4 Micro Entrepreneurship
P.G. Padma Gowri
Introduction:
Micro Entrepreneurship means an activity of setting up a small enterprise or businesses. This activity takes all the financial risk in the hope of getting profit out of it. ‘Microenterprise’ is a small business that employs a less number of employees.
The microenterprise usually operates with fewer than 10 people and is started with a small amount of capital. Most microenterprises initiated for providing goods or services for their local areas.
Entrepreneurs are the person who starts a business or exercises initiative by organizing a venture to take benefit of an opportunity as a decision maker, decides what, how and how much of a goods or service will be produced. Microeconomic theory (which was earlier known as the theory of price) also started studying the theory of consumer behaviour.
Objectives:
- To understand various concepts of micro Economics.
- To know about various concepts of Micro Entrepreneurship
- To know Steps to start a small industry
Micro units:
In the coming years, hundreds of millions of new jobs need to be created to keep up with demographic changes and population growth in low and middle income countries (LMICs) just in order to keep unemployment and underemployment rates at their current levels – let alone to substantially improve the employment situation.
The World Development Report 2013 on ‘Jobs’ estimates that this will require an additional 600 million jobs by 2020 if the ratio of employment to working-age population is to be kept constant. So there is a need for creating large number of micro Entrepreneurs -A person who sets up or runs a small business.
Economics:
Business Economics is the application of economic theory and methodology to decision making problems faced by the business firms. the technique of economics and the analytical tools developed there in can be applied not only in business firms but in all institutions faced with optimisation in decision making either they are private business firms, public sector firms, non-profit institutions etc
Business Economics or managerial Economics closely connected with micro Economics (managerial Economics), macro Economics, theory of decision making, operations reach and statistics.
Economic theory is divided into two main branches of study: Microeconomics and Macroeconomics. Microeconomics is concerned with a detailed analysis of the behaviour of the individual economic units be it consumers producers.
A producer (generally called a firm) is a decision-making unit in production which can consist either a person are a group of persons (for example, a corporation). Similarly, a consumer is a decision making unit that also consist of a person or a group of persons (for example, a family or a household).
“Microeconomics is the study of particular firms, particular households, individual prices, wages incomes, individual industries, particular commodities.”’
The field of study in microeconomics include the following:
- Price determination
- Production function
- Distribution and
- Efficiency
Microeconomic theory (which was earlier known as the theory of price) also started studying the theory of consumer behaviour. Nowadays utility analysis, indifference curve analysis, theory of consumer surplus etc. are used extensively in the theory of price determination. It is important to remember the microeconomics is concerned with the relative prizes of goods and not the general price level. The study of the later comes under macroeconomics.
The issue of distribution of national income among different people and different groups of people of production is determined and why is it higher or lower as compared with the income of other people. Microeconomics studies these problems.
Enforcing efficiency in use factors of production is a crucial economic problem economist try to determine the conditions under which the production can be considered to be efficient. Pareto, Hicks, Kaldor and a number of other economists have done useful works in this field. Their efforts have given birth to new branch of microeconomics known as Welfare Economics.
Significance of Economics
Microeconomics plays a crucial role in explaining the behaviour of a free market economy. It helps in determining how equilibrium is determined in various product and factor market. An important branch of microeconomics – welfare economics – helps in defining and analysing the rules of economic efficiency.
Microeconomics is also useful in the study of public finance and international economics. Business economics has contributed immensely to improved decision-making in business through demand analysis and forecasting, cost analysis, analysis of different market structures etc.
All individuals are constantly involved in making choices and in allocating their scarce resources to satisfy their unlimited wants. Therefore economics touches their behaviour of each and every individual it enables to make rational choices.
It helps the consumer in maximizing his level of satisfaction and the producer in maximizing his profits. It helps in deciding what commodities are to be produced in the economy and in what quantities, whose wants are to be satisfied and whose left unsatisfied, how is a pattern of resource allocation in the present to be determined, how are resource allocated between the present and the future requirements, etc..
Small –scale Entrepreneurship can be classified into five main types as follows:
- Manufacturing industries:It is the industries which can produce complete product which is used for direct consumptions and also processing.
- Feeder industries: It is the industries specialised in certain type of products and services e.g., casting, electroplating
- Serving industries
- Ancillary to large industries
- Mining and quarrying
The twin processes of globalization and liberalization, combined with rapid advances in information and communication technologies, are creating new dynamics of production, enterprise development and international competition. Countries’ existing enterprise development strategies may no longer be effective in light of the changes in the environment.
Public-private sector dialogue is a platform for interaction to inform policy development. Given the many areas where there exists a mutual interest in cooperation between the two sectors, including skills, technological and infrastructural development, environmental protection and the promotion of inter-firm backward and forward linkages, the ability of the Government and the private sector to build an effective working relationship assumes particular importance. Such a working relationship may be a competitive advantage in its own right in a globalizing and liberalizing world economy.
In the Indian context, micro, small and medium enterprises are defined as based on the investment in plant and machinery (for manufacturing enterprise) and on equipments for enterprises providing or rendering services.
Two groups of factors: (i) internal factors, namely those originating in entrepreneur and enterprise characteristics (ii) external factors, namely those originating in networks and the business environment.
Studying dynamics of micro Entrepreneurs has led to the insight that there is no single factor, but rather a number of factors from internal as well as external categories that drive enterprise development and job creation.
