1.0 Introduction
1.1 General Over View Of The Study
The establishment of small business is profitable and can lead to industrialization if effectively and efficiently managed. This depends on how one has perceive, planned for an operated the small scale business that will make for existence survival and possible growth of the businesses.
In third world countries including Nigeria and indeed in Owerri Imo state, economy and industrial development depends not only on large industries but also on small business that are found in every nook and cranny of the state. They role of capital in the growth and success of small business is vital.
Small business have been part and parcel of the daily activities of this country, therefore, it is pertinent to say that a greater percentage of the population engage in small scale businesses ranging from hawking to the establishment of manufacturing or servicing firms.
It is almost a culture of the people and it signifies the importance of small scale business in the economic socio-cultural and political life of Owerri in Imo state general.
For the past years, both civilians and military administrations have stressed and emphasized on the need and role of capital in the growth of growth of small businesses in Nigeria economy. As far back as 1974 till date, the importance of capital has been emphasized by small scale industries credit scheme (ssics) and Nigeria Bank for commerce and industry (NBCI) in the country and state in particular.
The federal government on the other hand engaged small business by advancing policies necessary to enhance effective operation of small scale businesses, schemes like National economic Reconstruction fund, people’s bank o Nigeria etc were all in attempt to solve the problems of lack of capital and mismanagement of capital.
Small businesses have been associated with problems of inadequate capital, mismanagement of capital, lack of managerial skills and inadequate of modern machinery/equipment among others.
1.2 Statement Of Problem
When the establishment of second tier foreign exchange market (SFEM), business found it very difficulty to obtain capital to import machinery and equipment to boost their product efficiency.
The elements of an organization environment include, Technology, culture political and economic under which is categorized.
However, despite government efforts to support small business operations, the problems of lack and inadequate capital persist.
Mismanagement of capital and unreliable source of capital persist, Poor management is also a problem because many business operators are lacking the basic principle of management, which will help them organize plan and control their businesses. They get frustrated when they come about some management problems which when not handled carefully may sink their businesses.
Looking at the aspect of inadequate capital, good business has its strength from money. In the course of running a business, one falls short of money and the result is winding up and of course when a business man or woman does not have cash, he or she may not be able to operate successfully
Most business operators lack the knowledge of operational methods, procedures and polices. if the operator does not possess this, the business is heading to a doom. Now, poor business location is also a problem. Locating 'and setting of businesses matters a lot, when a business is located in an interior area where customers are not easily reached, the products and services may not hit the desired sales and revenue and which may therefore lack good capital for expansion and growth purposes.
Many of the organisation in our rural areas are not passable during rainy season because of bad roads and small business around that area may get their desired patronage to keep them going .competition affects small business because they can hardly survive in an environment where competition is keen, many of this business hardly survive in an area where entrepreneurs who are financially sound are there to expand and at that they set their business at lower prices
Against this background this study focuses on the role of capital in the growth of small business in Nigeria.
1.3 Objective Of The Study
It has been opined by professor (FUBARA) that objective of any particular issue assort.
The objective of this work is as follows:
- To identify the prospects of financing small business in Owerri Imo state.
- To identify the problems that militates against the source of capital in Owerri, Imo state as well as the mismanagement of capital,lack of managerial skill and inadequate of modern equipment among others
- To know whether effective financing of small scale can enhance Business growth which depends on how one has perceive, planned and also operated the small business that will make for existence, survival and possible growth of the business.
- To know why government regulate the increase for borrowing which can frustrate the small business operators so that he or she may not find it convenient to operate successfully.
- To know why operators of business make wrong decision which leads to failure in business.
1.4 Research Questions
The following research questions have been drawn to guide this research work.
- Does the effect of adequate capital on the operation of small business yield profit?
- How does interest rate affect small business owners access to capital?
- How can various forms of capital be available to small business owners and the?
- How does effective accounting system influence capital management in small business?
- How can small business owners recover debts inorder not to run short of money which normally hinders their progress?
- have there been an increase in the level of fraudulent activities in the small scale business?
1.5 Significance Of Study
The relevant of this research will not be limited as an academic prerequisite for the researcher to obtain her Higher National Diploma certificate, prospective small investors, the students and the selected business within Owerri city to know the role of capital in the growth of small business in Nigeria.
- To the students, it will be academically important to many students who may want to carryout further research on the role of capital in the growth of small business in Nigeria.
- To the government, it will serve as a guide for advancing better polices towards improving and encouraging small scale business in the state and nation at large.
1.6 Scope Of Study
The coverage of this study is limited to small scale manufacturing firm in Owerri, Imo state, particular attention is paid to major problems of small business in Owerri metropolis.
1.7 Limitations Of The Study
Based on the topic of the study, the following are included. Therefore the limitations of study refers to the problem constraints that militates against the research work and the involve.
- Time: Being that the researcher carried the research work within a short period of time along side with other academic work e.g. lectures, assignment, and tests e.t.c
- Poor response from the respondent: Some of the selected manufacturing firms in Owerri imo state are not quick giving out information required for this research. They do not drive qualitative responses, this poses as constraints to the research.
- The researcher encountered harsh weather like (rainy season) which prevented movement in most cases
- The researcher encountered insufficient fund to carryout the research as expected
1.8 Definition Of Terms
According to the central bank of Nigeria, small scale enterprises (for commercial and merchant banks loan) are one whose capital investment (including land and working capital) does not exceed N5m or whose turnover does not exceed N25m annually
Capital
Capital could be seen as a wealth set aside for further production or money.
Profit
Money gained in business, especially difference between amounts earned and the amount spent.
Growth
The process of growing developing etc.
Objectives
A thing aimed at or wished for; a purpose, sometimes having existence outside the mind.
