PROBLEMS AND CHALLENGES FACED BY THE ENTREPRENEURS TOWARDS RURAL MICRO ENTERPRISES IN TAMILNADU

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1 PROBLEMS AND CHALLENGES FACED BY THE ENTREPRENEURS TOWARDS RURAL MICRO ENTERPRISES IN TAMILNADU Dr. S. PALANIVEL Assistant Professor, Department of Commerce, Government Arts College (Autonomous), Kumbakonam, Tamil Nadu ABSTRACT Rural micro entrepreneurship is now a day a major opportunity for the people who migrate from rural areas or semi - urban areas to urban areas. On the contrary it is also a fact that the majority of rural entrepreneurs are facing many problems due to not availability of primary amenities in rural areas of developing country like India. Lack of education, financial problems, insufficient technical and conceptual ability it is too difficult for the rural entrepreneurs to establish industries in the rural areas. This article highlights problems and challenges faced by the entrepreneurs towards rural micro enterprises. KEYWORDS :Entrepreneurs, Rural entrepreneurship, Small Industries Service Institute (SISI), and Challenges, Rural Micro Enterprises INTRODUCTION Every country depends to a great extent on industrialization for its progress. The small scale sector is national objectives like increasing production, providing more employment opportunities, minimizing relatively labour-intensive and has a short gestation period, plays a vital role in the process and achieving regional disparities and reducing inequalities in income distribution. In India, the emphasis on the small scale industry has been growing with the introduction of each five year plan. A large number of innovative fiscal incentives and concessions and other supporting facilities are being provided to small entrepreneurs for strengthening the economic base, leading thereby to more intensive industrialization. Such a provision includes subsidies credit on easy term, planned training programmes, supply to machinery on hire purchase facility and technical counseling through the Small Industries Service Institute (SISI). Page 165

2 Micro Enterprise A micro-enterprise (or microenterprise) is a type of small business, often unregistered, having five or fewer employees and requiring seed capital of not more than $35,000 and does not exceed Rs. 10 lakh. Micro entrepreneurs I would understand a micro-entrepreneur to be someone who starts a small business. Micro entrepreneurs are the owners of small businesses that have fewer than five employees and have startup costs of less than $35,000 and annual revenue of less than $100,000. Micro, Small and Medium Enterprise The Micro, Small and Medium Enterprise (MSME) sector is a significant contributor to the Indian Economy. Based on official figures from the Ministry of MSME, November 2008, this sector contributes 8 per cent of National Gross Domestic Product. It comprises 50 per cent of India s total manufactured exports, 45 per cent of India s total industrial employment and 95 per cent of all industrial units. The MSME sector in India has been changing over time, mostly through changes in government policy. The government of India passed the MSME Development Act of 2006 and brought about major changes in this sector. DETERMINANTS OF ENTREPRENEURSHIP The need to understand the determinants of entrepreneurship is as important as understanding its concept. The origins and determinants of entrepreneurship span a wide spectrum of theories and explanations (Brock and Evans, 1989; Carree, 1997; Carree, Van Stel, Thurik and Wennekers, 2002; Gavron, Cowling, Holtham and Westall, 1998; OECD, 1998a). However, it is generally accepted that policy measures can influence the level of entrepreneurship (Storey, 1994 and 1999; EZ, 1999). Research analyzing the determinants of the decision to start a new business has so far stressed the role of individual characteristics, access to capital and institutions. Social factors may also play a role in the decision to become an entrepreneur because, as shown by a growing literature, social interactions affect the payoffs from a variety of economic decisions. (Giannetti and Simonov, 2003).A widely accepted view is the following: while personal characteristics as well as social aspects clearly play some role, entrepreneurship and entrepreneurs can also be developed through conscious action.(petrin,1994) Development of entrepreneurs and of entrepreneurship can be stimulated through a set of supporting institutions and through deliberate innovative action which stimulates changes and fully supports capable individuals or groups. Therefore, policies and programs designed specifically for entrepreneurship promotion can greatly affect the supply of entrepreneurs and thus indirectly represent an important source of entrepreneurship. This view has important implications for entrepreneurship development in rural areas. If currently entrepreneurial activities in a given rural area are not thriving it does not mean that entrepreneurship is something inherently alien to rural areas. While this feeling could have some legacy due to the slower pace of changes occurring in rural areas compared to urban ones, proper action can make a lot of difference with respect to entrepreneurial behavior of people living in rural areas. CHALLENGES FACED BY RURAL ENTREPRENEURSHIP Family Challenges: Convincing to opt for business over job is easy is not an easy task for an individual. The first thing compared is Will you make more money in the business of your choice or as a successor of family business. This is where it becomes almost impossible to convince that you can generate more cash with your passion than doing what your Dad is doing. Social Challenges: Family challenges are always at the top because that is what matter the most but at times social challenges also are very important. Let us say you and your friend graduated at the same time. You opted for entrepreneurship and your friend opted for a job. He now has a flat, car and what not because he could easily get those with a bank loan but you still have nothing to show off and this is where the challenge comes. Page 166

