Bachelor of Business Administration-BBA Semester III BB0016 Small Business Management 2 Credits (Assignment Set: 2) -----------------------------------------------------------------------------------------------Q.

Q.1a Explain briefly the various sources of funds to finance a small scale sector.
Finance is one of the important prerequisites to start an enterprise. Required funds could broadly be classified into two sources. These are: 1. Internal Sources: under this source, funds are raised from within the enterprise itself. It could be owners capital known as equity, deposits and loans given by the owner, the partners, the directors, as the case may be, to the enterprise.eg- personal loans taken by entrepreneurs on his/ her personal assets like provident funds, life insurance policy etc. 2. External Sources: these includesa. Deposits or borrowing from relatives and friends and others. b. Borrowing from the banks for working capital purposes. c. Credit facilities from commercial banks. d. Term-loans from financial institutions. e. Hire-purchase or leasing facility from the National Small Industries Corporation (NSIC) and State Small Industries Corporation (SSICs). f. Seed/ margin money, subsidies from the Government and the financial institutions.

Q.1b Write a note on the Industrial Disputes Act.

The main object of the Act is to make provision for the investigation and settlement of industrial disputes. The Act seeks: a. To provide a suitable machinery for the just, equitable and peaceful settlement of industrial disputes. b. To promote measures for securing and preserving amity and good relation between employers and employees. c. To prevent illegal strikes and lockouts. d. To provide relief to worker against layoffs, retrenchment, wrongful dismissal and victimization. e. To promote collective bargaining. f. To improve the condition of workers.

Q.2a Explain the benefits and drawbacks of partnership format of ownership.

The Indian Partnership Act, 1932, Sec 4, defines partnership as the relation between persons who have agreed to share the profits of business carried on by all or any one of them acting for all.

Advantages
As an ownership form of business, partnership offers the following advantages: 1. Easy formation: partnership is a contractual agreement between the partners to run an enterprise. Legal formalities associated with formation are minimal.

2. More capital available: partnership overcomes the problem of limited fund to great extent, because there is more than one person who provides funds to the enterprise. It also increases the borrowing capacity of the firm. 3. Combined Talent, Judgment and skills: usually, partnerships are pooled from different specialized areas to complement each other. This gives the firm advantage of collective expertise for taking better decisions. 4. Diffusion of risk: the losses of the firm are shared by all the partners as per their agreed profit sharing ratios. 5. Flexibility: the partnership business is also flexible. The partners can easily appreciate and quickly react to the changing conditions. 6. Tax advantage: taxation rates applicable to partnership are lower than proprietorship and company forms of business ownership.

Disadvantages
In spite of above advantages, there are certain drawbacks associated with the partnership form of business organization. They are as follows: 1. Unlimited Liability: the liability of partners is unlimited. Just as in proprietorship, the partners personal assets may be at risk if the business cannot pay its debts. 2. Dividend Authority: each partner can discharge his responsibilities in his concerned individual area. But, in case of areas like formulation for the whole enterprise, there are chances for conflicts between the partners. 3. Lack of continuity: death or withdrawn of one partner causes the partnership to end. So, there remains uncertainty in continuity of partnership. 4. Risk of Implied Authority: each partner is an agent for the partnership business. Hence, risk involved in decisions taken by one partner is to be borne by other partners also.

Q.2b Identify the essential qualities that a good leader must possess.
The quality and style of leadership determine largely the success of business. Leadership is the process of influencing people towards the accomplishment of organizational objectives. It involves motivating and guiding people. The leader must adopt a hard or soft style to influence the employee. This style depends upon leaders assumption about human nature.

Qualities of a good Leader: 1. Physical Qualities: sound health, stamina, enthusiasm, and nervous energy, force
fullness. 2. Intellectual Qualities: intelligence, sound judgment, decisiveness, maturity, vision. 3. Moral Qualities: integrity, moral image, fair play, will power, sense of purpose and responsibility, achievement drive, objectivity. 4. Social Qualities: ability to inspire, tactfulness, persuasiveness, self-confidence, empathy, initiative, knowledge of human nature, communication skills.

Q.3 Prepare a market survey questionnaire for starting a new small business in agriculture area.
Setting up of a new business enterprise is a very challenging and rewarding task. Right from the conception of a business idea up to the start of production, numerous decisions have to be taken. In order to succeed in this task, an entrepreneur must correctly perceive the nature and intensity of problems to be faced and prepare and implement appropriate plans. An entrepreneur desiring to setup an industry must at the outset become familiar with the economic, political and legal environment in the country. He should also understand the procedure for setting up a small scale unit.

Market Survey:
Before the production actually starts, the entrepreneur needs to anticipate the possible market for the product. This is because of the fact that the basic purpose of running any business or enterprise is to earn profit and profit is the difference between sales income and business expenses. Knowing the anticipated market for the product to be produced becomes an important element in every business plan. The various methods used to anticipate the potential market, is demand forecasting. 1. Opinion Polling Method: in this method, the opinions of the ultimate user of the product ie, the customer are estimated. This may be attempted with the help of either a complete survey of all customers (called, complete enumeration), by selecting a few consuming units out of the relevant population (called, sample survey). 2. Sales Experience Method: under this method, a sample market is surveyed before the new product is offered for sale. 3. Vicarious Method: under this, the consumers of the product are not approached directly but indirectly through some dealers who have a feel of their customers.

Selection of site:
It is essential for every entrepreneur to choose a suitable location for his venture. An entrepreneur should take into consideration several factors while deciding the location. Some of these factors are given below. a) Nearness to the source of raw material. b) Nearness to the market. c) Availability of land at cheap rates. d) Availability of skilled labour. e) Cost of labour (prevailing wage rates) in the area. f) Availability of transport and communication facilities. g) Availability of power, waste, waste disposal and other essential series. h) Incentives and concessions available in different states. i) General business climate in the business region. j) Climate and environmental factors. k) Availability of factories sheds in industrial estates.