CHARACTERISTICS

OF SMALL
ENTERPRISES

-AKASH G S KUMAR
SMALL ENTERPRISE
 Small enterprise is a business that maintains revenues, assets or a number of
employees below a certain threshold. Each country has its own definition of
what constitutes a small enterprise. Certain size criteria must be met and
occasionally the industry in which the company operates in is taken into
account.
 Though small in size, small enterprises play an important role in the economic
growth of the country by employing vast numbers of people and helping to
shape innovation.
 Life as a small enterprise isn’t always easy. These businesses generally struggle
to attract capital and often have difficulty paying taxes.
 Governments recognize the importance of small enterprises in the
economy and regularly offer incentives, including favorable tax treatment and
better access to loans, to help keep them in business.
• Small Scale Enterprises or Industries
(SSI) manufactures, offers service,
and produces goods with minimal
manpower and fewer machines, i.e.
they offer services on a small scale.
• A micro enterprise is an enterprise
where investment in plant and
machinery does not exceed Rs. 25
lakh; A small enterprise is an
enterprise where the investment in
plant and machinery is more than Rs.
25 lakh but does not exceed Rs. 5
crore.
• More than 65% of Indian population
lives in rural and semi rural areas,
small enterprises becomes a major
source of income for many residing in
these areas. After agriculture, small
scale enterprise is the second largest
employer of human resources.
  Limited Investment : In a small business enterprise, capital is
supplied by an individual or a small group of individuals.
 Owner-Management : A small business is identified with its
owners; who themselves act as managers.

CHARACTERIST  Labour-Intensive : Small business enterprises are mostly labour-

intensive. The machinery and equipment used are not very
ICS OF SMALL sophisticated and are operated manually.
 Unorganised Labour : Small business enterprises employ less
ENTERPRISES number of workers as compared with big business enterprises.
Workers of these units do not form labour unions and remain
unprotected.
 Local Area of Operations : The area of operations of small units
is generally local as they have less capital and less marketing
facilities at their disposal.
IMPORTANCE OF SMALL ENTERPRISES
1. Favors flexibility and innovation :
Many technological processes and innovations are attributed to small enterprises. Since large enterprises tend to focus
on improving the old products to produce more quantities and obtain general benefits of dimensional economy, such
companies are not as flexible as small enterprises. In order to be successful, small enterprises focus on creating new
products or services. Hence, they are capable of adapting faster to the changing requirements of the market. SMEs play
a vital role in shaping a country’s economy.

2. Creates more competitive and healthier economy :

Small enterprises stimulate competition for the design of products, prices, and efficiency. Without small enterprises,
large enterprises would hold a monopoly in almost all the activity areas.

3. Assists big enterprises :

Small enterprises help large companies in some areas of operation that they are better able to supply. Hence, SMEs are
dissolved immediately; the big enterprises will be forced to be involved in more activities, which may not be efficient for
these enterprises. Activities such as supplying raw materials and distributing the finished goods created by big
enterprises are developed more efficiently by small enterprises.
THANK YOU