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Problems Faced by Small Scale Industries

Small scale industries face several issues including a lack of financing due to poor cash flow and high costs, a lack of expertise in business and management skills, outdated technologies, domination by large firms, shortages of raw materials, and labor issues related to selection, training, and retention of skilled workers. They also struggle with managing working capital and having sufficient short-term assets.

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Md Sharik
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2K views10 pages

Problems Faced by Small Scale Industries

Small scale industries face several issues including a lack of financing due to poor cash flow and high costs, a lack of expertise in business and management skills, outdated technologies, domination by large firms, shortages of raw materials, and labor issues related to selection, training, and retention of skilled workers. They also struggle with managing working capital and having sufficient short-term assets.

Uploaded by

Md Sharik
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Following are the Issues faced by Small Scale Industries

1. Short of Finance: Financial problem is a situation


where a businessman focuses with stressful mind.
Many small business owners are facing
hard financial crisis now a days which has created
anxiety for business survival. Some reasons of lack of
finance for small traders are:

 Poor cash circulation


 High labor cost
 The improper maintenance of books of accounts by
owner
2. Lack of Expertise: Many small business
owners have no experience of handling the
business properly. They are not practically
equipped with internal and external
business environment in industries. They
have poor management skills.

New business owners lack relevant business


and management expertise in areas such
as finance, purchasing of products, selling
of products, production process, hiring and
managing employees etc.
3. Technologies life cycle: Small scale
industries mainly possess old and
outdated technologies which affect the
production level. The reputation of small
scale industries may be lost among
consumers. Lack of productivity affects
the whole system of business.
4. Lack of management skills: Managing
the business requires a good level of skills.
Small scale business industries lacks in
planning and organizing the various
issues like:
 High worker Turnover
 Lack of Training and Education
 Lack of Communication
5. Domination of large and reputed firms:
Small scale industries are facing high
level of challenges in marketing
themselves because of continuous
business threats by large scale industries.
They are unable to sell their products on
a large scale.
6. Shortage of raw materials: Raw
materials are materials used in the
primary production or manufacturing of
goods. Business owners face challenges
and risks while selecting the raw
materials for production of goods. They
need it on regular period of time. They
may get inferior quality of raw materials
at cheap rates which ultimately affects
the business.
7. Labour issues: The Industry must take
reasonable steps while selecting the human
man powers to lead the business. The
difficulties which business owners face when
they select the human resource are:

 Selection of Skilled/ Unskilled Labor


 Physical and Emotional behavior of Employees
 Balancing their Personal and Professional Life
 Training and Development
 Monetary and Non-Monetary Assistances
9. Management of Working Capital:
Low working capital indicate
serious financial problems with a
company. The industry must have
enough short-term assets to pay off its
short-term debt and liabilities. High
working capital is an indication of a well-
managed company. However, some
small companies have negative working
capital.
Thank You for reading…

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