Rajasekhara Mouly Potluri, Jung Wan Lee, Saqib Rasool Khan, Syed Mastan Vali / Journal of Distribution Science

10-7 (2012) 5-11 5

Challenges and Opportunities of Small Business Management and Start-Ups in India

1)Rajasekhara Mouly Potluri*, Jung Wan Lee**, Saqib Rasool Khan***, Syed Mastan Vali****

nance, marketing and other problems while managing their businesses.

The researchers also attempted to get the opinions on problems of
Abstract the various categories of small businesses while starting their
operations. A staggering 68percent of respondents identified the prob-
The core objective of this research article is to investigate different lems related to preparation of business plan, location selection, mar-
challenges and opportunities in management as well as start-ups of keting and other problems like lack of proper credit facilities, skilled
small businesses in India. The prudence behind this research is to ex- manpower, and other infra related problems while setting up of their
amine various problems in front of the small businesses and to offer businesses. On an average, 64.62 and 63.51 percent of small busi-
vital support and cooperation to overcome those with the support of nesses are facing various kinds of problems both at the time of
concerned institutions through consultancy and training programs. The day-to-day management as well as start-up of their businesses
researchers have an intention to make available the research results to respectively.
the governmental agencies, concerned small business institutions and The present research confined with the opinions of only four cate-
also to the educational institutions which are continually design plans, gories of small business operators particularly from the manufacturing,
programs, policies and strategies to upgrade the managerial and tech- finance, trading (retailing and wholesaling), and servicing/repair which
nical dexterities of the small business Indian operators. After thorough are continuing their business operations from the nine coastal districts
revision of relevant literature on small businesses and its management, of Andhra Pradesh in India. The present study emphatically provides
the researchers used a well structured questionnaire and in-depth per- concrete information required to the business community for identify-
sonal interviews with 586small business operators selected from manu- ing an assortment of challenges faced by different small business op-
facturing, trading (retailing and wholesaling), finance, servicing/repair erators in managing and at the time of their inception. This research
businesses which are located in the coastal districts of Andhra paper is first of its kind from this part of the world by offering ex-
Pradesh in India. tensive and credible information required for prospective entrepreneurs
The researchers have used convenience sampling and collected data in facing the dynamic challenges in managing their business.
was analyzed with the support of Microsoft Excel and frequency Furthermore, this research presents invaluable inputs to the stake-
distribution. Noticeably, majority of the small businessmen in India holders like all types of governments, policy makers, practitioners, re-
are facing myriad number of challenges both in management and at searchers, and educators’about the various impediments faced by the
the time of establishment of their business operations. In particular, small business community in India.
72.47 percent of small businesses operators’ have substantiated their
strong opinion towards the challenges they are facing particularly fi- Keywords : Small Businesses, Industrial Policy Resolutions,
Manufacturing Sector, Trading, Finance, Service Sector,
**** Corresponding Author, Professor, Department of Management Andhra Pradesh, India.
Studies, Nimra Institute of Science & Technology.
Jupudi, Ibrahimpatnam- 521 456, Andhra Pradesh, INDIA.
JEL Classifications : L25, L26, L50, L51
Tel: +91-866-2882911, Fax: +91-866-2881852.
E-mail: [email protected] or [email protected]
**** Assistant Professor, Administrative Sciences Department,
Metropolitan College, Boston University. 808 Commonwealth Ⅰ. Introduction
Avenue, Boston, MA 02215, USA. Tel: +1-617-358-5627,
Fax: +1-617-353-6840. E-mail: [email protected] Industrialization plays a substantial role in the economic progress
**** Professor & Secretary, Nimra Educational Society. of any country. The nature of industrialization needed by each devel-
Jupudi, Ibrahimpatnam- 521 456, Andhra Pradesh, INDIA.
oping country is diverse. It is a common phenomenon that the in-
Tel: +91-866-2882786, Fax: +91-866-2881852.
dustrial structure of a country consists of large, medium, and small
E-mail: [email protected]
businesses. Of these three types of businesses, small businesses con-
**** Assistant Professor, Department of Management Studies, Nimra
Institute of Science & Technology. Jupudi, Ibrahimpatnam- 521
tribution to the advancement of a developing world is noteworthy.
456, Andhra Pradesh, INDIA. Tel: +91-866-2882911, Small businesses are the unheralded dynamos of the Indian economy
Fax: +91-866-2881852. E-mail: [email protected] and solid foundation of community philanthropy and leadership, espe-

