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Problems Faced By Small Scale Industries

What Are the Problems Faced By Small Scale Industries

There are many problems faced by the small scale industries. These small scale industries have an important role to play in the economic development of a country. These industries have to ability to boost growth, can create employment possibilities and also address imbalances. But due to a number of obstacles small scale industries have problems with fulfilling their duties. 

Read on to find out the various problems faced by this industry.

1. Finance:

One of the biggest issues is finance when it comes to small scale industries. There are not sufficient funds without which no organization can efficiently operate. There is always a lack of capital and there are insufficient credit facility available. Small scale industries don’t have any resources of their own and there is a lack of organizations willing to them either. This forces them to take out loans from lending agencies at a very high rate of interest which puts them in a tricky position.

2. Marketing:

Marketing is a challenging aspect for small scale industries. Information about the market, level of competition, likes and dislikes of the consumers, preferences, popular demands are all not accessible to them. As a result their product is unable to update in order to meet market demands.

3. Technology:

Small businesses don’t have access to the new and recent technologies. They do not have the necessary funds to repair or update their equipment. This is why they struggle with low productivity and lower quality of products and also higher cost due to outdated technology. This makes it impossible to compete with other competitors who use modern equipment.

4. Infrastructure:

Infrastructure as plays a vital role in the success of small scale industries. Small scale industries are usually located in area that are less developed , there is less access to power, transportation, lack of communication devices, and other such facilities. Entrepreneurs sometimes struggle to obtain power connections and when they do have connection lines there are frequent power outages. Improper transportation and communication network makes it all the more challenging to operate a successfully profitable business

5. Raw Material:

Small businesses typically use local resources in order to meet their raw material needs. There can be numerous issues like lack of sufficient supply, subpar quality, and delivery not being regular. All these challenges have to be faced. Which is why the functioning of these businesses is negatively impacted. When large scale companies monopolize raw materials small scale industries have to pay exorbitant costs on the raw material. This increases the production cost making it very difficult for them to operate profitably

6. Manpower

Finding unskilled labors may not be a trouble for rural under developed area but what they do lack is access to skilled labor. The company might not find skilled workers who are willing to work for them and if they are the company might not be able to afford to pay their salaries. Employee turnover, discipline issues, strikers are other manpower related issues that they have to face. These labor issues have a negative influence on the profitability of these business it also

lowers their productivity, degrading their quality and increase their overhead expenditures

7. Management and Planning

There is a significant lack in quality management and a system of planning. Inexperienced work leads to low quality of work and discipline. Also due to the lack of funds they cannot hire an expert consultant to help they put a system in place.

These are some of the important problems faced by the small scale industry


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