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Small scale business companies of different definitions depending on the environment cannot be one of the standard definition for small scale business. According to the federal ministry of industry act (FMI) (1979-2) small scale business consist of any business with total capital investment of two million naira (N2,000,000) with a number of employees not more than fifty (50).

The central banks of Nigeria (CBN) act January – march 1994 also define small scale business as any business enterprise with total or annual turn-over not exceeding five million naira or below hundred naira.
Committee for economic development of USA (CED) considered a small scale business when at least two of the following characteristics prevailed:

  1. Managers are often the owner.
  2. Capital is furnished by one individual owner or a small group
  3. Area of operation is local
  4. The business is small in comparison with larger competitors in the industry.

Putting the characteristics together, a small business can be self managed and if related to small in size and when considered as part of industries.
World bank defined small scale enterprise as any on going concern whose total capital investment does not exceed N300,000.
Government credit accordingly to plateau state ministry of industry define small scale business or industry as “any industry carrying on manufacturing products on serving activities with capital investment not exceeding N150,000 in machinery and equipment.
The companies and allied maters decree number one of 1990, section 376 (2) also defined small scale indsurties as industries whose annual turn over is not more than their two million (N2,000,000) or whose asset value (not worth) is not more than one million (N1,000000). Small scale enterprise have been defined in several ways, at the level of capital, a small scale business have been defined as those industries with total investment of between (N200,000) and (N2,000000) exclusive of land built, including working capital.
From the foregoing review on what people think should be the definition of a small scale enterprise, the researcher found it worth while to look small scale business dominates the overall business activities in Nigeria, individuals, groups, companies or cooperative can establish them but whatever the return of small business such business share the same characteristics as big one. It is interesting to note the most big business stated as small but with proper planning and effective management extended and know at the same time it will be risky to assure that small industries are exactly like big once after the difference in size.

According to the committee for economic development (ECD) of the united state, they have given a valuable list of characteristics of small and medium businesses as follows:

  1. Managers are often the owners
  2. Owners supply capital
  3. Areas of location is mainly local
  4. Small in size with the industry

Acooding to (CAMA) company and allied matter act of (1990), the characteristics attributed to small business on industries as follows:

  1. It is a private company united by shares.
  2. Amount o turn over is less than two million or such amount as may be fixed by the cooperative affairs commission.
  3. Its assets value is less than one million or such amount as may be fixed by the cooperative affairs commission.
  4. None of the members is government agent or nominee.
  5. None of its members is an alien.

At a small business from this angle, it may be useful to describe it in quantitative term as one which administrative and operation management lie in the hand of few or one person who are responsible for the major decision of the organization in almost exclusively in the hand of its owners.


The characteristics of small business varies according to different school of though “size” in all relative depending on he individuals point of view.
A company may be big when taken by itself and yet small when compared with other companies in the same industry since a company should therefore be categorized a small depending on the capital or the worth of such industry.
Various school of thoughts have their point a follows:

  1. Total investment cost
  2. Size of turn over
  3. Even operational environment that would be imaged by DERRI

According to Rosins (1972) a small scale enterprise is characterized by small market share. This is because the least majority of small firms do not have a large share of their market to enable them expand to any significant extent, the price or total qualitative goods and services sold.


Small scale industries have its contribution to the economy. According to Hamza R. Zayyad (1981, vol.6, No.3) titled industrial development in Nigeria that in a developing economy such as ours, the need to have a balance economy of heavy industries and small industries cannot be over emphasized the list number of preditional and modern small business in Nigeria suggested that the situation offers sustained opportunity of the sector.
The small business enterprise sector is not several contribution should be looked at in terms of goods and services as well as its role in supply required inputs to large scale enterprises and government effort.
Small scale business makes it possible for consumer to get their needed goods almost at their door step because they are almost cited many kilometers away from their customers. As a result of this, goods produced by small scale industries are likely to cost less due to the obvious reason of reduction in transport cost. By this, the increase in output of goods and services at stable prices and possible at lower prices satisfactory to the customers.


Several problems hinder the growth of small scale industries. These problems have been conveniently grouped by experts as financial, managerial, technical and commercial.
Financial problems should be expected given the limited capital of most of the entrepreneurs in the small and medium industries sector are in the ability to top maximum benefit from the resources of the organized financial sectors.
Other problems which are central in the further growth of that enterprise include the training  and educational limited ability to purchase expert advice, these contributes considerably to managerial problems, technical problems have been attributed to limited access to modern equipment and technology, which include maintenance and lack of association and lack of proper market survey and inadequate distribution channels for the scales of product and services.

According to Houseline M.B  (1992) in the role of small scale industry to its locality stated that some principle administrative practice and excessive transaction rate hinder small scale product activities in residential area in urban towns. He further stated that they are poled with problems of higher transport cost in procurement of inputs and distributor of it  goods and services to its numerous customers.

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