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6 Rajasekhara Mouly Potluri, Jung Wan Lee, Saqib Rasool Khan, Syed Mastan Vali / Journal of Distribution Science 10-7 (2012) 5-11

cially in small towns. Culturally rich and well diversified developing most consistent policy framework for providing confident assistance to
country India which seizes support from large, medium and small the entrepreneurs for setting up small businesses. Today, India oper-
businesses for a swift growth of the economy. Policy makers from ates the largest and oldest programs for the development of small-
both the central and state governments in the country clearly recog- -scale enterprises in any developing country (Kumar, 1988).The defi-
nized paramount importance to the development of the small busi- nition of small-scale industry or enterprise varies from one country to
nesses and its contribution to the industrialization of the country. another and from one time to another in the same country depending
The Government of India has been introducing significant support upon the pattern and stage of development, government policy and
measures adopted from time to time through its industrial policy reso- administrative set-up of the particular country. As a result, there are
lutions by expecting considerable contribution from the sector. at least 50 different definitions of SSIs found and used in 75
Particularly in the last two decades, whatever the sensational econom- countries. 1 For the first time, the Government of India appointed fis-
ic growth rates achieved by the country greatly supported by the cal commission defined the term small scale industry in a compre-
small business community. This sector’s relative contribution is hensive way. The Fiscal Commission, 1950 2, defined a small-scale
mounting tremendously in terms of production, employment and ex- industry as one which is operated mainly with hired labor usually 10
ports from year to year. The small businesses role in the economic to 50 hands. “The category of micro, small and medium-sized enter-
development of the country would become more and more vital with prises (SMEs) is made up of enterprises which employ fewer than
the passage of time particularly in India because of growth rates of 250 persons and which have an annual turnover not exceeding 50
population and unemployment. Even though, the central and different million euro, and/or an annual balance sheet total not exceeding 43
state governments has initiated to all sorts of shore-up measures, the million euro” (Commission Recommendation, 2003).
Indian small businesses has observed innumerable problems both at Small businesses, defined as for profit enterprises with fewer than
the time of their start-ups and also to carry on their businesses. In 500 employees (U.S. Small Business Administration, 2009), constitute
light of the initiation taken up by the governments and difficulties the overwhelming majority of businesses. In the United States, the
faced by the small businesses in the country, the researchers at- Small Business Administration (SBA) established three “base” or
tempted to know the present day’s challenges faced by the Indian “anchor” size standards: (1) 500 employees for manufacturing, mining
small businesses community as a core objective of this research. and other industries with employee based size standards (except for
Wholesale Trade); (2) $7.0 million in average annual receipts for
most nonmanufacturing industries with receipts based size standards;
Ⅱ. Materials and Methods and (3) 100 employees for all Wholesale Trade industries3. However,
in Australia, “A small business is defined as any business with fewer
The idea to promote the development of small scale industries in than 15 employees. This is calculated on a simple headcount of all
order to invigorate India’s dormant economy was first mooted by employees who are employed on a regular and systematic basis (http
Mahatma Gandhi in 1937, when he propounded the theory of ://www.fairwork.gov.au/termination/small-business-fair-dismissal-code/-
Trusteeship for economic progress. In India, the development of small pages/default.aspx). Predominantly in Korea, the concept of small bus-
industries was taken up in the 1950s when the Ford Foundation team inesses comprehensively and clearly defined by sector-wise with no.
visited this country and prepared a practical plan for the development of workers working in the organization. Broadly manufacturing and
of small scale industries. The use of the term ‘small’ as a desig- mining, construction and transportation with less than 50 workers;
nation in industry differentiates one set of industries from others. large general retail stores etc.; and seed and seeding production etc.;
Smallness identifies a hodgepodge of businesses ranging from fam- wholesale and product intermediation and other sectors with less than
ily-owned neighborhood stores to venture-capital-owned, innovative 10 workers (http://www.sbc.or.kr/sbc/eng/smes/definition.jsp).
computer manufacturing firms (Reddy, 2010).
Small-scale enterprises have been given a vital place in the frame- 1. Small Businesses and Industrial Policy Resolutions in
work of Indian planning for both ideological and economic reasons. India
The speed of transition of small-scale sector has increased due to
economic reforms by both central and state governments and the After the independence, the Government of India has had taken
World Trade Organization (Krishna, 2004). Development of small- series of steps for development of small scale and cottage industries
-scale enterprises has been instilled with an array of objectives. These by expecting significant contribution to the country’s economy
are: a) the generation of immediate employment opportunities with re- through Industrial Policy Resolutions and five year plans. Since in-
latively low investment; b) the promotion of more equitable dis- dependence, India has several Industrial Policies to her credit. These
tribution of national income; c) effective mobilization of untapped resolutions clearly and frequently define and redefine the definition of
capital and human skills; and d) dispersal of manufacturing activities small-scale businesses along with the modifications and suggestions to
all over the country, leading to growth of villages, small towns and the existing government policy of small scale enterprises. The
far-flung economically lagging regions (Dhar, 1979). Industrial Policy Resolution 1948, first time accepted the importance
Consequently, the Government of India has initiated various pro- of small-scale industries and policy’s main thrust was “protection”.
grams for the development of small-scale sector in India. It is worth Protection offered by the Central government with the support of all
revealing that over the past six decades, India has built-up world’s the state governments to shoot out all sorts of the then acute prob-

