ABSTRACT

 

This thesis examined and analyzed the problems of establishing a small business enterprise in Nigeria, the western part of Africa. The first part of the research was the theoretical parts where the topic introduced and information that are neglected by many small business owners. I further explained the importance of small busi-ness enterprises and their contribution to the economy of different countries, also the rigors they go through in realizing their goals. Small and medium sized enter-prises have shown their vitality in the west, they are recognized by policy makers as an important reservoir for growth. Additionally, I identified what the small business enterprises lack and what these businesses need from the government, the financial institutions and its immediate environment for it to survive.

 

In the Empirical study I examined the different forms of small business enterpris-es in the SME sector ranging from small shops to small manufacturing companies to examining the problems each is going through.

 

1    INTRODUCTION

 

There exist lots and lots of business ventures that are being engaged by individu-als, group of people or association, firms, industries and government with the main aim of maximizing profits. They range from small scale to medium and large scale. In the Nigerian economy, the small scale enterprises are the most common form of business. The aim of any economy (either industrialized or non industrialized) depends largely on how well organized the small industries are, for instance if we look at the standard of practice of small scale industries in econom-ically developed countries. The small scale enterprise in Nigeria seems too stag-nant, less adventurous than developed countries. Meanwhile in economically de-veloped countries small scale business are better organized and coordinated than in the developing countries because the governments appreciate their significance to the national economy.

 

Firstly, most of the small businesses are essentially one person‟s operation which makes such companies sole proprietorship business ventures. The profit of the business is reaped solely by the owner; this includes people or an individual who wants to invest in that type of business. It is also the easiest form of business ownership to organize because there is relatively small capital to use for its estab-lishment. The owner also has managerial freedom and this will help the owner employing his incentive to the maximum. Entrepreneurs are risk avoiders, not necessarily risk takers; they appear to be risk takers because they see market diffe-rently than the other forms of businesses. They can be referred to as risk elimina-tors because they seem to methodically eliminate all the factors that might prevent them from getting into a particular market (Thomas W. & Norman M. 2001).

2    THEORETICAL BACKGROUND

2.1      Definitions of Small and Medium-Sized Enterprise

Small businesses do not conform to any neat parameters because much of their activities depend on the industry in which they operate also the personalities and aspirations of those in charge of these businesses. These factors vary from manu-facturers to retailers, couples team, professional managers, high growth, high start-ups that are funded by venture capitalists to self-financed tradesmen and women for the purpose of making a living. (David.S and Nicholas. 2006: Pg 6).

 

EC refined its definition of Micro Small and Medium-Sized Enterprises to pro-mote competition and growth in the European Community. The financial ceiling for qualification has risen tremendously while the staff count still remains the same. A micro enterprise can still have up to 10 staff; a small enterprise has up to 50 staff while medium enterprise must have less than 250 staff. Furthermore, staff professional training, maternity or parental leave are not counted in staff ceilings in order to promote vocational training and a life-work balance according to en-terprise commissioner Erkki Liikanen;

 

„„Small and Medium Sized enterprises form the backbone of the European econ-omy. A proper definition of which enterprises are SMEs makes it easier to identi-fy their needs and to develop efficient policies to compensate for the specific problems linked to their small size. This is vital for the competitiveness of the enlarge European Union, its growth and employment‟‟

 

 

 

Small and medium sized enterprises have shown their importance in West Africa, they are recognized by policy makers as an important reservoir for growth. The African Development Bank regards them as representing over 90% of business, providing employment in Africa and representing GDP of approximately 50% in Africa. In spite of the consensus on the role of SMEs in these emerging market, Africa‟s SMEs still face lots of obstacles in their development and especially in accessing financial, technological and other forms or resources.