Problems of Small Scale Industries

The path of secondary entrepreneurs is non rosy. Small entrepreneurs establishment the following types of line of works (1) task 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 altogether these factors adversely affect the straightlaced functioning of small units. (2) Problem of pay 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 rating-worthiness of small units in the country. Due to their weak economic base, they find it difficult to take financial assistance fr om 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 marketingOne of the major problems faced by small entrepreneurs is in the range of marketing. They be not in a position to get first hand information about the market i. e. information about completion, taste, liking disliking of consumers. Therefore, they be 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(prenominal) marketing organization. As a consequence, their product quality compares unfavorably with the quality of the products of the deep scale industries.Therefore, these industries suffer from a comparative disadvantage as compared to large scale industries. (4) Problem of under example of capacity almost of the small entrepreneurs are suffering from the problem of under utilization of capacity. Small scale units are making only 40 to 50 percent use of their installed capacities due to various reasons such as shortage of finance, raw-materials, power and under-developed markets for their products. (5) Outdated technology Most of the small entrepreneurs depend upon old techniques and equipment.These units find it very difficult to modernize their plant and machinery due to limited capacity and capital. He quality of products and productivity tilt be low in the absence of modern technology and that too at higher cost. They are in no position to complete with their check equipped rivals operating modern large scale units. For example, Khaki products even after government subsidy seem to be costlier. (6) Poor project training Poor project planning is another problem faced by small entrepreneurs.In the absence of education and experience, these entrepreneurs do not attach much importation to viability studies. They do not bother to study the demand aspect, marketing problems, sources of raw materials. Inexperienced and incompetent entrepreneurs often submit unrealistic feasibility reports and incomplete documents which ever result in delays in completing promotional formalities. They cannot afford to avail services of project consultants due to limited financial resources. (7) Inadequate infrastructure light quality and quantity of transportation, communication and other basic services particularly in backward areas is another problem. Inadequate infrastructure results in under utilization of capacity and wastages. Inadequate infrastructures also adversely affect the quality, quantity and production schedule of the enterp excludes operating in these areas. Therefore, their functioning will become uneconomical and unviable. (8) Problem of skilled manpower A small entrepreneur located in backward area may not have problem of unskilled workers exclusively it may be exposed to the problem of non-availability of skilled workers.Skilled workers may be reluctant to work in their areas and small scale enterprise may not afford to pay the wages and other facilities demanded by these persons. Unavailability of skilled manpower result in lower productivity, deterioration of quality, increase in wastages, rise in other overhead costs and finally adverse impact on the profitability of these small scale units. (9) Managerial problem Another expert problem for small scale units is managerial inadequacies. Modern business demands vision, knowledge, skill, aptitude and whole hearted devotion.The managerial competence of the entrepreneur is very important for the success of any venture. An entrepreneur is required to undergo training and counseling for developing his organization revolves. Therefore, he must be fully conversant with all aspects of management. Lack of proper commitment and managerial skill will add to the problems of entrepreneurs. (10) Other problems In addition to above discussed prob lems, the small scale industries have been constrained by a number of other problems such as trained technicians, technological obsolescence, unorganized nature of operation etc.