What are the essential features of small-scale industries?
Small-scale industries play a key role in the development of the country and provide many opportunities for the growth and development of people within the country. Though the number of employees working in the small-scale industries is less when compared to large-scale business organizations, they also play a vital role in the development of the firm. Many small-scale industries manufacture many different products which include food items, manufacturing small units for large organizations, export services, etc. Let us discuss the important features of small-scale industries;
- Increased Entrepreneurial roles: An easy entry and exit of many new entrepreneurs help to find their fortune in the field of business. If they possess enough entrepreneurial skills and knowledge in their respective field helps them to evolve as a successful entrepreneur. Entrepreneurial skills like risk-taking, innovative ideas, adapt to new situations, will make them more efficient and effective in running a successful business.
- Educational level: The small-scale owners though does not possess high educational background, knowledge of various techniques, ideas involved in their respective field enable them to be a successful player in the market.
- Use of Less Capital: The small-scale industry does not require more capital to be employed in business activities like the large-scale business. An optimum use of capital will ensure the smooth functioning of business and if there is an increased cash flow in the firm which helps the business to move to the next level of activities to be carried out in these firms.
- Employment generation: The small-scale industry provide employment opportunities for the people situated nearby locations and thereby helps in the growth and development of these local areas where the firm is located. This helps many people to have many job opportunities in and around the city.
- Use of Local resources: Many indigenous materials are unlocked through small-scale firms in which these small firms convert these resources into goods which can be supplied to many large firms.
- Decentralization: Many large-scale organizations are in a centralized way whereas these small firms follow a decentralization pattern in which decision regarding the business operations are made faster since it is a one-man show of the firm.
- Less Gestation period: The gestation period is relatively less for a smaller firm since the manufacturing process to finished goods production requires only a shorter period of time. The cash cycle also relatively requires less time for the small firms to ensure the smooth cash flow.
- Fewer imports and more exports: Since many small-scale industries use indigenous materials and local resources, there is an option for less import which reduces the taxes for the government. It also helps the government to generate more revenue through the increased amount of export of various products.
- Profit-oriented: Most of the small firms concentrate on an increased profit margin for the smooth functioning of the business activities.