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 Rajasekhara Mouly Potluri, Jung Wan Lee, Saqib Rasool Khan, Syed Mastan Vali / Journal of Distribution Science 10-7 (2012) 5-11 7

lems of raw materials, capital, skilled labor and marketing. limit of Rs. 5 lakhs and located in bigger towns will become a part
The Industrial Policy Resolution, 1956 was added “development” of the tiny sector. Second, more significantly, earlier industry means
along with the earlier emphasis thrust area “protection” which was re- mainly manufacturing, the new policy has widened the scope to in-
served 128 items for exclusive production in the small sector. Besides clude industry related service and business enterprises. This is more
the establishment of Small Scale Industries Board (SSIB) to scrutinize realistic. Now like in many other countries, we have a “Small Busin-
and prepare a development plan for small scale industries during the ess Policy”, and not a “Small Industry Policy”(Khanka, 2004).
Third Five year Plan, 1961-66. The Industrial Policy Resolution1977
classified Indian small sector into three categories: i) Cottage and 2. Problems of Small Businesses in India
household industries which provide self-employment on a large scale;
ii) Tiny sector incorporating investment in industrial units in plant It is an augury to any country’s economic development can be
and machinery up to Rs.1 lakh and situated in towns with a pop- possible with the support of all categories of industries in general and
ulation of less than 50,000 according to 1971 census; iii) Small-scale small businesses in particular. In the less developed countries, small
industries comprising of industrial units with an investment of up to and medium companies have been affected and facing new challenges
Rs.10 lakhs and in case of ancillary units with an investment up to but on the other side these companies have new opportunities also.
Rs. 15 lakhs. In addition, the IPR, 1977 suggested protection meas- The firm’s capabilities can be enhanced with innovation, learning, in-
ures like reservation of 504 items for exclusive production in ternationalization and strong relationship with government and
small-scale sector and proposal to set-up in each district an agency non-government institutions to increase its competitiveness in the mar-
called “District Industry Centre” (DIC) to serve as a crucial point of ket (Gabriel and Mohammed, 2011). The companies need to under-
development for small-scale and cottage industries. stand the layer of environment from national to international environ-
The Government of India adopted this Industrial Policy Resolution ments (Olga and Castellano, 2011). Predominantly, second largest
1980 policy with a main objective keep in mind that to facilitate an populated country in the world, India definitely requires the support
increase in industrial production through optimum utilization of in- from small businesses to provide more employment opportunities, bal-
stalled capacity and expansion of industries. This policy resolution vi- ancing of inequalities in the society, eradicate poverty along with dis-
sualized i) increase in investment ceilings from Rs. 1 lakh to Rs. 2 tributive justice and also to deepening the feeling of dignity among
lakhs in case of tiny units, from Rs. 10 lakhs to Rs. 20 lakhs in individuals.
case of small-scale units and from Rs. 15 lakhs to Rs. 25 lakhs in But this segment of the industry has observed incalculable number
case of ancillaries. Accordingly, the Industrial Policy Resolution 1980 of problems which has severely hampered the contribution from the
re-emphasized and recognized the small-scale sector still remained the small businesses to the economic development of the country. Mostly
