THE FULL DOSE OF SMALL SCALE BUSINESS MANAGEMENT EXAM QUESTIONS

Below are questions that you should expect: I will not answer them all but I will give you a clue: Also, some answers are already in the blog, so search/explore the blog.

Question:

What are the motives and requirement for starting a small business?

Answer:

Motives and personal requirement for starting a small business are:

i.             The need for profits:

ii.           Love for industrial independence:

iii.         The need for recognition:

iv.          The desire to be contented:

v.            A sense of family obligation:

vi.          Natural love for particular business activities:

If you are asked to explain the above, please, just try and do little explanation on them. For example, The need for profits making is because people want to make profit, that is why they are motivated to go into Small Scale Business.

Question:

Differentiate between Economic Failure and financial failure

Answer:

Economic failure occurs when the business collapses as a result of economic activates, when financial failure occurs when a business suffers from bankruptcy or technical insolvency.  

Question:

List and explain various objectives of a small business

Answer:

Objectives is a statement of attainable short-term achievement.  Small business objectives are the results you hope to achieve and maintain as you run and run your business.

Importance of Objectives

i.             Motivation

ii.           Targets

iii.         Performance Measurement

iv.          Guide to management decision

v.            Committing the organization to its environment

The following are the main objectives of a small business owner:

1.    Profitability

2.    Productivity:

3.    Customer Service:

4.    Employee Retention:

5.    Growth:

6.    Core Value etc:

Please, remember to explain if you are asked.

Question:

Explain the sources of finance to a small scale business in Nigeria.

Answer:

The major sources of capital that are available to small business firms are INTERNAL 

FUNDS, BANKS AND OTHER PRIVATE SOURCES OF CAPITAL.

Internal funds:- These are monies that have been kept aside by the business owners like personal savings. We have also, Trade Credit, money from family and friends. Equity Source is the contribution from the owner.

BANK: Overdraft, short term loan, Collateral Loans: Etc.

Other private sources of Capital are:

1.    Finance Companies:

2.    Factors: Accounts, receivable factoring:

3.    Insurance companies.

Question:

To plan a company’s financial needs, a small business manager must begin by answering four main questions. Explain the four questions:

Answer:

To plan a company’s financial needs, a small business manager must begin by answering four main questions as thus:

1.    What do I need the money for?

2.    How much Do I need?

3.    How and when will I repay the money?

4.    Can I afford the cost of the money

Here is the hint on the explanation of the above: What do you need the money for as a business man or woman – explain this. It is only you that know what you need the money for i.e. equipment that you want to buy, land, hiring of office space etc. that is the hint on that.  How much do  I need? Here you need to calculate to know the things you must buy and how much to run the business (daily) ok.

Question:

List and explain various types of capital available to a small business.

Answer:  

Types of Capital

It is obvious that every business, irrespective of its size, need capital to be able to start and maintain its operations. There are four basic types of capital:

1.    Short term loans:-Trade credit loan, short term bank loans.

2.    Intermediate term loans: - 1-10 years

3.    Long term loans: - 10 or more years

4.    Equity Capital: - from the owners

Other Exam Questions are below:

1.    Dine planning and explain it principles

2.    Explain organizing and its principles

3.    Discuss the steps involved in recruiting

4.    Define directing and explain its various functions.

5.    Fully discuss the following management functions: and coordinating, controlling and budgeting.

This other exam questions are so long. I mean their answers, so, when you see them in the exam, “JUMP AM PASS”

Below are question that you should expect: I will not answer them all but I will give you a clue: Also, some answers are already in the blog.

Question:

What are the characteristic of a Small Business?

Answer:

Here are the characteristic, but you will explain – will only outline them: 1. Simple technology 2. They are not capital intensive 3. It is easy to set them up 4. They require limited financial commitment: You can remember the rest.

Question:

List and explain the contributions of small business to the economic development of Nigeria. One guy has asked me this question and here is the answer:

Answer:

Unique Advantages and contributions of small business: 1. They originate new products and services 2. They generate employment opportunities: 3. They enhance local contents:

Other contributions are; Revenue Generation, Innovation, Industrialization, Allocation of Resources, Poverty Reduction

Question:

Critically discuss the challenges facing small business;

Answer:

Small businesses are beset with numerous problems in developing counties.  These problems can be categorized into managerial, technical, financial and commercial.

