The Kenyan corporate sector has in the recent years experienced economic difficulties. Some companies actually closed down while others resorted to strategic survival techniques such as mergers, downsizing, restructuring etc.
The small business enterprises now thrive because of lack of adequate chances for salaried employment. Besides, many people want to be their own bosses and so start their own enterprises.
The small and medium-sized enterprises usually take the forms of sole proprietorships and partnerships. These businesses usually have following characteristics:
• Management is independent
• Capital is contributed one person or a small group
• The area of operation is local
• The size within the industry is small.
The small enterprises are able to grow steadily within the Kenyan economy because they have various advantages over large corporate enterprises. They have freedom of action, quick decision making opportunities, very little capital requirements, better supervision and owners can assess market needs better because they are members of the community.
Even though they are an important part of the economy, small business failure is a common phenomenon. They fail due to factors such as financial problems, poor planning, poor record keeping and poor marketing strategies.
Owners must be trained on ways of making their businesses succeed. The following are ways of making a small business succeed:
• Good management on part of owners alongside total commitment and willingness to work long and odd hours.
• Good leadership i.e. honesty and responsibility. An ability to motivate workers.
• Good interpersonal relationships in case of partnerships
• Proper use and application of business funds
• Good planning especially on the products, location, organization and promotion of the business.
• Ensure continuity training someone to take over.
Importance of Small Business to the Economy
a) They make a significant contribution towards employment. In Kenya the rate at which the Jua Kali Sector is creating employment is encouraging.
b) They provide the economy with financial vitality. Overhead costs are low and they can respond to external changes faster than big firms.
c) Small businesses are also a main source of innovation. A lot of unique and practical products have been created in the small business enterprises.