paramount sector for generating wage and self-employment based these are related to raw material, finance, marketing, under-utilization
prospectsin the country. During the year 1990, the Industrial Policy of capacity and other problems which include technological obso-
Resolution 1990 was introduced which has given due importance to lescence, inadequate and irregular supply of raw materials, lack of or-
small scale enterprises to serve the objective to create sufficient job ganized market channels, imperfect knowledge of market conditions,
opportunities. This resolution also introduced sufficient measures to unorganized nature of operations, inadequate availability of credit fa-
boost-up this sector with an investment ceiling in plant and machi- cility, constraint of infrastructure facilities including power etc (Se-
nery for small-scale industries was raised from Rs. 35 lakhs to Rs. venth Five Year Plan, 1985-1990).
60 lakhs and correspondingly, for ancillary units from Rs. 45 lakhs As per the survey conducted by the Small Enterprise Development
to Rs. 75 lakhs. In addition, 836 items were reserved for exclusive Agency (SEDA, 2007) in Korea, small business founders had diffi-
manufacture in small-scale sector and a new scheme of Central culties at financing (44%), selection of location (19.3%), shortage of
Investment Subsidy exclusively for small-scale sector in rural and management know-how (6.5%), and selection of business type (6.2%).
backward areas had been mooted and implemented. But in India, the situation is completely different and more drastic on
The Government of India, for the first time, tabled the new small challenges faced particularly related to financing (73.89%), marketing
enterprise policy titled “Policy Measures for Promoting and Streng- (65.19%) and other problems (78.33) which were highlighted through
thening and Supplementing Small, Tiny and Village Enterprises” in this survey. A foremost problem Indian small businesses are facing is
the Parliament on August 6, 1991. The main driving force of New the procurement of required quantity and quality of raw material
Small Enterprise Policy is to impart more liveliness and growth mo- which has majority of the times questioned the existence of the
mentum to the sector to enable it to contribute its mite fully to the business. Most of the times suppliers are expressing their inability to
economy, particularly in terms of growth of output, employment and supply the requisite supplies in time with the expected level of cost
exports. The new policy is founded on a proper understanding of the consideration. Another important setback faced by the Indian small
fundamental problems of small-scale sector and the measures proposed businesses is that of finance which has identified mainly due to scar-
by it are well directed to mitigate the various handicaps that face this city of capital and weak credit worthiness. Related to marketing,
sector (Sandesara, 1991). The new small enterprise policy changes the Indian small businesses are facing problems like understanding the
definition of tiny units has two-fold features. First, having raised the market requirements, finding new customers, deprived marketing or-
investment ceiling from Rs. 2 lakhs to Rs. 5 lakhs and done away ganization, poor product designing, failing to introduce attractive price
with the locational requirement, all new units within the investment structure, lack of channel support and feeble promotional support etc.

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8 Rajasekhara Mouly Potluri, Jung Wan Lee, Saqib Rasool Khan, Syed Mastan Vali / Journal of Distribution Science 10-7 (2012) 5-11

