductions and connections into some of the more elite business networks. The
females often felt reluctant or hesitant to approach people for further direction and guidance. At
times, they were also unaware about whom to approach to seek right guidance.

Taking about the responses of the respondents 18 respondents feel that the condition of women
25 entrepreneurship in “Fair” and 12 of the respondents feel that the condition is improving and it is
“Good”.
 Small Business in Nepal

2.1.14 Do you think business person ………….?

While asking with the respondents through personal interview that whether business person are
born or made, surprisingly 25 respondents out of 30 replied that business person are made and 5
of the respondents believed that entrepreneurs are born. While asking why do they think that
business person are made respondents said that “due to the work done and the efforts implied one
becomes a successful business man”, “from the failure of the businesses and learning, one
becomes a successful entrepreneur”, “through observing the work of others one learns the
techniques of doing a business and steps in the journey of entrepreneurship”. While asking why
do they think that business person are born one respondent said that “skills, qualities and
attributes of the successful business person is inbuilt while they are born, so business person is
chosen by only that kind of individual.”

2.1.15 Are Investors Ready to Invest?

26
While asking with the respondents through personal interview that whether there are investors
available for their businesses 20 respondents including 10 male and 10 female said that there are
no any person who would invest in the businesses of others. 10 female said that there are investor
(their parents and relatives) who helped them start their business.
 Small Business in Nepal

2.2 Major Findings and Discussion

A small business is a business which helps to boost the economic level of individual as
well as the nation. It launch new ventures and are owned by creative individuals. They have
vision and foresightedness and are inspired to start a new venture. They are able to identify new
business opportunities and are seeking ways to take advantages from that by starting business to
exploit those opportunities. They possess high motivation as well as leadership skill. They must
possess greater experience and skill to become a business person and should not be afraid to take
risk. A business person is a person who is willing to work 16 hours a day for himself than to
work 8 hours a day for someone else. They work in the field of their interest and do different
things or do things differently.

For the first research question that was to know the impact of running the small business
in local community, small business is incredibly valuable and not just because it puts food on
your table and keeping a roof over your head. Small businesses are an asset to the local
community. Butch, baker, or handmade jewelry makers you all bring something great. Small
businesses are, and can be in the future, a conduit for social change. Benefits to communities can
27
be delivered through the vehicle of the small business. This change may be integrating people
from other cultures, increasing support for mental health, supporting the disabled, re-integrating
people that have fallen out of the community for some reason or one of many more positive
changes.

Small businesses have been seen as the recipient of change, be that social, cultural or
regulatory. What has become clear through this research is that they can also be the agent for
change, and can, through their sense of civic responsibility, be driving that change too. A small
biz, no matter what their sector is, create jobs – and they’re usually local. People aren’t all that
likely to commute to work at a smaller company, so the chances are high you will be employing
someone in the area.

The second research question aims to know about the challenges in opening the business,
whether business person challenges or not while doing business in Nepal, astonishingly all the
respondents said that they would not prefer to work on risky business circumstances. Some of the
challenges mentioned by the respondents are Raising Capital for your Startup, Assembling
 Small Business in Nepal

a Business Team, Finding the Right Business Location, Finding Good Employees, Finding Good

Customers, Dealing with Competition etc. Similarly while reviewing the scholars article
(Brockhaus, 1980) the result is opposite than that of what this research has found. According to
his study he concluded that entrepreneurs too take risk as much as the managers in an
organization in three levels i.e. (low, intermediate or moderate, and high). As this research was
conducted elsewhere we can say that entrepreneurs from Nepal do not prefer to take risk while
doing business.

Similarly next research question aims to know about how this business helped to improve
the economic condition of an individual, For this question two option were provided to the
respondents and 70% of the respondents believe that small business helps to improve the
economic condition and rest 30% feel that it does not. The respondents have clearly mentioned
that it not only improve the level of the owner but also the employee and as a whoe the nation.

Likewise next research question aims to know how larger business been a hindrance to a
28
small business. According to the respondents most of them said yes larger business has been a
hindrance to a small business. They have clearly said that the larger business capture larger area
which the small business cannot. Due to the drastic difference in the captital and the investment
the large business can survive for the longer time period as compared to the small ones. Large
business also invest huge amount of capital in the advertisment.

