Role of Small Business In Economic Development – Essay Sample

  1. DEFINITION OF SMALL BUSINESS:

There is no precise definition of a little concern. Some would see a concern as little if it has no more than a specified figure of employees. Other would wish to believe a concern as little that limits its range of operation to the local market country. Yet others may prefer to write a college essay about a concern as little on the footing of nature of house, such as the local medical shop, vesture shop, service station or a jewelry shop.

WRITERS’ Definition:

“A little concern is defined as a concern (corporation, Limited Liability Company or proprietary) with 500 employees or less”- U. S. Govt. “Harmonizing to Small Business act 1934″ A concern, which is independently owned and operated and non-dominant in its field” is a Small Business.

* Harmonizing to executive commission for national economic development. “A Small Business one of which processes at least two of the undermentioned features:

* -Managers are the proprietors.
* -Capital provider and the proprietor is single or a little group.
* -Worker and the proprietors are local market may not be so.
* -Relatively smaller compared with the biggest unit of the industry [Gross sales, employees etc.]

DEFINITIONS IN THE CONTEXT OF BANGLADESH:

“Small industry means an industrial constitution or unit which is rum chiefly by hired labor and non-utilizing mechanical motor power but does non-usually employ more than 50 workingman’s and whose land, edifice and machinery does non transcend Tk. 150. 00. 000 in value in either instance” – E. Pakistan Small
Industries Corporation Act of 1957.

Graph: Product/ service

Fiscal Plan
Operationss

Exhibit: Small Business process

  1. 2 TYPES OF SMALL BUSINESS:

Name
Example

  1. Retail gross revenues
    Food. Appliance. Clothing etc.
  2. Servicess
    Service station. Auto fix. Plumber etc.
  3. Finance
    Fiscal audience bureau.
  4. Agribusiness
    Land usage & A ; development.
  5. Sweeping
    Jobbers. Agents etc.
  6. Fabrication
    Metallic elements. Plastics etc.
  7. 3 Structural FEATURES OF SMALL BUSINESS:
    1. 4 STAGES OF SMALL BUSINESS DEVELOPMENT:

Chapter 02

ROLE OF SMALL BUSINESS IN THE CONTEXT OF WORLD & A; BANGLADESH

  1. 1 ROLE OF SMALL BUSINESS:

Small concerns play an important function in the socioeconomic development of a state. Important is of such functions are indicated hereunder: Large industry wastage can be put to utilize;
Desired industrial spread & A; decentralization is facilitated; Business variegation is made easier;
Inventions for new products/ services are made;
Development of new engineering with respect to methods, inputs & A; accomplishments are mutely undertaken; Ensures broad competition & A; thereby provides sensible monetary value advantage to consumers; Promotion & A; development of entrepreneurship are facilitated; Contribute in raising the GDP of the state;

Enable just distribution of income among individuals & A; parts; make better usage locally available accomplishment, expertness & A; proficient know-how; more individualized contacts possible with all clients, providers, employees & A; others interested in the concern; explore advanced selling at place & A; abroad;

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Act as seed bad for new venture;
Aid in foreign currency net incomes through personalized push exports ; Help in rectifying some of the jobs created by unplanned urbanization ; Provide an honorable alternate support in a land starved / scarce state ; Traditional autochthonal engineerings are kept alive through version ; A commanding factor over large business’ inclination toward monopoly ; Greater community life ;

Development of leadings in the Fieldss of concern, society & A; otherwise; Large figure of little investors can go proprietor of such concerns; Large figure of low cost occupation chances can be created;

Act as backward linkages of the comparatively larger industries; Cost effectual production is possible;
Unutilized natural resources can be brought under productive usage; Easy supply of needed goods/ services is facilitated.