3 Technological Challenges: Indian education system lags too much from the Job industry as a whole but then it lags even more when it comes to online entrepreneurship. What technology would be ideal and how to use that technology effectively? Financial Challenges: (Difficulty in borrowing fund): Financial challenges are a lot different in India especially for online entrepreneurs. When you are starting out as an entrepreneur you don t opt for venture funding but try to go to funding for small to medium business people. Many such non-technical business people don t understand the online business models as a whole and so getting an initial business funding from them becomes challenging. The other option you can think of is a loan but bank loan is not at all an option in India for new online entrepreneurs. Policy Challenges: Now and then there is lots of changes in the policies to change in the government. of TRIPS and TRIMS, problems of raising equity capital, of availing raw-materials, of obsolescence of indigenous technology Increased pollutions Ecological imbalanced, exploitation of small and poor countries and so on. CHALLENGES FOR RURAL ENTREPRENEURS Growth of Mall Culture Poor Assistance Power Failure Lack of Technical know how Capacity Utilization Infrastructure Sickness C. Opportunities for Rural Entrepreneurs Crashed Scheme for Rural Development Food for Work Program National Rural Employment Program Regional Rural Development Centers Entrepreneurship Development Institute of India Bank of Technology Rural Innovation Funding Social Rural Entrepreneurship REVIEW OF LITERATURE Venkata Ramana, Chivukula (2008) in his doctoral study, Success in Small and Medium Enterprises in India A Study of Entrepreneurial Attributes, explores the influence of entrepreneurial attributes on entrepreneurial success among new businesses in the SME category, and entrepreneurial propensity among individuals. The findings of the study supported significantly that tolerance for ambiguity and impact of personal selling on entrepreneurial success contribute to entrepreneurial success to a moderate and marginal level, respectively. The remaining two attributes, industry knowledge and street smarts were found to be insignificant with respect to their contribution to entrepreneurial success. Another important finding is that self gain influences entrepreneurial propensity in the positive direction. Apart from individual entrepreneurs, policy makers and extension agencies in the field of SMEs; others, who can benefit from the study are entrepreneurship educators, venture capitalists, and researchers in enhancing their effectiveness in the areas of assessment, training and behavioural research. Nagayya, D. and Tirumala Rao P. (2010), in their article, Development of Small and Medium Enterprises in Andhra Pradesh, present the small and medium enterprise scenario at the national level, review the Page 167

