A STUDY ON FINANCIAL PROBLEMS AND PROSPECTS OF MICRO ENTREPRENEURS By Anuradha Nahar.G Under the guidance of Dr. C.K.Deepa M.Com., M.B.A., M.Phil., Ph.D. Head Department of PG & Research Commerce, SSS Jain College for Women, T.Nagar Ch - 17 Abstract: With the introduction of reform measures in India since 1991, the Govt. has withdrawn many protective policies for the Micro entrepreneurs and introduced promotional policies to increase competitiveness of the sector. Though globalization process has expanded the market facilitating supply of superior technology, this has also forced the MSMEs to face ruthless competition from domestic firms and the MNCs.The Small Scale Industries (SSI) has been renamed as Micro, Small and Medium Enterprises (MSMEs) with the introduction of MSMED Act, 2006. Hence this study is done to analyze the problems and prospects of micro entrepreneurs explore the opportunities enjoyed and the constraints faced by them. 1. INTRODUCTION: MONEY IS THE LIFE BLOOD OF A BUSINESS AND FINANCE IS THE NERVE CENTER. The goal of any finance function is to achieve three benefits: business support service, lowest costs and effective control of the environment. Micro enterprises mainly deal with initiating, promoting, and maintaining economic activities for the production and distribution of income and wealth. It implies recognition of values of individual liberty, innovation, risk taking and independence. In most developing countries, micro enterprises and small scale enterprises account for more than 90 percent in terms of employment. It has been already identified that micro entrepreneurship is a major contributing factor to economic growth. The person who carries out entrepreneurial activities
is an entrepreneur. The financing of MSME has received much attention in recent year and it is considered as an important topic for research in the field of economic and finance. It is mainly because of the role played by MSME in the country s economic development in the way of rural industrialization, creation of employment opportunities and entrepreneurial development., small and medium enterprises (MSME) constitute a major part of the industrial activity in both the developing and the developed economies of the world. Their contribution is substantial in terms of creation of productive employment, GDP growth and exports. The social contribution made by MSMEs in creating employment, infrastructure, and better standards of living is even more significant than its economic contribution. MSMEs in developing economies, mostly in the unorganized sectors, have been the source of livelihood for millions of people. As such, MSMEs have been accepted as the engine of economic growth and for promoting equitable development. The major advantage of the sector is its employment potential at low capital cost. In India, in recent years, the MSME sector has consistently registered higher growth compared to the overall industrial sector. It has been accepted as the engine of economic growth for promoting equitable development and a major contributor to a GNP after service sector in India. The role of MSME in the economic and social development of the country is well established. It contributes 8% to the country s GDP, 45% to the manufactured output and 40% to its exports. It provides employment to 60 million persons through 26 million enterprises. It is an indispensable source of creating job, entrepreneurial spirit and innovation in the country. 1.1 OBJECTIVES: To study the growth and workings of micro entrepreneurs in Chennai in T.nagar. To identify the various barriers faced by micro entrepreneurs in raising finance. To suggest the various remedies to cope up with the present financial problems.
1.2 STATISTICAL TOOLS: 1.2.1 DESCRIPTIVE STATISTICS: This sort of analysis is used in the phenomenon of study describes data on one variable, two or more than two variable. In this study Descriptive statistics are used to assess the Demographic and Socio economic factors of sample respondents. The following are the descriptive statistics which are used in the study. WEIGHTED AVERAGE Weighted average is a mean calculated by giving values in a data set more influence according to some attribute of the data. It is an average in which each quantity to be averaged is assigned a weight, and these weightings determine the relative importance of each quantity on the average. Weighted Average = n i=1 W ix i n The tool is used to identify the most influencing factors towards the attitude of the respondents. 2. REVIEW OF LITERATURE: Dr. J.Anuradha (2014) problems and prospects of micro, small and medium enterprise in India in the era of globalization, revealed the definitional aspect of MSME and explored the opportunities and constraints faced by them in the era of globalization. The study used statistical tools to compare the performances of MSME during pre & post liberalization period. It was found that the government has taken several policy initiatives but needs to ensure proper coordination and implementation of such schemes N.Aruna (2015) studied on problems faced by micro, small and medium enterprises, a special reference to small entrepreneurs in Visakhapatnam has made a study on how the entrepreneurs manages micro, small and medium enterprises and the various problems faced by them. The study focused on the issues relating to power, raw material, non-availability of
