By Abimbola Salami
Small businesses are privately owned corporations, partnerships, or sole proprietorships that have fewer employees and/or less annual revenue than a regular-sized business or corporation. Businesses are defined as “small” in terms of being able to apply for government support and qualify for preferential tax policy varies depending on the country and industry. Small businesses range from fifteen employees to fifty employees depending on the ability of the owner of the business to pay workers i.e. depending on the financial capability of the business, small businesses can also be classified according to other methods, such as annual revenues, shipments, sales, assets, or by annual gross or net revenue or net profits, the number of employees is one of the most widely used measures. Small businesses in many countries include service or retail operations such as convenience stores, small grocery stores, bakeries or delicatessens, hairdressers or tradespeople (e.g., carpenters, electricians), restaurants, guest houses, photographers, very small-scale manufacturing, and Internet-related businesses such as web design and computer programming. Some professionals operate as small businesses, such as lawyers, accountants, dentists, and medical doctors (although these professionals can also work for large organizations or companies), small businesses vary a great deal in terms of size, revenues, and regulatory authorization, both within a country and from country to country. Some small businesses, such as a home accounting business, may only require a business license. On the other hand, other small businesses, such as daycares, retirement homes, and restaurants serving liquor are more heavily regulated and may require inspection and certification from various government authorities.
Addressing them as enterprises, the Federal Ministry of Industries (FMI) defines a micro-enterprise as one that has no defined amount of asset and turnover but must have not more than 10 employees while small scale enterprise is such that has total assets less than 50 million, with less than 100 employees, at an annual turnover of any amount. Yet, the Central Bank of Nigeria (CBN) defines a micro-enterprise as one that can have a zero amount of asset and turnover and can be run by one person alone while a small scale enterprise is that which must kick-start with an asset and turnover values that are not more than 1 million Naira. Also, the National Economic Reconstruction Fund (NERFUND) has given no specifications for micro-enterprises but defines a small scale enterprise as one whose total assets is less than 10 million, with no defined annual turnover and number of employees. Generally, it should be noted that micro and small scale businesses are normally privately owned businesses, partnerships, or sole proprietorships. A business can be defined as commercial or mercantile activity engaged in as a means of livelihood, businesses are also known as enterprise, corporation, company, firm, establishment, organization, and conglomerate.
In the Nigerian economy and all other economies, small businesses litter the economic landscape, provide employment opportunities for people and contribute significantly to economic development. In terms of quantity, they are larger than big businesses. Everywhere we go in our environment we see them. No well-meaning Government can ignore their importance because of their nature and their importance in development planning and management. The Central Bank of Nigeria, in the monetary policy circular number (twelve) of 1980, defined small scale business as a business concern with annual turnover ranges between twenty-five thousand Naira and fifty thousand Naira only. However, the small American business Act of 1999 defined small scale business as one that is independently owned, operated and is not dominant in its field of operation. Small businesses management is independent, usually, managers are the owners, capital supplied and ownership is held by an individual or small group of people, the size of the firm is small relative to the industry and the area of operation is mostly local, i.e. employees and owners reside in one part of the community or town.
A small business can be easily identified with the following factors;
There are categories of small businesses and they are;
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Owners of small businesses should have targets they have to meet to meet the targeted goals objectives so as not to run bankrupt. Some important goals have to be met by small businesses and they are;
This is the main aim or objectives of most businesses or organizations i.e. to make a profit and this can be achieved by reducing expenses and increasing revenue. To reach this goal, objectives could consist of increasing annual sales by 10%.
This is a way to increase productivity in any business or organization and the improvement of efficiency can be achieved by purchasing materials earlier than normal in other to satisfy the customers as at when due.
Most small business does not aim at growth at all thereby offering an existing product, process and service. Growth should the goal of any small business.
The characteristics of small businesses are used to identify a small business while the goals are driving forces of a business therefore every business owner must strive for growth as this would lead to perpetual existence.
The role of small businesses in an economy cannot be underestimated as they also contribute a large percentage of the achievement of economic goals and objectives. Small businesses make up an essential element in developing economies (Okon & Edet, 2016), Small businesses have been a part of Nigerian industrial and commercial growth since the 1970s and have contributed to the nation’s industrial and business development (Oyedepo, 2014). Small and Medium businesses are a large proportion of the Gross Domestic Product (GDP), they have innovative concepts that make them compare favourably to the large firms, and they are resilient and drive jobs and growth. Small businesses have been a part of Nigerian industrial and commercial growth since the 1970s and have contributed to the nation’s industrial and business development (Oyedepo, 2014). Small businesses comprised a significant percentage of the companies in Nigeria (Agyei-Mensah, 2016), the implications for positive social change include the possibility to increase the survival rates of small businesses during the early years, reduce unemployment, increase tax receipts for the government, and catalyze economic activities, reducing poverty levels. The roles of Small businesses in the Economy are;
Strategic planning is a systematic process of envisioning a desired future and translating this vision into broadly defined goals or objectives and a sequence of steps to achieve them. Strategic planning is a tool for organizing the present based on the projections of the desired future. That is, a strategic plan is a road map to lead an organization from where it is now to where it would like to be in five or ten years Ernstthal (1992). Small businesses that strategically plan (compared to those that do not) are more likely to be those that achieve higher sales growth, higher returns on assets, higher profit margins and higher employee growth (Gibson & Casser, 2005). This implies that small businesses that strategically plan are also more likely to be those that are innovative, those that achieve international growth. Overall, the relationship between strategic planning and business performance is best summarized by the following statement: “Of all the contrasts between the successful and the unsuccessful business, or between the leader and follower, the single most important differentiating factor is strategy” (Thomas cited in Olson & Currie, 1992).
