Problems of Small Scale Industries

The course of study of downhearted entrepreneurs is not rosy. Sm all in all entrepreneurs face the following types of problems (1) Problem of vulgar materials A major problem that the runty entrepreneurs face is the procurement of tippy materials. They impart to confront with numerous problems like i. Availability of in qualified criterion ii. Poor quality of materials iii. High cost of raw materials etc All these factors adversely allude the proper functioning of teensy-weensy units. (2) Problem of finance finance is one of the most important problems set to the highest degree by small entrepreneurs.As finance is the life blood of a personal credit line organization and no bank line organization can function properly in the absence of adequate funds. The problem of finance in small sector is mainly indemnify equal to(p) 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 harness 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 really high rate of interest. (3) Problem of tradeOne 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 tremendous scale leaf industries.Therefore, these industries suffer from a comparative disadvantage as compared to vainglorious scale industries. (4) Problem of under utilization of capacity Most of the small entrepreneurs are suffering from the problem of under utilization of capacity. Small scale units are making only 40 to 50 percent social occasion of their installed capacities due to various reasons such as shortage of finance, raw-materials, power and under-developed markets for their products. (5) over-the-hill 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 tend be low in the absence of modern technology and that too at higher cost. They are in no position to complete with their better equipped rivals operating modern large scale units. For example, Khaki products even after government indemnity seem to be costlier. (6) Poor tr usefulness planning Poor project planning is another problem faced by small entrepreneurs.In the absence of education and experience, these entrepreneurs do not attach much significance to viability studies. They do not bother to study the demand aspect, marketing problems, sources of raw materials. unfledged and incompetent entrepreneurs often submit unrealistic feasibility reports and incomplete documents which perpetually consequent in delays in completing promotional formalities. They cannot afford to avail service of project consultants due to limited financial resources. (7) Inadequate basisInsufficient 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 enterprises operating in these areas. Therefore, their functioning willing become uneconomical and unviable. (8) Problem of skilled manpower A small entrepreneur located in backward ar ea may not have problem of unskilled workers but it may be expose 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 solemn problem for small scale units is managerial inadequacies. Modern business demands vision, knowledge, skill, dexterity and whole hearted devotion.The managerial competence of the entrepreneur is very important for the achiever of any venture. An entrepreneur is required to undergo training and counseling for evolution his organization revolves. Therefore, he must be fully conversant with all aspects of management. Lack of proper commitment and manager ial skill will make up to the problems of entrepreneurs. (10) Other problems In addition to above discussed problems, the small scale industries have been constrained by a number of other problems such as trained technicians, technological obsolescence, unorganized nature of operation etc.