Role Of Capital In The Growth Of Small Scale Business In Nigeria (A Case Study Of ABC Transport Plc)

Project and Seminar Topics with material for Banking and Finance

Project and Seminar Topics with material for Banking and Finance


Abstract


This research work examined the role of capital in the growth of small scale business in Nigeria with reference to ABC transport PLC . The major objective of the study is to identify the prospect of financing small scale business in Nigeria and to know whether effective financing of small scale enterprises can enhance business growth. Fire research questions were formulated for the study.

The literature review describes small scale business, identifies its problems and revealed the importance of capital in the growth of small scale business. Relevant data were collected from both primary and secondary sources. Instrument of data collection is made of structured questionnaire and research questions, which formed the source of primary data, while materials from various published articles, textbooks, journals and newspaper formed the secondary data. The data collected were analyzed using simple tables and percentage analysis.

From the analysis for the data collected by the Researcher, it was discovered that high interest and mismanagement of capital and unreliable source of capital were the major problem militating against small scale business. Based on the findings, some recommendations were made; one of which is that small business owners should learn about capital management so as to avoid mismanagement of capital. The study concluded that with good management of capital and proper availability of funds less problems will be encountered in the running of a business.


Table Of Contents


Preliminary Page(s)

  • Title page
  • Approval page
  • Dedication
  • Acknowledgement
  • Abstract
  • Table of content

Chapter One

1.0 Introduction

  • 1.1 Background of the study
  • 1.2 Statement of the problem
  • 1.3 Objectives of the study
  • 1.4 Research question
  • 1.5 Significance of the stud
  • 1.6 Scope of the study
  • 1.7 Limitations of the study
  • 1.8 Definition of terms

Chapter Two

2.0 Literature Review

  • 2.1 Introduction
  • 2.2 Nature of capital
  • 2.3 Types and sources of capital
  • 2.4 Nature and definition of small scale business
  • 2.5 Characteristics of small scale business
  • 2.6 Historical background of the case study
  • 2.7 Importance of capital in the growth of small scale business.
  • 2.8 Capital and growth in ABC transport PLC.
  • 2.9 Government and small business enterprises
  • 2.10 Problems of obtaining capital by small scale business. A case study of ABC transport.

Chapter Three

3.0 Research Methodology

  • 3.1 Introduction
  • 3.2 Research design
  • 3.3 Sources of data collection
  • 3.4 Population and sample size
  • 3.5 Sample technique
  • 3.6 Validity and reliability of measuring instrument
  • 3.7 Method of data analysis

Chapter Four

4.0 Presentation and Analysis of Data

  • 4.1 Introduction
  • 4.2 Presentation, Analysis and Interpretation of data

Chapter Five

5.0 Summary, Conclusion and Recommendations

  • 5.1 Introduction
  • 5.2 Summary of Findings
  • 5.3 Conclusion
  • 5.4 Recommendations
  • Bibliography
  • Appendix

Chapter One


Introduction

1.1 Background Of The Study

The concept of self reliance has occupied a place in the literature of economic development over the years in Nigeria and other countries of the world. The establishment of small bsuienss is profitable and can lead to industrialization if effectively and efficiently managed. This depend on how one has perceived, planned for and operated the small scale business that will make for existence, survival and possible growth of the business.

However, the capital resources needed for the commencement and running of a business is at the heart of all enterprises and until an entrepreneur identifies the ways of raising funds for financing the new venture, his ideas or plans may best be described as wishful thinking or a dream. The most important factor that could make or break a business is finance and businesses are evaluated in terms of their financial worth. Both big and small enterprises need adequate capital not only to get started, but also to grow, expand and meet competition and changing market or consumer needs and tastes.

Therefore, it is pertinent to say that the role of capital in the growth and success of small scale business is vital as funds are necessary for the smooth running of any business firm. The advantages claimed for small scale enterprises are various including the encouragement of entrepreneurship, the greater likelihood that small scale enterprises will utilize labour intensive technologies and thus have an immediate impact on employment generation; they can usually be established rapidly and put into operation to produce quick returns. The growth and development of small scale enterprises is seen as accelerating the achievement of wider economic and socio economic objectives, including poverty alleviation.

for the small industrial credit scheme, fund for small scale industries has remained largely inadequate and of little effect.


1.2 Statement of the problem

The small scale industry is acknowledged in have huge potential for employment generation and wealth creaton in any economy. However, the sector is faced with problems of inadequate capital, mismanagement of funds, limited access to capital, lack of managerial skills and inadequate modern machinery equipment.

Small scale businesses are not able to take business ventures with high yielding potentials because of the numerous problems in obtaining adequate fund. This financial problems hampers all important objective of the business.
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

The objective of this study is as follows :

  1. To identify the prospects of financing small scale business in Nigeria.
  2. To identify and consequently analyze the most effective and efficient way through which small scale enterprise could be financed and promoted.
  3. To examine the financial support given to small scale enterprise in Nigeria.
  4. To know whether effective financing of small scale enterprises can enhance business growth.