  1. 2 WORLDWIDE CONTRIBUTION IN SMALL BUSINESS:
    Harmonizing to U. S. Small Business Administration (SBA), small concerns represent 99.7 % of all employer houses. Since 1995 small concerns have generated 64 % of new occupations. Harmonizing to the SBA small concerns have paid 44 % of the entire U. S.’s private pay sheet.
  2. 3 THE POWER OF SMALL BUSINESS:

FROM BANGLADESH PERSPECTIVES:

  1. 4 ROLE & A; CONTRIBUTION OF SMALL BUSINESS TOWARDS ECONOMIC DEVELOPMENT

Function:

Poverty relief:
Poverty relief through Small Business
Respondents
Percentage
Alleviated 37 %
Not alleviated 63 %
Entire 100 %
Beginning: field study

GENERATION OF INCOME:

Generating income among deprived mark people and in geographically under-developed countries by putting up bungalow industries.

Woman’s authorization:

Making linkage with Youth Welfare. Women personal business. Social Welfare and other organization engaged in the publicity of income generating activities, with the purpose of accomplishing incorporate rural development.

Employment coevals:

Accumulative Small. Medium & A; Cottage Industry unit and employment will make by 2025 (figure in million) . Class of Industry
Unit of measurement
Employment
Small
0. 171
2. 915
Medium
0. 013
0. 863
Bungalow
0. 904
2. 852
Entire
1. 088
6. 630

Socio-economic development:

Promotion of pilot undertakings in association with private enterprisers in countries or Fieldss of national involvement where private investing is diffident and manus them over at an appropriate private clip. Assisting and reding in the publicity of industrial places next to industrial countries for the Welfare of household members of industrial workers.

  1. 5 Contribution:

Greater flexibleness in operations;
Labor intensive, therefore little concern ideally suit the state where capital is scarce while labor is ace abundant; Large fund of traditional accomplishments;
Extensive employment potency;
Artistic handcrafts earn valuable foreign exchange for the state. It constitutes about 35 % through exports. Avoid utmost inequalities of income, wealth & A; economic power; in a shorter clip period little scale units can be contributed & A; brought up; Decentralization of production;

Industrial dealings are more concerted & A; peaceful.

  1. 6 A RECENT REVIEW
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Some establishments are lending towards economic development of Bangladesh through little concern such as Grameen bank, IBBL, ASA, and BRAC etc. Grameen Bank has become world-renowned for its impact through microloans under the leading of Muhammad Yunus, who won the 2006 Nobel Peace Prize for his work. Its success has inspired organisations in many states, including the Grameen Foundation in the United States. Harmonizing to the Grameen Foundation, more than 37 million people live below the poorness line in the US, with approximately 74 % life in major metropolitan countries. The Grameen Foundation works through Project Enterprise in New York City, giving little loans averaging merely $ 2. 600. With over 700 loans disbursed since 1997, the concerns in Project Enterprise’s loan portfolio generate US $ 1. 56 million in local rewards yearly, with a 42 % mean addition in monthly net income after having a microloan.

Role of IBBL in the economic development of SMEs:

The function of Small and Medium Enterprises (SMEs) is indispensable for overall economic development of a state peculiarly for developing states like Bangladesh. Since this sector is labor intensive with short gestation period, it is capable of increasing national income every bit good as rapid employment coevals ; accomplishing Millennium Development Goals ( MDGs ) particularly obliteration of utmost poorness and hungriness, gender equality and adult females authorization. SME sector has played a critical function in economic development of some comfortable states of Asia. Our neighboring states have besides given due importance on SME. Terming SME as ‘employment bring frothing machine’ they stressed on SME development for higher economic growing, contracting the spread of income inequality and poorness relief. Besides the above. SMEs are considered as the drive force for industrialization. Entire SME Investment of IBBL reached to Tk. 78.456 core (US $ 11 billion) during 2010, which was 37.26% higher compared to Tk. 57.159 core (US $ 8 billion) during 2009. Institutional Category-wise SME Investment increased at the terminal of September. 2010 in State owned Bankss (+75.66 %)

Foreign Banks (+53. 49 %)
Private Banks (+31. 56 %)
Non-bank FIs (+24. 43 %) and
Specialized Banks (+20. 06 %).
A survey shows that IBBL provides a thought about how little enterprisers can be developed through an Islamic manner.

