Page 218 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Unit 14: Sickness in Small Business Enterprises

man key positions in the units which are taken over. Even if the government can find such Notes
technically qualified and business-oriented persons, it should give them adequate freedom of
action. Yet, more of these measures will never work until the workforce comes to realize that it,
too, has a stake in keeping a unit going.” The Economic Times, New Delhi, August 25,1994.

14.2.7 Overtrading

The firms grow at a faster rate than they are able to finance from internally generated cash flow
and bank borrowings. The firm focuses only on sales, regardless of whether or not, the same is
profitable. Profit margins are reduced and unprofitable buyers are wooed just to increase the
(unprofitable) sales growth. There is also shortage of cash because the unit’s sale, stock levels
and general sales grows faster than their capital allows. A unit managed in such a fashion is
bound to become sick.

14.2.8 Psychological Melodrama

Interestingly, the entrepreneurs – promoters of sick units never accept the blame for the sickness
of their units. The blame is shifted on external factors like government, institutions, irregular
facilities or so on. Self-analysis is altogether missing. Lack of exercise, heavy smoking and
intoxication, lack of sleep, etc., causes decay in their personal efficiency which affects the health
of the unit adversely. At the same time, owner-managers of such sick units would not accept that
the unit is heading towards sickness at the incipient stage. As Goutanga P Chattopadhyay the
great psychologist, remarks in Industrial Sickness – A Psychodynamic Interpretation, “sometimes
the entrepreneur finds it profitable to have his unit suffer losses chronically. The entrepreneur
being psychologically sick is ruining the life of several employees and cheating many creditors
and financial institutions, just to satisfy his self-indulgence need. On the other hand, the society
will never blame itself for not being prepared to keep a check on irresponsibility, corruption of
many of its so-called stalwarts.”

Reluctance in reporting to factory bribery, unawareness of their managerial incompetencies,
non-realization of work-man ratio, overloaded labour surplus, non-cognizance of the need to
replace the old machinery and equipment, etc., are just some of the few unhealthy practices
contributing to psychological sickness of units.

Self Assessment

State whether the following statements are true or false:

6. The internal causes are beyond the control of the industry, and usually effect the industry
group as a whole.
7. A mismanaged unit is in fact a sick unit.

8. Efficient management makes the small-scale units highly prone to sickness.
9. The ancilliary industries often face various problem of marketing.
10. Obsolete technology and crude technology has been one of the major causes of sickness in
small units.
14.3 Symptoms and Cure of Sickness

During the conduct of the survey that was undertaken by the authors for detection of sickness in
small industries in over 50 industries, it was generally felt that, more important than searching
for the causes or rehabilitation packages of the industrial units after they are crisis struck, is to

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