4 progress of the sector in Andhra Pradesh district-wise, present incentives for industry and for enterprises in the ICT (Information and Communication Technology) sector in the State for , and indicate directions for the future with reference to Andhra Pradesh from an all India perspective. District wise data presented are in terms of number of units, fixed investment, and employment for five regions - Hyderabad region, rest of Telangana, Rayalaseema, North Coastal Andhra, and South Coastal Andhra. Data presented for the State and regions is from 1995 to Nagayya, D. and T.V. Rao (2011) in their article, Enabling Small and Medium Enterprises (SMEs) to Target Globalisation, present cluster-specific and firm specific programmes being pursued by all India organisations with a wide network of institutions associated with various functions supporting the SME sector at different levels. The approaches covered include the following: (i) MSMED Act 2006, (ii) Policy of de-reservation and facilitating greater equity participation including foreign direct investment (FDI), (iii) Cluster development approach, (iv) National Manufacturing Competitiveness Programme (NMCP) with its ten components, and (v) Suggestions. In an increasingly globalised competitive scenario, SMEs have to upgrade their capabilities by innovation, and adoption of advanced technologies and modern management approaches. Radha Krishna Mathur, Secretary, Union Ministry of MSME (2012) in an interview to the Confederation of Indian Industry (CII) on an overview of the challenges facing the development of MSME sector, and initiatives taken by Government of India, as covered in the article, MSME sector nurtures Entrepreneurship, and meets Social Objectives, published in MSME Business deals with a wide variety of challenges of the MSME Sector, and initiatives of Government of India and other MSME associated institutions. The themes covered included the following. Highlights in respect of a few of them are presented here. Mathew, P.M. (2012), in his article, the Relevance of MSMEs, focuses on recent developments in the industrial sector, contribution of MSMEs, and prospects for growth during the Twelfth Plan period, along with directions in which MSMEs should move in future. The basic objective of the Twelfth Plan ( ) is faster, sustainable and more inclusive growth, as indicated in the Approach Paper of the Twelfth Plan released by the Planning Commission in Among the thrusts meant for such an inclusive growth, faster creation of jobs, especially in manufacturing, is given a special focus. OBJECTIVES OF THE STUDY The following are the important objectives of the study: To identify the important problems and prospects of rural micro enterprises. To reveal the association between the profile of the entrepreneurs and their organization with their level of perception on various problems. SAMPLING SELECTION In the present study, one micro entrepreneur was selected from the all district of Tamilnadu. Since the each district consists of 20 (32x20= 640) entrepreneurs, the total sample size comes to 640. Out of the 640 entrepreneurs only 623 micro entrepreneurs were fully responded the interview schedule. Hence, the applied sampling procedure is purposive sampling. It is followed because of the non- availability of population details on micro entrepreneurs in Tamilnadu. STATISTICAL TOOLS FOR ANALYSIS For analyzing the data collected during the investigation, the following statistical values were used T-test, F- test, One Way Analysis of Variance, Two groups Discriminant Analysis. Page 168

5 PROBLEMS FACED BY THE ENTREPRENURS TOWORDS RURAL MICRO ENTERPRISES (Testing of Hypothesis -t Test) The present study has made an attempt to analyze the problems of micro enterprises. Even though the dimensions of problems are too many, the present study is confined to financial, marketing, entrepreneurial, knowledge related, economic, social, psychological and general and business problems. Problem Encountered among the Entrepreneurs The problems in micro enterprises have been identified as financial, marketing, entrepreneurial, knowledge related, economic, social, psychological, general and business problems. The mean scores of the above said nine problems among the male and female respondents have been computed to show their level of perception on it. The t test has been applied to test the significant difference among the male and female respondents regarding the above said nine problems. The results are given in Table 1. Table: 1 Problem Encountered among the Entrepreneurs S. No. Mean Score Among t statistics Male Female 1 Financial problems Marketing problems * 3 Entrepreneurial problems * 4 Knowledge related * problems 5 Economic problems Social problems * 7 Psychological problems * 8 General problems * 9 Business problems Source: Computed from Primary Data * Significant at five per cent level. The highly viewed problems among the male respondents are financial and economic problems since their mean scores are and Among the female respondents, these are marketing and social problems, since their mean scores are and respectively. Regarding the perception on problems, the significant differences among male and female respondents have been identified in the case of marketing, entrepreneurial, knowledge-related, social, psychological and general problems, since their respective, t statistics are significant at five percent level. Association between profile of respondents and their Important The profile of the respondents may be associated with their perception on important problems. Hence, the present study has made an attempt to analyze these associations with the help of one way analysis of variance. The included profile variables are age, level of education, marital status, and nature of family, family size, number of earning members per family, personal income, family income, material possession and personality score. Initially, the association between the above said 10 profile variables. Page 169