  1. 7 PROSPECTS OF SMALL BUSINESS IN BAGLADESH:
    Supporting Industry;
    Easy formation;
    Cultural merchandise demand;
    Unemployment consequence;
    Skilled worker;
    Women engagement;
    Local demand;
    Location;
    Loan installation;
    Institutional Support in Small Business Unit:
    Bangladesh Small & A; Cottage Industries Corporation (BSCIC)
    BSCIC Provides
    Pre investing guidance
    In works advisory services
    Post investing extension services
    Developed Industrial secret plans for investors
    BSCIC Supplies
    Technical information
    Designs and paradigms
    Industrial profiles
    Market information
    BSCIC Assists in:
    Financing of SCI through DFIs & A; NCBs
    Choice of right type of machinery
    Adopting and accommodating appropriate engineering
    Analyzing investing feasibleness
    Establishing sub- catching linkages.
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BSCIC Organizes
Technical and direction accomplishment development preparation
Carnivals and exhibitions
Buyer-seller meet

Their work among the landless & A; plus less hapless through extract of microfinance has activated 1000000s of miniscule SMEs across the state.

  1. 8 SPECIAL INCENTIVES FOR SMALL BUSINESS IN BANGLADESH:

Tax consideration;
Flexible regulations & A; ordinances;
Consultancy support;
Reviewing public presentation.

Chapter 03

Decision

  1. 1 CONSTRAINTS OF SMALL BUSINESS IN BANGLADESH:

Quality and Standards;
Selling;
Investing and Working Capital;
Deficit of Skilled Workers;
Lack of entrepreneurship and direction accomplishments;
Physical Infrastructure;
Conveyance costs;
Geographic Disadvantage;
Trade Policy and Incentives;
Lack of information.

  1. 2 Suggestion:
    Aid of Government:
    Government should do definite program to hike up this sector. Youth development section should be more activate. Their fund needs to be increased and regulations should be more flexible.

Ministry for Small Business:

Particular ministry can be made to organize all this.
Subsidy:
Government can give some subsidies to hike up this sector. Flexibility in Case of Tax:
Tax regulations should be more flexible for Small Business.
Handiness of Raw Material:
It should be assured that the Small Business houses will acquire sufficient natural stuffs in lower cost. Removal of Political & A; Social Inconsistency:
Political and societal instability should be maintained. Terrorism must be sustained and maintain under control. Availability of other Facilities:
It must be assured that the Small Business houses will acquire public public-service corporation service connection without any hold and payoff.

Success of Small concern in economic development in Bangladesh needs several inputs. Such as effectual policy modus operandi up to day of the month cognition and information related to concern and industry, efficient forces, capital fund, reliable substructures, appropriate and competitory engineering and inter-ministerial ties with close co-cordial relationship is really much needed for accomplishment of end and vision of BSCIC. Every input must be utilized in the proper clip in appropriate manner so one can anticipate the efficient end product.

Mentions:
1 ) ‘A Study on East Asian Economy’; by World Bank; page: 31 – 407; Publisher: University Press Limited; 1981.

2) ‘Developing Careers on Small Business’;
by Monjurul Akhter ; page: 1 – 34. 67-286; Publisher: Maola Brothers; 1998.

3) ‘Entrepreneurship and Lives of Successful Entrepreneur’; by Dr. A. R. Khan; page: 2 – 165; Publisher: University Press Limited; 1986.

4) Www.Reportbd.com
5) WorldWideWeb.Google.com
6) Jahur M Saleh and Azad A. S. M. Sohel (2004). “A survey on little endeavors in Bangladesh seeking for growing factors & A; obstructions. “Journal of the institute of bankers Bangladesh. volume 51. no-1
7) Rahman. A. H. M. Habibur (1985). “Entrepreneurship and little endeavor development in Bangladesh. “In Abdul Mannan (Eds). Entrepreneurship and direction in Bangladesh. Chittagong University Business Research Bureau. p. 104.