1.4 Research Questions

  1. How does interest rate affect small scale business owners access to capital?
  2. What is the effect of adequate capital on the operation of small business?
  3. What are the various forms of capital available to small business owners and the related cost?
  4. How does effective accounting system influence capital management in small business?
  5. What is the trend of the financial support given to small scale enterprise in Nigeria?

1.5 Significance Of The Study

The relevance of this study lies basically on its contribution to knowledge and its benefits to individuals and organizations.

This study will be academically important to many students who may want to carryout further research on the role of capital in the growth of small scale business in Nigeria and will also serve as a guide to the government for advancing better policies towards improving and encouraging small scale business in the state and nation at large.


1.6 Scope Of The Study

The coverage of this study is limited to small scale business in Nigeria with reference to ABC transport PLC and particular attention is paid to major problems of small scale enterprise in Nigeria.

This study focused attention on the essential problems encountered by small scale business with regards to capital.


1.7 Limitation Of The Study

The researcher encountered a few constraints during the process of the research.

One for the constraints of the study was the reluctance of some respondents to volunteer information because they did not believe the assurance given to them that the data collected were purely for academic purpose.

In addition, the timing of the study was another major consideration, with too many things to meet up within a short space of time.

Another limitation that applied to this study is the fact that the study focuses on small scale business alone and the sample of the study is restricted to owerri, Imo state.

However, it is unlikely that these constraints would adversely affect the validity of the findings.


1.8 Definition Of Terms

Entrepreneur:

The person who identifies and evaluates business opportunities in an environment and mobilizes resources to the advantage of the enterprise with the aim of making profit.

Small Scale Business:

A business in which the mangers are the owners, area of operation mainly local, owners supply capital and small in size within the industry.

Grant:

It is a financial assistance by financial institution or government which is not repayable.

Capital:

This is the financial resources available for the commencement and running of a business.

Finance:

This is the provision made for money.

Profit:

Money gained in business which is the difference between amount earned and amount spent.

Efficient:

Making good and careful use of resources in order to produce a satisfactory result

Enterprise:

A business or company involving entrepreneurial activity which is accompanied by initiative and resourcefulness.

Growth:

This refers to the process of developing involving an increase in size, number or value.

Funds:

This refers to the supply and sum of money

Credit:

This is a loan of money.

Wealth:

This is a stock of goods existing at a given time that yield utility , have a money value, are limited in supply and ownership of which is transferable from one person to another.

Management:

It refers to the competence of the entrepreneurs as to their expertise, strategies, vision, and experience as well as other relevant qualities.

Interest Rate:

This is the rate at which banks give out loans.

Retained earning:

This is the profit ploughed back into a business for expansion.


Chapter Five


5.0. Summary, Conclusion And Recommendations

5.1 Introduction

Government are often seen making so many efforts, in developing the small scale enterprises. This enormous effort stem from the fact that the activities of the small enterprises contribute enormously to the employment generation and manpower development of the country.

It is important to note that many developing countries, for example Nigeria depends very much on small scale enterprises for their economic growth, employment generation and technological development.
Generally speaking, however, the performance of this sector have not measure up to expectations.


5.2. Summary Of Findings

Results from the empirical analysis provide strong evidence indicating that adequate capital and proper financing of a firm are the major considerations for the growth of a business .

From the analysis, it can be seen that inadequate capital significantly affects the financing of small scale business such that funds are necessary in order for a firm to complete succesfuly in the market as a business owner need to adequately train its workers, develop appropriate strategies , products, sponsor marketing activities and pay workers well in order to grow effectively.

The difficult encountered by small scale firms which occasionally lead to the death of their business are numerous. Majorly, financial constraints and management ineptitutde are common causes of small business failure.
Finally, the analysis showed that small business, generate employment and contribute to economic growth of a country as they employ a greater percentage of the working population in any country.


5.3 Conclusion

Having identified the various problems of small scale business and the role of capital, one can strongly conclude that with proper management of capital and reliable source of funding, less problems will be encountered in the running of the firm.

From experience , it has been seen and known that small scale business have contributed to the attainment of economic development, income redistribution, promotion of indigenous entrepreneurship and technology as well as production of intermediate goods to strengthen inter and intra industrial linkages in countries that fully tapped its potential. However, despite their significance to economic growth and development, they are faced with the ultimate problem of limited access to capital as they find it difficult to obtain funds from financial institutions due to the formalities involved.


5.4 Recommendations

On the basic of the findings made by the researcher, the following recommendations were made:

  1. Financial institution should make loans available to small scale business entrepreneurs at affordable rates so as to enhance the growth of the economy.
  2. Government should provide incentives such as grants, lowering of tax rates etc to small scale business entrepreneurs, so as to assist them to overcome funding problems which they encounter in running their firms.
  3. Government should provide enabling environment for small business operations.
  4. Small business entrepreneurs should carry out more research before venturing into business.
  5. Government should ensure full implementation of its policies on SMES programmes through monitoring, continuous appraisal and upgrading.
  6. Government should also ensure that there is constant value for money audit on all its SMES programmes.

Role Of Capital In The Growth Of Small Scale Business In Nigeria (A Case Study Of ABC Transport Plc)


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