This research study was designed to analyze risk management
practices amongst small scale enterprise. On the course of this study, the
researcher centered his analysis on some selected manufacturing businesses,
servicing businesses and trading business to form a cross section of the small
business in Nigeria. The work is aimed at examining the attitude of small scale
business owners to risk and risk management. The researcher also intends to determine
and examine the nature different types of risk associated with small scale
This work also aims at analyzing Gender problems associated with
risk management, knowing the problem they encounter, and given possible
solutions to address this problem. The overall aim of this to test hypotheses
designed for this study and come out with deductions and recommendation that
will be of benefits to the small scale enterprises entrepreneurs in Nigeria, if
necessary to the world as a whole. There was an hypothesis which was supported
by data that were tabulated and analysed on percentages, and chi-square bass.
It is hoped that the recommendation that are made in last chapters
of this research study would help to inspire the business owners/administrators
to effect changes in their attitude to risk and risk management respectively.
TABLE OF CONTENTS
1.2 Objectives to the Study
1.3 Significance of the Study
1.4 Statement of Problem
1.5 Scope of Study
1.7 Research Hypothesis
CHAPTER TWO: Literature Review
2.2 Definition of Small Business
2.3 Failures Small Scale Enterprises Encounter
2.4 Pitfalls Management must Avoid
2.5 Risk and Risk Management Uncertainly
2.6 Risk Management Strategies in Small Scale Enterprises
CHAPTER THREE: Research Methodology
1.2 Area of Study
1.3 Sample, Size and Sampling Method
1.4 Source of Data Collection
1.5 Research Instrument
1.6 Method of Data Analysis
1.7 Description of Analytical Tool
CHAPTER FOUR:Data Analysis and Interpretation of Results
4.1 Background Information on Respondents
4.2 Data Analysis of Questionnaire
4.3 Testing of Hypothesis
CHAPTER FIVE:Summary of Findings, Conclusion and
5.1 Summary of Findings
LIST OF TABLES
1 Business Class
2 Present Form of
3 Highest Educational
Qualification Affairs to Date
4 Nature and Types of
Risk Associated with
Small Scale Business
5 Attitude of Owners to
Risks and Risk Management
6 Attitude to Risk
7 Attitude to Risk
Small scale businesses have played vital roles in the development process in
most of the developed economies and even in the developing countries. It
has been proved to be one of the most viable sectors with economic growth
potential. The successes recorded by the countries were because of
serious considerations of the future rewards from sustained investment in this
sector. Due to their size and scope of operations these enterprise
require relatively small capital investment to start, thereby offering a
relatively high labour-to-capital ratio. The demand low technology and
managerial skills which are readily available within the society. The
extinct to which the opportunities offered by small scale enterprise are
exploited and their contributions maximized in any economy depends on the
enabling environment created through the provision of requisite infrastructural
facilities. These include roads, telecommunications, power, parts, etc. and the
introduction and pursuit of policies such as concessionary financing that
encourage and strengthen the growth of small scale enterprise.
Small Scale Enterprises have such crucial role to play in the development of an
economy that they cannot be ignored. In fact, small scale enterprise
development should form are of the country’s development objectives. They can
serve as sources of input for the multinationals, thereby replacing existing
foreign sources. They serve as training grounds for local skills and
entrepreneurs and could become channels for mobilizing local savings, ensuring
a more equitable distribution of income and reducing the migrations of manpower
from the rural to the urban areas. Across the would, including Nigeria,
Benin City in particular, small scale enterprise are important for economic
growth, poverty alleviations, wealth creation and the promotion of more
Size is relative, depending on the individual perspective. A
company may be big when taken by itself and yet be small when compared with the
other companies in the same industry. Such a company or enterprise would
therefore be small depending on the capital or the worth of such industry
(May-Ifeoma Nwoye p.15). Various schools of thought have proffered varied
definitions of small scale enterprise using such parameters are as in total
investment cost, size of work force (If labour leaders would decide), level of
turnover, operational environment (All revolving round high labour to capital
Within our Nigeria context of industrial situation, a small scale enterprise
could be defined as any business with a total capital investment of less than N2 million with the number of employees not
more than 50 (fifty). They dominate the overall business activities in
Nigeria. But special circumstances may justify variations form their
limits. These measures are subject to constant change. They can be
established by individuals, groups, companies or co-operatives. But
whatever the nature of small business, such business share the same general
features as big ones. It is interesting to note that big business started
off as small outfits but with proper-planning and effective management,
expanded and grew.
At the same time, it will be risky to assume that small industries, small
business or small scale enterprise which are synonymous are exactly like by
ones – “afterall the differences is size”. Nonetheless, as a business
grows in size, the difference become clear. It is however crucial that a
standard definitions of small business enterprise be evolved to act as a guide
to both finances and operators of such enterprise.
