State any four problems of small buisness in rural areas​

ong>Answer:

Problems of by Small Businesses

1. Finance

The inadequacy of funds to funnel in the operations of a small business prove to be a major hindrance to the development of the small business. Small businesses lack the creditworthiness needed in the CAPITAL market. Small businesses have a poor creditworthiness.

The banks and industrial investors need a collateral security, due to most of the small businesses being operated in the rural and semi-urban area, these businesses lack the collateral security to get finance for their business.

2. Raw material

For the production purposes, the businesses need raw materials. To get some output, they need to give some input. The quality of the raw material completely depends upon the quality of input. But due to a tight budget, these businesses are UNABLE to get a good quality raw material for their production.

Bargaining power is non-existent because of the small quantity of purchase. Another issue linked here is the shortage of storage facility, because of the shortage of storage facility the production needs to be quick and the sale good. This puts a heavy strain on these small businesses to sell their stock as quickly as possible.

3. ‎Managerial skills

The operations of small businesses are carried out by a limited number of employees. This means that a single person usually manages the operations. The pressure on this manger is immense to satisfy the demands of production. Also, the manager might lack managerial skills required to operate a unit.

4. ‎Skilled labour

Due to a shortage of funds, small businesses are unable to hire the proper candidate for the job. Also, they are not in a position to give high wages to the employees. This results in the drop in productivity per EMPLOYEE and rate of labour are high. This proves to be a major obstruction in the operations of productions.

5. ‎Marketing

Marketing is one of the most important links to sell whatever the business plan to or has produced. Without marketing these businesses will not be able to achieve their goal of sales they planned. Direct marketing is not possible due to the lack of necessary infrastructure.

The shortage of finance does not let the business hire a good middleman. These middlemen exploit these businesses by paying low prices and delaying payments.

Small businesses already play a pivotal role in India’s economy.But if the country is to fulfil its ambition of becoming a global manufacturing hub, the sector must grow RAPIDLY.” -Amarendra Sinha, Special SECRETARY and Development Commissioner at India’s Ministry of Micro, Small and Medium Enterprises, on how the sector can lead the manufacturing charge.

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