6 Table: 2, Association between Profile of Respondents and their Perception Sl. F Statistics N Profile Variables Entrepreneu o. rial Financia l Problem s Marketin g Knowledge Related Economi c Problem s 1 Age * * * * 2 Level of education * * * * Marital status * * 4 Nature of family Family size * * * 6 Number of earning * * * * * members per family 7 Personal income * * * * * 8 Family income * * * * * 9 Maternal possession * * 10 Personality score * * * * * - Continuous Sl. No. F Statistics Profile Variables Social Psychological General Business 1 Age * * * Level of education * * Marital status * * 4 Nature of family * 5 Family size * * * 6 Number of earnings * * * * member per family 7 Personal income * * * * 8 Family income * * * * 9 Maternal possession * * Personality score * * * * Source: Computed from Primary Data * Significant at five per cent level. Table 2 shows the result of one way analysis of variance. Regarding the level of perception on financial problems, social problems, the significantly associating profile variables are age, level of education, number of earning members per family, personal income, family income, national possession and personality scores, whereas regarding the level of perception on marketing problems, psychological problems, these profile variables are age, level of education, family size, number of earning members per family, personal income, family income and personality score, since their respective F statistics are significant at five percent level. The significantly associating profile variables with the level of perception on business problems among the respondents are their marital status, nature of family, family size, number earning members per family, personal income, family income and personality score. Page 170

7 SUGGESTIONS AND RECOMMENDATIONS The following are the important suggestions and recommendations of the study: This team identifies the entrepreneurs and renders all assistance by co ordinate efforts to commission the small scale industrial units chosen by them. The motivation conducted yields the result of desire by changing the student population to an entrepreneur. The Government of Tamilnadu encourages entrepreneurship among micro entrepreneurs through EDP. The Government also extends incentives such as Margin money subsidy for First Generation Entrepreneurs at 10% on the project cost for RS 50,000 whichever is less. To encourage micro enterprises and for equitable distribution and growth in the District, the Government has to announce various concessions especially at the backward blocks. Avoidance of competition is linked to the income earning capacity of the beneficiaries. Generally people avoid competition due to fear of failure. In order to check their failure, they must be imparted necessary skill in the handling of the scheme, which in turn would generate confidence among them. Beneficiaries can be trained in small groups of four to five. In order to increase the entrepreneurship among the women, the following activities are to be motivated by the Government or Governmental organizations or non-governmental organizations. These are conducting skill oriented training for women; increasing education level for women; Increasing loan amount to self help groups. Most of the financial institutions and government agencies normally require the borrower to prepare detailed working paper together with the cash flow projections. Being a micro enterprise entrepreneur with a lack of knowledge in the financial and accounting aspect, is also another challenge faced. Due to lack of knowledge, most SMEs entrepreneurs are ignorant of proper accounting principles and values to reflect their financial position. CONCLUSION The present article concludes that there are many problems among the micro entrepreneurs. The important problems are financial, marketing, social and psychological problems. The degree of problems varied among the male and female entrepreneurs. The female entrepreneurs perception of the problems is higher among than the male entrepreneurs. But at the same time, the female respondents are also viewing that there are more opportunities to micro enterprises. The level of perception on problems is significantly associated with the profile of entrepreneurs especially personality trait. The highly indebted entrepreneurs highly perceive the problems. REFERENCES 1. Shamika Ravi Entrepreneurship Development in the Micro Small and Medium Enterprise Sector in India, Indian School of Business. 2009, pp: MSME Development Act 2006, Ministry of MSME, Government of India. 3. Thangamani.K and Uma Priya.V Impact of Micro Enterprises Undertaken by Women Beneficiaries of Loan Fund Scheme of Avinasilingam Trust, Journal of Extension Education, 12(1), 2006, pp: Kalbash, C. Women and Development, Vol.1, Discovery Publishing House, New Delhi, p Singh, S. Statistical Techniques in Agricultural Research, Oxford and IBH Publishing Co., New Delhi, 1980, pp Vasant Desai Entrepreneurial Development Principles, Programmes and Policies, Himalaya Publishing House, 1991, p Geetha, N. and Sundari, S Poraty Credit and Micro Enterprises A Gender Study, Kurushetra, 2000, 49(2), p Page 171

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