Sometimes in February 1988, the Central Bank of Nigeria (CBN) came
out with the definition of a small scale industry. It states:
…..for the lending purposes of merchant banks a small scale
enterprise is one with a maximum annual turnover of N500,000
or with a capital investment of not more than N200,000
(excluding the enterprise is one with a maximum annual turnover of N500,000 or with a capital investment of not
more than N200,000 (excluding the
enterprise is one with annual turnover not exceeding N500,000
The Center for Industrial Research and Development (CIRD), Obafemi
Awolowo University, Ile-Ife defines small scale enterprises as the total
investment capital not exceeding N250,000
and employing not more than 50 full time workers. The Nigerian Industrial
Development (CIRD) Obasfemi Awolowo University, Ile Ife defines small scale
enterprises as the total investment capital not exceeding N250,000 and employing not more than 50 full
time workers. The Nigerian Industrial Development Bank (NIDB) classifies as
small scale enterprise with project cost (investment and working capital) not
Central Bank of Nigeria (CBN) in its 1990 credit policy guidelines
to financial institutions has adopted a radically deferent definitions of small
scale business as those projects “whose annual do not exceed N500,000 or capital investment not exceeding N2,000,000. In other words, projects that
were not regarded as small business can now be recognized as small business or
small scale enterprises.
Small scale enterprise comprises of management. According to
May-Ifeoma Nwoye, “Management may be described as the process of employing the
diverse recourses of material, finance, people and time. In a manner as to
achieve a set objectives of an organization”. Management is involved in risk
always, hence he is called a risk-bearer because the certainty of risk is real.
In the words of Isenmila P. A. 2002, it is almost impossible for any individual
or enterprise to completely operate in a risk-free environment”. Many of the
risk to which the small scale enterprise is exposed are major risks that could
result in collapse of the business. Hence, the research topic, “Risk Management
Amongst Small Scale Enterprise”.
1.2 OBJECTIVES OF THE STUDY
According to Eheduru (1995), “the statement of the problem serves
to elaborate up the information implied in the title of the study”. Ways in
combating this problem encountered here in this study include:
i. Examining whether management has an element of
risk contained in the enterprise.
ii. Identifying the level of risk management
iii. Measuring the degree of risk.
iv. If risk is identified, see if there are ways of
combating them i.e. applying the risk management strategies or methods of risk
control and financing.
With these research on these issues will be formulated and
reasonable and affordable answers will be given.
1.3 SIGNIFICANCE OF THE STUDY
A study on risk management amongst small scale enterprise will
immensely enable small scale operators to identify the various level of risk
that are prevalent in the industry.
Small business plays an important role in the economic development
to a nation. This fact has made it imperative to undertake this study and to
create the awareness of the promotion of the survival and economic viability of
these ventures through the reduction of risk that tend to stifle their growth.
Finally, this study is not only intended to highlight that risk
exits in small scale enterprise and its strategies but also to boost studies in
this area and to serve as encouragement to other students to carry out further
research in this field.
1.4. STATEMENT OF PROBLEM
According to Eheduru (1995), “the statement of the problem serves
to elaborate up the information implies in the title of the study”.
Small scale business has gotten its fair share of risk tendency
that is prevalent in the society in recent times. Theories of risk has
propounded that risk behaviour is derived from a number of causes. Small scale
business are faced with a lot of risk which involves management and if not well
taken care of will cause a lot of problems like employee’s health, fire
outbreak, burglary and others numerous to mention.
Finally, this is why something serious must be done to minimize
this imminent disaster before it is too late.
1.5. SCOPE OF STUDY
The extent of this study will be limited to risk management
practices amongst small scale enterprises in Benin City.
It will cover areas of risk as it will affects small business in
four local government areas such Egor, Oredo, and Ikpoba-Okha Local Government Areas
where samples will be taken.
A theoretical approach will be adopted in this research work. The
work will be analyzed in order to understand the risk practice associated with
small scale enterprises in Benin City.
The population of the study will be all small scale enterprises in
Benin City stratified into Egor, Oredo, and Ikpoba-Okha Local Government Areas
(LGA). Samples will be drawn from manufacturing services, furniture
work/marketing, printing/publicity and fashion and other small scale
enterprises the researcher will visit.
The mode of data collection will be drawn from primary and
secondary sources. The primary source of data gathering will be through
observations, interview and the use of questionnaire. Data from secondary
source will be gotten from textbooks and other relevant materials. They allow
as an advantage of greater scope and range. Also, data from these sources was
not quick and cheap to obtain, thus, the researcher had a lot of delay due to
financial constraint, attitude of respondent and time constraint.
1.7 RESEARCH HYPOTHESIS
A hypothesis is a tentative owner to a research questions. It is
often stated in the form of a relationship between a dependent and an
independent variable. For this research the following hypothesis was considered:
–> That risk does not exist in
small scale enterprise in Benin City.
–> That risk does exists in Small Scale
Enterprise in Benin City.
–> Relationship does not exist between the
level of education of the small scale business proprietors and the success of
–> There is no relationship between the level
of education of small scale business proprietor and the level of success.
TERMS AND CONDITIONS APPLY
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