The last research question was to identify whether culture, tradition, diversity brings
obstracles in the business, The result that was obtained from the interview with the 30
respondents suggested that only 9 of the respondents feel that the culture, tradition, diversity
brings obstracles in the business. Rest of the 21 respondents believe that multi-culture, multi-
tradition and unity in diversity does not affect the working enviroment of small business and it
also helps to survive in the business market of Nepal.
 Small Business in Nepal

Apart from the research question other question are also answered by this research:While
asking with the respondents through personal interview that whether business persons are born or
made, surprisingly 25 respondents out of 30 replied that business person are made and 5 of the
respondents believed that entrepreneurs are born. While asking why do they think that business
person are made respondents said that “due to the work done and the efforts implied one
becomes a successful business person”, “from the failure of the businesses and learning, one
becomes a successful business person”, “through observing the work of others one learns the
techniques of doing a business and steps in the journey of entrepreneurship”. While asking why
do they think that business person are born five respondent said that “skills, qualities and
attributes of the successful entrepreneur is inbuilt while they are born, so entrepreneurship is
chosen by only that kind of individual.”

While asking with the respondents, it was found that women-owned firms are still in the
minority, and the hurdles faced by women who have embraced entrepreneurship are vast and
often very different from those experienced by their male counterparts. Many of the respondents
agreed that raising capital is even more difficult for women-owned firms. The bankers put
29 unrealistic and unreasonable securities to get loan to women entrepreneurs. Women still face
more difficulties in obtaining credit, often due to discriminatory attitudes of banks and informal
lending groups. Women do not have property or assets to their name. Hence, they create a
problem while applying for loans due to lack of collateral. The challenge found commonly in all
women entrepreneurs is building social networks. With the majority of the high-level business
world still being dominated by men, it can be hard for women to blaze their own path and
facilitate the introductions and connections into some of the more elite business networks. The
females often felt reluctant or hesitant to approach people for further direction and guidance. At
times, they were also unaware about whom to approach to seek right guidance.

Taking about the responses of the respondents 7 respondents feel that the condition of
women entrepreneurship in “Fair” and 3 of the respondents feel that the condition is improving
and it is “Good”.

The research gives the finding that the business person in Nepal do not like to work on
unconditional situation or we can say risky situation. People believe that political factor,
financial factor and resources affect their business. They feel that having capital is more
 Small Business in Nepal

important than having experience in their field and having good personal relation. Majority of
the respondents believe that business person are not born but made from their hard work, effort
and dedication. Still the condition of women entrepreneurship in not satisfactory in Nepal.
Lastly, due to the already established business it is difficult for the new business survive which is
the main reason for youths going abroad.

30
 Small Business in Nepal

Chapter 3: Summary and Conclusion

3.1 Summary of Findings and Conclusion

This research discusses about the advantages, disadvantages, challenges and attributes
that an business person should have in order to survive in the tough business market of Nepal.
Apart from this, this research also identifies various factor that affect the entrepreneurship
journey. Also this research identifies per month earning of the people involved in small and
medium scale businesses. Some brief question have also been answered qualitatively which has
been already mentioned in the data analysis and presentation section.

The main aim of this research is to know why people are keen on starting their own
business and to understand what benefits /advantages (financial, personal, social) they will have
if they do something of their own. Additionally, the study aims to explore about the core skills
(communication, presentation, leadership, management, etc) that an entrepreneur should possess
to become an effective and successful entrepreneur. Thirdly, this study will examine who
influences people to start their own business and through what factors. Forth, this research seeks
31 to understand about the current market situation of Nepal and how much should the people
wishing to start their own work should separate the capital to be invested and fast is the ROI
(Return on Investment).

This research was conducted by using both the qualitative and quantitative methods of
research. Qualitative in the sense that every respondent were visited one by one, personally to
collect the data and to collect their views regarding certain questions of the research.
Quantitative in the sense that respondents were given a small questionnaire to fill up according to
their perspective.

This research was conducted on the small stores and other stores nearby by using the
above methods of research. Total of 30 respondents were taken out of which 18 were men and 12
were women. Every respondent were visited one by one, personally to collect the data and to
collect their views regarding certain questions of the research. In case of difficulty to understand
the questionnaire of the employees who cannot read and write the questions were briefly
explained and their response were collected. The raw data was coded using Ms Excel and SPSS
 Small Business in Nepal

software. The data is presented using tables, figures such as pie chart, histogram, bar diagram
etc.

From the research People believe that political factor, financial factor and resources
affect their business. They feel that having capital is more important than having experience in
their field and having good personal relation. Majority of the respondents believe that
entrepreneurs are not born but made from their hard work, effort and dedication. Still the
condition of women entrepreneurship in not satisfactory in Nepal. Lastly, due to the already
established business it is difficult for the new entrepreneurs to work which is the main reason for
youths going abroad..

