Page 217 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Entrepreneurship and Small Business Management

Notes (4) interference in decision-making by parent industry,
(5) non-adherence to quality and delivery schedules.Mismanagement.

14.2.3 Implementation Lacunae

In cases of newly established small business, it often faces a delay in the implementation of its
plans.

Example: A delay in the construction of the building within the scheduled time, would
lead to delay in the installation of plant and machinery and consequently the working capital
could not be used in time, etc.

If initial functions are delayed further, production and sales automatically get affected. Inability
to implement the contingency plan in time, would in turn, delay the release of further installments
of loans from the financial institutions. Side by side, costs also shoot up and the demand projections
become obsolete. It is obvious that in such cases of sequential delays in implementation of
plans, sickness is anticipated from the very initial stages of a project.

14.2.4 Poor Information System

Extremely poor information and reporting system is a normal feature in SSIs, where accounts,
cash flow planning, costing, budgetary control, breakdowns, sales revenues, financial statements,
statement of chargeable current assets, etc., are not properly reported on a day-to-day basis. At
the same time, there is an intensely low level of communication and information system. The
information department needs to be set up to strengthen small units.

14.2.5 Energy Problem

Shortage of power have done irreparable harm to SSIs in most of the states. Only a few years
ago, some 2000 SSIs having nearly 20,000 workers were denied power by the Haryana State
Electricity Board. HSEB was blamed for its general apathy towards the demand of SSIs and it
resulted in the closure of these units. Similarly, most of the engineering and plastic industries
have suffered greatly due to acute power shortage in UP, Orissa and MP. A better managed
power sector and energy policy is required to save the SSIs from falling sick due to this avoidable
lacuna.

14.2.6 Improper Technology

Obsolete technology and crude technology has been one of the major causes of sickness in small
units. Frequent breakdowns, inefficiency in machinery performances due to inadequate
maintenance, and delays in renovating or replacing the machinery is a normal feature in these
industries. The situation is made worse when, instead of using the funds for depreciation or
development rebates, these liquid funds are diverted towards new and unrelated activities. This
may help in the short run but will always make things difficult in the long run. “The last few
years have seen a growing infusion of modern technology and as the market has become more
competitive, the weak, the infirm and the static among the units find it difficult to survive.

Since a crucial element in the scenario has been technology, arrangements have to be made
immediately to ensure its widest possible spread. During the last decade, increase in capital has
been of order of 6.24 per cent, but the contribution of technology to modernization has been just
about one per cent. At times, technology means risk capital. More importantly, the state
government lacks the managerial personnel with the necessary know-how and dynamism to

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