According to Arun Ghosh (1988), on the basis of All India Census personal interviews the researchers collected additional information re-
of Small-Scale Industries, 1972, the percentage of utilization of ca- lated to the government and institutional support, preparation of busi-
pacity was only 47 in mechanical engineering industries, 50 in elec- ness plan, training facilities, finance, marketing, availability of skilled
trical equipment, 58 in automobile ancillary industries, 55 in leather manpower and technology along with R&D support. Even though
products and only 29 in plastic products. On an average, we can there were time and cost constraints, much effort has been made to
safely say that 40-50 percent of capacity was not utilized in the extent possible to make the sample size larger. Thus, the re-
small-scale units. searchers selected the sample size of 600 small business operators out
Along with the above setbacks, Indian small businesses have ob- of which a total of 586usable questionnaires collected and represent a
served troubles like entrepreneurial myth, social responsibility, bank- response rate of about 97.67 percent.
ruptcy, job quality. Particularly related to entrepreneurial myth, the A well-trained team of thirty MBA students gathered the required
crucial assumption is that an expert in a given technical field will al- information through questionnaires by explaining the questionnaire in
so be expert at running that kind of business. Additional business the local vernacular language Telugu. The researchers have chosen the
management skills are needed to keep a business running smoothly convenience sampling technique to make the organization of data col-
(http://en.wikipedia.org/wiki/Small_business). The Indian small business lection more manageable with a significant sample size. The collected
entrepreneurs who established business in their field of expert fails in data was analyzed with the support of Microsoft Excel package and
the remaining functional aspects of the business. This is one of the frequency distribution. The researchers also conducted well structured
crucial setbacks facing by this segment of the industrialization. personal interviews to collect information related to governmental and
Indian small businesses can encounter problem related to corporate institutional support, role of educational institutions, corruption and
social responsibility due to lack of proper time, budget, and pressure red-tapism in getting the permissions, and most significantly, pro-
from large industry and severe stress from all the stakeholders with spective business opportunities in this segment. This extensive re-
their expectations. In association with the bankruptcy which is nothing search completely confined to the nine coastal districts of the south-
but the failure in discharge all the debts, majority of the small busi- ern state of Andhra Pradesh which is a culturally, socially and eco-
ness operators in the country has come to this bad patch due to im- nomically well-diversified location in the country.
proper usage and allocation of funds to different activities in their
business. Whatever may be the problems observed by the small busi-
ness community in India, majority of the Indian are totally depending Ⅲ. Results and Discussion
on establishing these kinds of businesses because of limited finance
capacity as well as more unemployment. To meet demand of small The researchers used a two-folded comprehensive questionnaire by
business founders, the Government announced various kinds of sup- identifying various problems with the help of pilot survey among the
port policies for small businessmen as well as venture business, sim- Indian small business community both at the time of day-to-day ad-
plification of business foundation procedures, and build up of busi- ministration as well as start-ups of their business. The selected sample
ness foundation system (Song Mu-ho, 2004). The Government of of 586 small business operators’ opinion on facing different chal-
India also introduces similar kind of support policies in terms of pro- lenges faced clearly depicted in the below Table 1.
viding financial assistance, subsidized land and power, and marketing
facilities to the small businessmen in the country. <Table 1> Respondents’ Demographic
Characteristics (N= 586)

3. Methodology Characteristics Frequency Percentage

Gender
The fundamental reason which inspires the researchers to take up Male 476 81.23
this study is to shed the light on different challenges and oppor- Female 110 18.77

tunities of small business management and establishments in India. A Age

two-part, closed-end type of questionnaire was used to accumulate the 20-30 95 16.21
data related to the empirical challenges faced by the small business 30-40 245 41.81
40-50 192 32.76
entrepreneurs. The sample of 600 small business operators selected for
50-60 54 09.22
the study which were chosen from the sectors of manufacturing, fi-
Educational Qualifications
nance, trading (wholesaling and retailing), and service/repair bus-
Un-Educated 93 15.87
inesses. However, as the information provided by the respondents of Below 10th Grade 165 28.16
14 was not complete, therefore, they were excluded from the final Below 12th Grade 123 20.99
analysis. Thus, the final sample comprised of 586 small businesses Graduates 111 18.94
from the state of Andhra Pradesh. Postgraduates 94 16.04
The study is based on primary data which has collected with the
As mentioned in the Table 2, on an average, 64.62 and 63.51 per-
help of a structured, non-disguised and pre-tested questionnaire. Along
cent of Indian small businesses are severely affecting with multitude
with the questionnaire, the researchers also used structured personal
number of problems while managing and initial establishment of their
interviews with some predetermined, open ended questions. Through
businesses respectively. In particular, finance related problems severely

