SMALL BUSINESS MANAGEMENT – EXAM QUESTIONS AND ANSWERS

For questions and answers, email theotherwomaninmarriage@gmail.com 

QUESTION:

What is small business? Clearly explain the criteria used to formulate your definition

ANSWER:

A small business is one in which the administrative and operational management is in the hands of one or two people who also make important decisions in that enterprise.  Small enterprises exist in all countries whatever the level of development, but the level of the countries development would determine what constitute a small enterprise. 

Thus, what is categorized a small business in the USA might be ranked medium enterprise in Nigeria. In Nigeria, the federal government industrial policy of 1989 defined a small –scale- industry as one in which the total capital outlay does not exceed N2million excluding cost of land.  

CHARACTERISTICS OF SMALL BUSINESS

i.             Labour – intensive to generate employment

ii.           Capital formation to speed up national development

iii.         Open competition via cease of entry

iv.          Ownership is either sole proprietorship or partnership

v.            High mortality rate among is high because of mistrust that often develops among owners.

vi.          Managerial skills:  Many entrepreneurs who found and manage small businesses have centralized management and lack the appropriate management skills to provide the entrepreneurial leadership.

THE CRITERIA FOR DESCRIBING OR DEFINING SMALL BUSINESS

The criteria for describing an enterprise as mall might be the numbers of employees, capital investment or value of sales but the main factors distinguishing a small enterprise from a large one are the following:

i.             Finance source (personal or family savings)

ii.           Management (where the enterprise has close personal contact with the whole enterprise)

iii.         Operations (where the enterprise operates in a limited geographical area)

iv.          Numbers of person employed

v.            The volume of sales/turnover

vi.          Asset base

QUESTION:

What is the Rationale for studying small business enterprise in Nigeria?

ANSWER:

The question requires the student to identify the reason for undertaking to study small enterprises in Nigeria.

Before now, the operation of small business enterprises has been relegated by the social science scholars.  The recent inclusion of entrepreneurship studies in the curriculum of the tertiary institutions is clear evidence.

RATIONAL/REASON FOR THE STUDY OF SMALL BUSINESS ENTERPRISE

i.             The student is equipped with the knowledge of investing his capital despite how little the capital might look.

ii.           Small business serves as a training spot for the development of large scale business managers.

iii.         The study gives opportunity to identify various types of small enterprises that exist in the immediate locality

iv.          Knowledge of small business management will assist the operator in the efficient coordination of such ventures.

v.            The challenge associated with small business is highlighted in the course of studying a similar enterprise.

vi.          The importance of proper record keeping in small business could prevent its untimely failures

vii.        The causes of failure of small business could be avoided through the study

viii.       The study will help in the prudent management of resource to achieve greater result

ix.          The knowledge of small business will make most operators become a better entrepreneur in the area of environmental challenges.

x.            The small business operator could become more dynamic and proactive in a volatile economic environment.