Research and other investigation have shown that some of the business Enterprise in Nigeria today started as small business. These business Firms perform various functions, which include manufacturing of goods, Distributing of goods and services and retailing of these goods to the Final consumers.
In the past, studies in management have often Concentrated on large business, which are characterized by impersonal Relations formed structures and personnel special action. The revolution (Industrial) of the early 19th century brought along with it a sporadic Change in the production process with the aim of achieving economics of Scale through large-scale production. The huge capital outlay required In large business make this type of business even more tasking.
The need to place close supervision and control on their management as a Way to protect the owners' interest. Recent studies in modern economy show that it is virtually difficult to attain balanced and sustainable Growth by depending only on the large business organization. Small scale business is regarded as an indispensable part any economy.
Moreover, small business is credited with being responsible for the Majority of innovations, so much that small business has been called the Innovation “engine of the economy”
DEFINITION OF SMALL AND MEDIUM SCALE ENTERPRISES (SME).
The Term small business enterprises have been used to describe small and Medium scale enterprise (SME). It has been observed that they fall under The same category of small business.
There has been no census Among the research and practitioners on what constitutes a small business. The question has always been “How small is small” when confronted with Explaining what a small business means. It means different things to Different people. The term small business has been a confusing issue.
The definition of small-scale varies from one country to another event Within the same country. They also vary in terms of time, from one Period to the other; such that the definition acceptable in 1980 will know Longer be acceptable in 1989. It varies from sector to sector e.g. Manufacturing to another say service sector, the definition of small Business also vary from one institution to another.
However, no matter the kind of definition, given for small scale business, the criteria are usually:
a. Size of paid employees
b. Size of capital invested including money excluding the value of land
c. Sales turnover usually annually.
d. Employees of machine power extended to your power driven engines are used.
e. Combination of any of the above.
The general practice is to specify the upper limit, for example:
• Any business that 50 people or persons is regarded as small-scale business.
• Those businesses with capital investment not more that N 2 million etc.
Krectner (1995:62), defined a small business as independently owned and manage Profit seeking enterprise with fewer than 100 employees. The United States of American government define small scale business as " Manufacturing plants employing fewer that 500 workers, investing not more Than 800,000 or 1 million and which does not dominate the market on the Other hand the Netherlands (Holland) defines small scale industries an Industries in which the manager personally performs all the management Functions without taking actual part in the production processes.
This, Seems closest to our Nigeria concept of the small business. Fundamentally authorities in Nigeria define small-scale business bearing; Three factors in mind, namely, capital investment, the volume of production; And the number of the people employed by the enterprise. This concept is, Very close to that guiding the definition of small business as put up By the United Nations industrial development organization (UNIDO), which Says that small business is characterized by at least two of the Following factors.
1. Ownership and management are usually vested In the same individual(s), that is the management is not independent; And the managers are usually also the owners.
2. The small business controls a small share of the market and therefore constitute a little quota in the large market size.
3. Capital is made available by the owner(s) or and policy decisions are In the hands of the individual(s) or small groups of entrepreneurs.
4. The area of operation is localized and workers and owners concentrate In the local community, of course some do have branches in other towns But most of such branches serve as mere depot.
5. The owner Participates very actively in all decision making on a day-day Operational basis, with a high degree of rigid control.
The Small-scale industries division of the federal ministry commerce and Industry defines small-scale industries as an establishment with capital Investment totally N250, 000 and staffed with between 50 and 150 Employees.
Moreover, the small scale business, according to the Nigeria companies and allied matter acts section 376 have associated, With the following:
1. A private company limited by shares.
2. The amount of its turnover for that year is not than N2 million such Amount as may be fixed by the commission (corporate affairs commission).
3. The net asset values is not more than N1 million or such amount as may be fixed by the commission.
4. None of its members is an alien.
5. None of its members are a government agent or nominee.
6. The directors among them hold not less than 50 percent of the equity share capital of the company. Obi (2007).
Furthermore, in 1971, the British committee on small business called Bolton committee attempted to define a small business by avoiding the Use of investment and number of employees as a basis of definition Instead.
They defined small scale in terms of:
I. Market share.
II. Independence of the unit.
III. Personalized management.
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