Characteristics of Small Enterprise

Following are the main characteristics of small enterprises:

1. Local and limited area: Generally the area of operation of small enterprise is limited and mostly its area is local.

2. Marketing area: In addition to local market area small enterprise can cover wide market area which may be regional, national or international.

3. Capital investment is limited: The amount of capital investment done by the small enterprise is limited, which should not exceed Rs. 5 crores.

4. Ownership: Generally, small enterprises are usually proprietory concerns. The sole proprietor may employ many workers. Sometime small enterprises may organise under the form of partnership firms or co-operative firms. 

5. Easy establishment: In case of small enterprises, there is no too much legal formalities. So the owner of this business can easily establish the business at his choice at any place.

6. Organisational structure: Organisational structure implies the framework or design of the business under which business activities are performed. In case of small enterprise, a very simple organisational structure is adopted, because in this business there is only one owner and he is the manager in most times. Moreover, there are a few number of employee entrusted different duties of the business. That is why, in this business duly allocation and deligation of authority is very smooth and easy. This organisation generally adopts live organisation.

7. Management system: All managerial decisions are taken by the owner and there is no too much legal formalities to be observed by this business. Even the owner can quickly change the rules and regulation of management as per requirement of the business.

8. Technique of production: There are two types of production techniques. One is labour intensive and other is capital intensive. In case of small enterprise generally intensive technique is adopted, where as compared to the amount of capital or machinery, more number of labour are employed.

9. Government protection: There is a strong protection and initiative of government towards the small enterprises. After in-dependence, ceantral government has established a number of corporations and boards to provide help to small scale industries in india.

10. Registration: Registration is not compulsory for small enterprise or business. Registration is optional for small enterprise or business. Of course, the registered enterprise can enjoy some benefits and facilities from government and legal side.

11. Satisfaction to consumer: There is an advantage of small enterprise that it can satisfy individual tastes fully and offer personised srvices to customers.

12. Supplements to large scale units: Activities, production and services rendered by the small enterprise are supplementary to large scale units. Most of the large scale units have to depend on the productions and services of small business units.

13. Industrial estates: Industrial estates are established for the purpose of promoting the growth and development of small scale units. Industrial estates provide all sorts of facilities to the small enterprises such as tools, finance, equipment, machinery etc.

14. Flexible: Small enterprises are very flexible, so these enterprises are capable of being adapted to changing tasks and demands.

15. No separating between owner and management: Like company or large business house, there is no separation between owner and management of small enterprise. The owners of the small enterprises are the management.

16. Shorter gestation period: Gestation period implies the gap between the time of establishment and time of production. In case of small enterprise, within a small enterprise, within a short gestation period it can be established. So the return of investment in small enterprise can be recovered immediately. 


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