labour and financial constraints. It was observed that most of these entrepreneurs are not aware and do not understand how they can benefit out of them. Elena Mwai (2016) studied factors influencing adoption of ICT by small and medium enterprise in the hospitality industry in Kenya, revealed that lack of adoption of ICT is harming this industry as firms are losing out on the benefits brought about by use of ICT s and not being able to have competitive advantage, increasing operating cost and low productivity. It was found out that between industry market characteristic, customer s characteristics initial ICT installation and running costs, technology characteristics influences the adoption of ICT s by small & medium enterprises in the hospitality industry. Jayadatta.S (2017) studied the major challenges and problems of rural entrepreneurship in India. The study analyzed the role of rural entrepreneurs, effect of globalization on rural entrepreneurship and the problems of rural entrepreneurship. The study focused on major problems like marketing of products, transport facilities, required energy and financial amenities. The study concluded that the government should stress, emphasize more on integrated rural development programs, overcome with training and sustaining support system by providing all necessary assistance so that rural youth can be motivated to take up entrepreneurship as a carrier. 3. ANALYSIS AND INTERPRETATIONS: 3.1 FACTORS CONSIDERED FOR CHOOSING GOOD PRODUCTION SYSTEM: While doing production system some factors are considered by entrepreneurs. Factors like estimation of financial requirements, estimation of demand and supply, quality control system, Capacity utilization, inventory management system, maintenance procedure, minimization of wastages, availability of working capital, controlling mechanism applied were listed and the respondents ranked them according to their preferences. Weighted
average method has been employed to find out the most influencing factor of production system in this study. Table 3.1 Factors considered for choosing good production system by entrepreneurs S.No Factors Weighted Average Rank 1 Estimation Of Financial Requirements 4.43 1 2 Estimation Of Demand And Supply 3.81 6 3 Quality Control System 4.04 2 4 Capacitsy Utilisation 3.64 9 5 Inventory Management System 3.82 5 6 Maintainance Procedure 3.79 7 7 Minimization Of Wages 3.89 4 8 Availability Of Working Capital 3.93 3 9 Controlling Mechanism Applied 3.97 8 Source: Primary Data From the above table 3.1 has been inferred that the major factor that influences the entrepreneur in choosing good production system is Estimation of financial requirements followed by quality control system and availability of working capital. The less influencing factor is capacity utilization. 3.2 LEVEL OF SATISFACTION ON VARIOUS DEVELOPMENT PROGRAMMES The level of satisfaction from various development programmes were obtained through Liker s five point scale from the respondents. Weighted average method has been used to analyze the level of satisfaction of respondents in this study.
Table 3.2 Table showing the level of satisfaction of entrepreneurs on various development programmes available S.No Development Programmes Weighted Average Rank 1 Management Development Programmes 1.69 6 2 Seminars & Workshops 2.26 4 3 Entrepreneurship Development Programmes 2.22 5 4 Quality Programmes 2.43 2 5 Technical Consultancy 2.46 1 6 Skill Development Programmes 2.43 2 Source: Primary Data INFERENCE: From the above table 3.2, it has been inferred that the entrepreneurs have high level of satisfaction on Technical consultancy, followed by quality and skill development programmes. The entrepreneurs have low level of satisfaction on management development programmes. 4. FINDINGS SUGGESTIONS AND CONCLUSION: 4.1 FINDINGS: Majority of the respondents are satisfied with the technical consultancy, skill development and quality programmes It was found that majority of the respondents influenced on estimation of financial requirements, quality control system and availability of working capital on choosing good production system.
4.2 SUGGESTIONS: Since credit rated MSMEs are able to get easy access of loans, all micro enterprises should be credit rated in SMERA, which in turn will help the micro enterprises to get easy access of loans. Government should organize more awareness programmes about the latest technology, Government schemes and financial education to micro entrepreneurs. Banks should come forward to ease the procedures followed by granting loans to micro entrepreneurs. Micro entrepreneurs should also develop the attitude to attend and get beneficial from Government schemes and awareness programs organized by various Government agencies and ready to accept the latest technology. 4.3 CONCLUSION: In a nutshell, MSMEs have emerged as an engine of growth in Indian economy by way of their significant contribution to GDP and industrial production. The micro entrepreneurs need to improve its productivity and quality, reduce costs and innovate. To keep this growth engine on the right path and direction, it is necessary to put emphasis on formulation of friendly policies, conducive operating environment, improvement of proper infrastructure, arranging proper finance, efficient manager and arranging appropriate modern technology for micro entrepreneurs. Micro entrepreneurs are the back bone to the Indian economy. Since today s micro enterprises are tomorrow s small and medium scale enterprises and tomorrow s SMEs are future MNCs. Hence the government, non-government agencies and banks should come forward in extending their helping hands to uplift the micro entrepreneurs which in turn the development of the country will be attained
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