Problems of Small Scale Industries

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The path of small entrepreneurs is not rosy. Small entrepreneurs face the following types of problems:

(1) Problem of raw materials:

A major problem that the small entrepreneurs face is the procurement of raw materials. They have to confront with numerous problems like;

i. Availability of inadequate quantity

ii. Poor quality of materials

iii. High cost of raw materials etc

All these factors adversely affect the proper functioning of small units.

(2) Problem of finance:

Finance is one of the most important problems faced by small entrepreneurs. As finance is the life blood of a business organization and no business organization can function properly in the absence of adequate funds.

The problem of finance in small sector is mainly due to two reasons i.e.

(i) Scarcity of capital in the country as a whole.

(ii) Weal credit-worthiness of small units in the country. Due to their weak economic base, they find it difficult to take financial assistance from the commercial banks and financial institutions.

Therefore, small entrepreneurs have to obtain credit from the money lenders on a very high rate of interest.

(3) Problem of marketing:

One of the major problems faced by small entrepreneurs is in the field of marketing. They are not in a position to get first hand information about the market i.e. information about completion, taste, liking disliking of consumers.

Therefore, they are not able to upgrade their products according to the changing business environment. These small units acceding to the changing business environment.

These small units often do not process any marketing organization. As a consequence, their product quality compares unfavorably with the quality of the products of the large scale industries.

Therefore, these industries suffer from a comparative disadvantage as compared to large scale industries.

(4) Problem of under utilization of capacity:

Most of the small entrepreneurs are suffering...
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