While asking whether mentors are required or not, most of them replied that it would be
like the cherry on top of the cake if the young and enthusiastic business persons are provided
some mentorship as they will be able to sharpen their available skills so that they won’t have to
face the problem of not being able to deal with the future business situation as they would
already have been kept in similar situation before by their mentors who have experienced such
situation before in their time of working in the field.
32
The research answers were somehow similar to my expectation but going through
different journal article it was quite the opposite. Some of the question give surprising results
such as, I too believe that small business owner are the one who love risk as while reading the
new and going through many journey they depict that they started their business in a
unreasonable way. From this research I have gained a new perspective that money is not the
most important factor when it comes to doing business but it is the experience, personal relation
and have the traits such as: hard work, effort and dedication that matters a lot.
 Small Business in Nepal

3.2 Limitation and Recommendation for Future Research.

3.2.1 Limitation of the Research.

In spite of the contributions of this paper, it has its limitations, which provide avenues for
future researches. First and most significantly, the present research is conducted from the small
businesses inside Kathmandu valley. So, there was an insufficient sample size. Perhaps if data
collection is expanded to include other provinces, findings might be more insightful. The time
available for the collection of the data and their analysis was also no sufficient. Since the
research is based on the small and medium scale business owners and only 30 sample are taken,
research answer may not be accurate because of the sample size. There are many people who
have excelled in their work and have reached greater heights of success.

3.2.2 Recommendation for the Future Research.

Firstly, future researcher should have more number of sample size to collect the accurate

33 data and should conduct the research in various provinces. They should separate ample time to
collect the data so that not a single area would be left.

Secondly, convenient sampling was used in this research which makes it easier to reach
out according to the convenience but it may limit the sampling. So for the further research the
researcher must choose the entrepreneurs from far which will be help to obtain good results.

Lastly, questionnaire shall also be reviewed and changed according to the changing need
of the researcher. Also since the topic of the research is very specific, if future researcher view
the journal articles of others countries as well it would help a lot for developing the research
questions and questionnaire as well.
 Small Business in Nepal

REFRENCES
 Adeyemi, Sidikat Laraba, Dr. Aremu, Mukaila Ayanda,(2011)”Small and Medium Scale
Enterprises as A Survival Strategy for Employment Generation in Nigeria”

 Ayozie Daniel Ogechukwul (2010) “Entrepreneurial developments and small scale

industry contribution to Nigerian national development- A marketing interface”
 https://en.wikipedia.org/wiki/Businesses

 Hurst and Pugsley (2011) “What Do Small Businesses Do?”

 Jayshri J Kadam, Prof. Dr. V.N. Laturkar,(2011) “A Study of Financial Management in
Small Scale Industries in India”

 Mark D. Griffiths , Lisa K. Gundry , Jill R. Kickul , (2013) "The socio‐political,

economic, and cultural determinants of small business activity: An empirical
examination"
 Maskey ,B.K. (2001) “Small and Medium Enterprises Development in Nepal”, Kathmadu
34
: Centre for Development and Governance, Pp. 198-199

 Sam Ashe-Edmunds (2010) Small Business Management in Nepal, Kathmadu,

KTM:M.K. Publisher and Distributors.
 Siropolis ,N.C. (1998) “Small Business Management”, Boston: Houghton Miffin
Company, P.3.

 Smit and Watkins( 2012) “small and medium enterprises (SME) risk management
practices in South Africa”
 Small Business in Nepal

Annex A
Small Businesses in Nepal

We are conducting this survey for academic purpose. Your information will be kept confidential.
Thank you for your auspicious time and response.

Please tick one of for each criteria group:

Q1. Gender

1. Male
2. Female

Q2. Age

1. 25-30
2. 30-35
3. 35-40
35
4. 40-45
5. 45-50

Q3. What is your title at your company?

.....................................................................

Q4. How long has your company been in business?

1. Two years
2. Two – Four years
3. Four – Six years
4. Six – eight years
 Small Business in Nepal

Q5. What was the annual revenue for your company last year?

1. 100000-150000
2. 150000-200000
3. 200000-250000
4. 250000-300000
5. Above 300000

Q6. What is the most needed thing to run a business ?

1. Finance (capital)
2. Personal relation
3. Experience
4. Expertise

Q7. What affects business opportunities in Nepal?

36
1. Financial factor
2. Political factor
3. Resources
4. Geographical factor

Q8. Does your company have more than one location?

1. Yes
2. No

Q9. Which marketing channels do you use to promote your business?

1. News paper
2. Television
3. Internet
4. Bill board
 Small Business in Nepal

Q10. Does your company do business online?

1. Yes
2. No

Q11. Does your company serve consumers, businesses or both?

1. Consumers
2. Businesses
3. Both

Q12. Are mentor required?

1. Yes
2. No

37 Q13. How many people are employed at your company?

1. 5-10
2. 10-15
3. 15-20
4. 20-25

Q13. . Do people (investors) invest in the entrepreneurship?

1. Yes
2. No

Q14. What is the condition of women involvement in small businesses in Nepal.

1. Poor
2. Fair
3. Good
4. Very good
 Small Business in Nepal

Q15. Do you think busniness person .................... ?

1. Born
2. Made

38
 Small Business in Nepal

39