Investment range of various business:
Importance of the Micro entrepreneurship sector :
The contribution of micro entrepreneurship sector was listed below:
In the manufacturing sectors micro entrepreneurship contribution was 87% of its total employment. In the service sectors micro entrepreneurship contribution was 13 % of its total employment. The micro entrepreneurship contributes 40% exports of the country
In India micro entrepreneurship sector employs about 42 million persons in over 13 million units throughout the country. There are more than 6000 products, ranging from traditional to high-tech items, which are being manufactured by the Indian MSME ( Ministry of Micro, Small and Medium Enterprises )s.
MSME -Ministry of Micro, Small & Medium Enterprises
This sector has emerged as a highly vibrant and dynamic sector of the Indian economy over the last six decades. MSMEs play an important role in providing large employment opportunities at comparatively lower capital cost than large industries but also help in industrialization of rural & backward areas. It also helps to reducing regional imbalances, assuring more equitable distribution of national income and wealth.
MSMEs are complementary to large industries as ancillary units and this sector contributes enormously to the socio-economic development of the country Institutional Support Structure for MSMEs in India At Federal Level
1. Ministry of MSMEs
2. Small Industries Development Organisation (SIDO)
3. National Small Industries Corporation (NSIC)
4. Khadi & Village Industries Commission (KVIC)
5. Coir Board
6. Entrepreneurship Development Institutions (EDIs) MSMEs
‘Micro enterprise’:
Microfinance seeks to help microenterprises by loaning small amounts of capital to these businesses. This allows poor individuals or families to start their own businesses, earn income and benefit their communities.
For example, a woman in a developing country may use microcredit to take out a loan and purchase a sewing machine. She could use the machine to establish a microenterprise that specializes in tailoring. The woman would increase her wealth and help her community by providing a service.
Microfinance
Microfinance is a type of banking service that is provided to unemployed or low-income individuals, or groups who otherwise have no other access to financial services. Ultimately, the goal of microfinance is to give low-income people an opportunity to become self-sufficient by providing a way to save money, borrow money and get insurance.
Micro financing provides options to customers with limited resources to promote participation in productive activities or to support a small business. While institution participating in the area of microfinance is most often associated with lending, some microfinance companies offer additional services, including bank accounts and insurance. Additionally, some institutions provide information in the areas of financial literacy, such as understanding interest rates and managing financial risks
Miscellaneous Manufacturing Industries
- Food Products
- Chemical & Chemical Products
- Basic Metal Industries
- Metal Products
- Electrical Machinery & Parts
- Rubber & Plastic Products
- Machinery & Parts except Electrical goods
Services & Products
- Beverages, Tobacco & Tobacco Products
- Repair Services
- Cotton Textiles
- Wool, Silk, Synthetic Fibre Textiles
- Jute, Hemp and Mesta Textiles
Other manufacturing Services
- Leather and leather goods
- Plastic and rubber goods
- Ready-made garments
- Hosiery goods, sheet metal goods
- Stationery items – soap and detergents
- Domestic utensils
- Toothpaste and toothpowder
- Safety matches etc.,
Village Industries and Tiny Sector:
“Village Industries” have been defined as artisans (irrespective of location) or small industrial activities (viz., manufacturing, processing/preservation and servicing) in village and small towns with a population not exceeding 50,000 peoples and involving utilisation of locally available natural resources and/or human skills (where individual credit requirements do not exceed Rs.25,000).
Tiny (Sector) Units includes industrial units located in villages and in towns where population does not exceed 50,000 peoples and in which the original investment in machinery and equipment does not exceed Rs.5 lakhs.
Microeconomics and Macroeconomics
- Economic theory is divided into two main branches of study – Microeconomics and Macroeconomics.
- Microeconomics deals with particular firms, particular households, individual prices, wages, incomes, individual industries and particular commodities.
- Macroeconomics is concerned with aggregates and thus deals with national income, aggregate spending, aggregate consumption aggregate investment, general price level and level of employment.
- While price theory is the core of microeconomics, income theory is the core of macroeconomics.
STEPS TO START A SMALL INDUSTRY:
If any person has a strong orientation towards entrepreneurship and growth, the most appropriate decision would be to start a small scale enterprise. Instead of playing the subservient role of an employee/ worker, he can enjoy the sovereign status of being the owner controlling the affairs of his enterprise.
An entrepreneur possessing the keen aptitude for setting up a small scale unit should formulate a business plan and take a number of steps to give shape to his business idea. He is to prepare project reports and obtain various approvals and sanctions.
An opportunity to provide a create product or service, which can generate surplus job opportunities. This is all the more true if one is a believer in the maxim, “Small is Beautiful”. However, ideas need to be filtered through a multi-layer sieve.
This Micro Entrepreneurship model is shown in the Questions: –
- Does the idea fire up your motivation?
- Is it a viable business proposition in your area?
- Does it match the needs of your clientele? – Check it out with basic market research
- Test it out at market place
- Consult with the experts
- Look out for competition in the field – Is it a sunrise industry?
- Your business opportunity
Project conceptualisation once the ideas are screened and a viable business opportunity emerges the project has to be conceptualised in all its dimensions. The 4 Ps of Project Conception is: – PRODUCT (Shape, Size and Nature) – PROCESS (Technology to produce the product) – PLACE (Location of Plant) – PARTNER (Technological of Financial Collaborator)
Conclusion:
Micro entrepreneurship is the attitude of stating a new business with the capacity and willingness to develop organize and manage a business venture along with any of its risks in order to make a profit. Micro business is one which operated out of a business owner’s residence and can be located in an established office within the residence.
A small office/home office is considered a microenterprise since it typically has fewer than ten employees and is categorized one notch below a “small business.” The cost of starting a micro-enterprise doesn’t need to be high. So any one can easily start the micro entrepreneurship .It is possible for keeping the ownership to one person, there’s the best possible chance that the person will have real control over it.
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