Most small businesses do not strategically plan, most times, the primary focus of most small business operators is on short-term operational rather than long-term strategic issues, and their decision-making is generally reactive and intuitive rather than proactive and deliberates (Mazzarol, 2004). This means that for those operators that do plan, planning is frequently ad-hoc rather than formal and subsequently provides a basis upon which business performance can be measured or analyzed. The reasons why most small businesses do not engage in strategic planning includes the following;
Strategic management is defined as the set of decisions and actions taken in the formulation and implementation of strategies designed to achieve the objectives of an organization. The importance or role of strategic management in a business cannot be underestimated and the importance or role are as follows;
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Small businesses have their importance and factors that hinder their growth. These factors are as follows;
The role of Marketing is that it communicates a consistent message to the ideal customer. Discovers what customers want and need as well as what price they will pay. Knows where to find customers that will most likely buy. Builds the foundation for sales through multiple channels. In short, marketing creates a sales opportunity. Marketing Strategy is an organization‘s strategy that combines all its marketing goals into one comprehensive plan. A good marketing strategy should be drawn from market research and focus on the right product mix to achieve the maximum profit potential and sustain the business. The marketing strategy is the foundation of a marketing plan. Marketing strategy has the fundamental goal of increasing sales and achieving sustainable competitive advantage. It includes all basic, short-term, and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies that contribute to the goals of the company and its marketing objectives.
The distinctions between strategic ‘and managerial ‘marketing are used to distinguish two phases having different goals based on different conceptual tools. Strategic marketing concerns the choice of policies aiming at improving the competitive position of the firm, taking account of challenges and opportunities proposed by the competitive environment. On the other hand, managerial marketing is focused on the implementation of specific targets.
Planning is the management function of anticipating the future and determining the best course of action to achieve an organization‘s objectives within a given circumstance and with available human and material resources. It incorporates decisions about the activates of the organization and how they should be performed, while putting in proper shapes the resources to be used in accomplishing the set objectives. It thus answers the question of what should be done, by whom, where, when and how. Although, planning may not mean the automatic success of an organization, as organizations that plan may still fail because of other variables or factors that are attached and go together to determine such success; but, planning certainly aids the success of a business.
The planning process starts with the assumption that the future will be different from the present and therefore attempts to determine how the organization can take advantage of that difference as it means to decide in advance what is needed to be done. It is the opposite of improvising, it is a device for the change to meet future challenges. It is, however, important to mention that business planning occurs in various stages and each sub-plan must be well coordinated. If the various parts of business seem uncoordinated, jumbled and haphazard in the way they function, it may reflect a lack of planning. Financial plans must be key in with raw material purchasing and payroll dates. Personal plans must relate to production schedules so that there is neither too much nor too little labour available. Production plans or schedules must be in line with sales, special promotions and market conditions.
A business plan is also important because they wish to achieve certain specific goals, and realizing the implications of not planning at all or inadequate planning, it ensures the provision of a framework for coordination among functions and sub-units. Not planning may mean failure.
Planning is important for any business either big or small as if you fail to plan your business you are planning to fail already. Planning helps to define the purpose and activities of an organization. It enables performance standard to be set and results can be evaluated to compare the expected with actual, planning should be;
Strategic marketing planning is a five-step process that assesses current performance; establishes specific marketing objectives; determines positioning and differential advantage; selects target markets and measures market demand, and designs strategic marketing mix. With the plans in place, the marketing programmes are implemented, while the results are monitored. If the Plans work well, the feedback provides good news. However, if the marketing programme does not meet expectations, the feedback mechanism helps marketers adjust the processes. You should realize that strategic marketing planning is a controlling process, not a one-time event. Therefore, continuous monitoring and feedback is the surest way to stay in touch with dynamic market conditions.
Market-oriented strategic planning is the managerial process of developing and maintaining a viable fit between the organization’s objectives, skills and resources, and its changing market opportunities. The main goal of strategic planning is to help a company select and organize its businesses in a way that will keep the company healthy even when unexpected events adversely affect any of its specific businesses or product lines.
There are factors which have to be taken into consideration by small businesses and they are;
A small-scale business is a privately owned business with a small employee capacity. It ranges from operating a small shop like a bakery, saloon and professional firms like an accounting firm or a law firm.
Small-scale businesses in Nigeria face a lot of challenges, but the major ones include bankruptcy, social responsibility, and quality of the job. Most consumers would rather use a ‘known brand’ or buy from a ‘trusted brand’ than use a new small-scale business. This is because your brand is probably yet to prove its job quality capacity.
Important factors to be considered by small businesses are as follows;
A great business leader is someone who can motivate their team and follow business management best practices for success. Business management is the process by which a company gets its employees to produce the greatest results with the least amount of effort using the resources available to them. The following has to be taken note of;
Starting or managing a new small business in the competitive business world is an exhilarating but risky experience as it takes more than just a good idea to run a business. Every business, big or small, is always concerned about one thing and that is management. Proper management is crucial to the survival of every business as small business entrepreneurs need is to be equipped with good management skills and abilities to turn their venture into a success story. The following tips are important to starting a business and they are;
Time is your greatest asset because you can lose money.
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