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 Rajasekhara Mouly Potluri, Jung Wan Lee, Saqib Rasool Khan, Syed Mastan Vali / Journal of Distribution Science 10-7 (2012) 5-11 9

hinder the performance of small businesses in the country with a Along with the questionnaire, the researchers also conducted a
shocking percentage of 73.89 and 57.68 businesses completely failed well-structured personal interviews with the small business operators
in mobilization of required quantity of funds from different sources. and identified noteworthy dissatisfaction on the issues like government
Crucial reasons for this monetary setback are poor mobilization and and institutional support, role of educational institutions, corruption
management of funds, injudicious allocation of funds, poor main- and red-tapism and prospective business opportunities. On an average,
tenance and management of required working capital, severe fluctua- 72 percent of Indian small business owners expressed their discontent-
tions in prices of raw materials, and raising trend of other day-to-day ment over the government and institutional support. Even though, dif-
expenditures of the business etc. Most of the Indian small businesses ferent state and central governments has established number of in-
do not have separate marketing and human resource departments to stitutions to support the small and medium enterprises, there is no
attract the pool of competent professionals because of their budgetary proper and expected level of commitment from these due to high de-
constraints. A staggering 65.19 and 63.82 percent of small businesses gree of corruption, red-tapism, and lengthy bureaucratic procedures.
in the country are facing severe marketing problems in understanding There is no exception in the case of financial institutions which are
the market, failure in designing alluring marketing mix and to combat claiming commission on the loans sanctioned by both the commercial
against competitors in the fiercely competitive business scenario. Most and specialized banks for this purpose. The small businesses in the
significantly, 78.33 and 75.77 percent of Indian small businesses have country strongly opined that no conducive support and cooperation
identified other problems which has mentioned in the following Table from the higher educational institutions and uttered that these in-
in managing and start-ups of their businesses. stitutions are only meant for professionally managed large scale in-
dustry which offers fat compensation package.
<Table 2> Nature of Challenges Faced by the Indian Small Business
Most outstandingly, the researchers collected the opinions of small
Operators in Managing and Start-Ups
entrepreneurs about the prospective business opportunities available in
Part:1 PROBLEMS RELATED TO Positive Negative
the country. In view of the Indian small business community, there
MANAGEMENT (%) (%)
will be a mammoth business opportunity in retailing, leather goods,
1. Finance 73.89 26.11
ready-made garments, finance and gold loan business, gems and jewel-
2. Inadequate & Irregular Supply of
57.16 42.84 lery, auto-ancillaries, interior-decoration. And in recent years, majority
Raw material
of the small business investments directed towards manufacturing and
3. Marketing 65.19 34.81
marketing of electrical and electronic goods like power inverters, bat-
4. Operations 57.51 42.49
teries, water-coolers, heaters, water purifiers, mobile spares and ac-
5. Managerial and Technical Skilled
55.63 44.37 cessories, audio and video related goods along with digital photo stu-
Manpower
dios and color labs, etc. Along with the above, based on their interest
6. Other problems like technological
some significant portion of potential small businessmen are also con-
obsolescence; inadequate availability
of credit facilities; lack of organ- sidering and directing their investments into the agro-based industries
ized market channels; imperfect like dairy, poultry, sheep, goat and emu-bird forms, food-processing,
knowledge of market conditions; spa-clinics, preparation of ayurvedic medicines, printing and binding,
78.33 21.67
unorganized nature of operations; Internet and photo-copy centers, mini-passenger and transport industry,
inadequate support from research &
development; infrastructure pro-
restaurants and customized fast-food centers etc.
blems (power, water, transportation India, a culturally-diverse country with different ethnicities, has
and other amenities.) multitude of small business opportunities which can be tapped suc-
Average of Problems in Management cessfully only by overcoming all the setbacks with the introduction of
64.62 35.38
of Indian Small Businesses novel and professional way of managing along with the support of
Part:2 PROBLEMS RELATED TO Positive Negative governments and educational institutions. It is the responsibility of
START-UPS (%) (%) governments, educational institutions, and other unique bodies spe-
1. Preparation of Business Plan 63.48 36.52 cially established to extend their seamless cooperation in surmounting
2. Location Selection 68.94 31.06 the multitude of problems by adopting proper strategies. And sig-
3. Bureaucracy 55.63 44.37 nificantly, all the governments have to introduce stringent control
4. Funds Mobilization 57.68 42.32 mechanism to curb corruption, red-tapism, and unique strategies to get
5. Technology Mobilization 59.22 40.78 rid of inertia in the bureaucracy.
6. Marketing 63.82 36.18 The small businesses of the country also entails the support of
professional technical and business consultants in overcoming some of
7. Other problems like inadequate
availability of credit facilities; the crucial problems related to preparation of business plan, technol-
scarcity of skilled technical and ogy mobilization, location selection, and operations. Besides, small
75.77 24.23
managerial personnel; infrastructure businesses essentially require the support from technical and manage-
problems (power, water, trans-
ment educational institutions to obtain the well-trained and experi-
portation and other amenities.)
enced manpower as well as to enhance the existing capacity levels of
Average of Problems in Start-ups of
63.51 36.49 the employees. It is also an imperative situation that Government of
Indian Small Businesses