Question:

Differentiate Between A Vision and a Mission

Answer:

Vision points at a direction where an organization should go, while mission explains how.  Vision is about the future, while mission is about the present (here and now).

Question:

Critically compare and contrast small and big business

Answer:

Comparison of small and big business:

In terms of number of employees:  90% of small business in Nigeria have less than 20 employees:

In terms of sales: Large Business Account for most of the sales while small business account for very little.

In terms of Origin:  Almost all large business started as small business

Question:

Define and explain the concept small business management:

Answer:  

The issue of proper definition of small scale business is yet to be resolved due to variation from country to country, from industry to industry and among researchers in the field.

Empirical evident has revealed a general tendency for small-scale enterprises to be relatively more important in the Less Developed Countries (LDCs) than in the developed industrial economies.  While in the developed countries large enterprise tend to predominate because of strong economies large enterprises tend to predominate because of strong economies of scale, in many developing counties, there is very large number of small scale enterprises as a result of heir flexibility.

The American Committee for Economic development defines a small business as one that has at least two of these features:

(a) Management is independent

(b) Capital is supplied and ownership held by an individual or a few individuals;

(c)  The area of operations is primarily local; and

(d) The firm is small in comparison with competitors.

The definition is acceptable in the Nigerian context, but however, because of the dynamic nature of small business the formal definition is very flexible.

In the United Kingdom, the Economist Advisory classified small business according to industries in terms of assets and turnover ranging between £20,000 to £25,000 in net assets and £50,000 to £500,000 in business turnover.

According to Small Business Association in the United States of America (USA), any business which has less than 250 employees and whose annual turnover is not more than $10 million is small scale. 

In the Nigerian context, small business according to the Third National Development Plan Vol. 1.P.353 is classified thus:

i.             Small scale industries – are manufacturing establishment employing less than 12 people or whose investment machinery and equipment do not exceed six hundred thousand (600,000).

ii.           In the credit guidelines of the Central Bank of Nigeria (CBN), small businesses are classified as those businesses with an annual turnover of less than half a million Naira (N500,000).

QUESTION:

Differentiate Between A Vision and a Mission

Answer:

Vision points at a direction where an organization should go, while mission explains how.  Vision is about the future, while mission is about the present (here and now).

Question:

Critically compare and contrast small and big business

Answer:

Comparison of small and big business:

In terms of number of employees:  90% of small business in Nigeria have less than 20 employees:

In terms of sales: Large Business Account for most of the sales while small business account for very little.

In terms of Origin:  Almost all large business started as small business

Question:

Define and explain the concept small business management:

Answer:  

The issue of proper definition of small scale business is yet to be resolved due to variation from country to country, from industry to industry and among researchers in the field.

Empirical evident has revealed a general tendency for small-scale enterprises to be relatively more important in the Less Developed Countries (LDCs) than in the developed industrial economies.  While in the developed countries large enterprise tend to predominate because of strong economies large enterprises tend to predominate because of strong economies of scale, in many developing counties, there is very large number of small scale enterprises as a result of heir flexibility.

The American Committee for Economic development defines a small business as one that has at least two of these features:

(e) Management is independent

(f)   Capital is supplied and ownership held by an individual or a few individuals;

(g)  The area of operations is primarily local; and

(h) The firm is small in comparison with competitors.

The definition is acceptable in the Nigerian context, but however, because of the dynamic nature of small business the formal definition is very flexible.

In the United Kingdom, the Economist Advisory classified small business according to industries in terms of assets and turnover ranging between £20,000 to £25,000 in net assets and £50,000 to £500,000 in business turnover.

According to Small Business Association in the United States of America (USA), any business which has less than 250 employees and whose annual turnover is not more than $10 million is small scale. 

In the Nigerian context, small business according to the Third National Development Plan Vol. 1.P.353 is classified thus:

iii.         Small scale industries – are manufacturing establishment employing less than 12 people or whose investment machinery and equipment do not exceed six hundred thousand (600,000).

iv.          In the credit guidelines of the Central Bank of Nigeria (CBN), small businesses are classified as those businesses with an annual turnover of less than half a million Naira (N500,000).

REFERENCE:

M.S Isyaka and Aina Olalekan Kazeem: Small Business Management (Concept and Practice) Published and printed by: Chartered Graphics Press, Abuja, Nigeria.

Note: I will be posting this exam questions bit by bit:  But try and read them very well.