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10 Rajasekhara Mouly Potluri, Jung Wan Lee, Saqib Rasool Khan, Syed Mastan Vali / Journal of Distribution Science 10-7 (2012) 5-11

India must focus on infrastructure development such as power, roads, References

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management techniques which would help them in achieving their balization on Legitimacy Signals: The Case of Organizations
economic and non-economic objectives. There will be an enormous in Transition Environment”, Journal of Management, 6(1),
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Received: May 12, 2012. SBC (2012), from http://www.sbc.or.kr/sbc/eng/smes/definition.jsp
Revised: June 12, 2012. (Retrieved June 24, 2012)
Accepted: July 18, 2012
Seventh Five Year Plan (1985-1990), “Government”, of India:
Planning Commission, Vol. II, 98.
Small Enterprise Development Agency (SEDA) (2007), “A Study on
Acknowledgements: Reformation of Small Business Support Policy”.
Song, Mu-ho (2004), “A Study on Venture Business Foundation Pro-
The corresponding author would like to extend his sincere grati- cedures and Difficulties at Each Stage”, Business Foundation
tude to Janab Dr. Mohammad Saquib Rasool Khan, Secretary: Nimra Research, 7 (4), 25-28.
Educational Society and also to my co-author Dr. Jung Wan Lee for U.S. Small Business Administration (2009), “SBA Size Standards Me-
their invaluable guidance, cooperation and support in completion of thodology”, Prepared by: Size Standards Division, Office of
this research. I further acknowledge another co-author Dr. Mastan Government Contracting & Business Development, April, 11.
Vali and a team of MBA first year students of NIST for collecting Wikipedia (2012), from http://en.wikipedia.org/wiki/Small_business
the necessary data and information in completing this research article. (Retrieved April 30, 2012)
We would also like to express our sincere thanks to all the re-
spondents who gave their valuable time for filling questionnaires as Footnotes:
well as convey their opinion on different challenges faced by them in
1. An International Compilation of Small Scale Industry Definitions
managing their business.
(mimeographed), Georgia Institute of Technology, Engineering

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 Rajasekhara Mouly Potluri, Jung Wan Lee, Saqib Rasool Khan, Syed Mastan Vali / Journal of Distribution Science 10-7 (2012) 5-11 11

Experimental Station, Atlanta, Georgia, 1955.

2. Report of the Fiscal Commission, Government of India, New
Delhi, 1950, 99-100.
3. SBA analyses of industry characteristics using the 1997 and 2002
Economic Censuses show significantly different economic structure
for the Wholesale Trade industry as compared to the structure of
industries in both 500 employee and $7million anchor size stand-
ard industry groups, thereby requiring a separate 100-employee an-
chor group for wholesale industries. Much of these observed dif-
ferences may be attributed to the definitional changes to the
Wholesale Trade Sector between the Standard Industrial
Classification System and the 1997 and 2002 North American
Industry Classification System.

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