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Lecture Introduction to business - Lecture 7: Understanding entrepreneurship & new ventures

The following will be discussed in this chapter: “Small” business, need for small businesses, small business industries, entrepreneur, non-financial reasons to start a business, financial reasons to start a business. | Lecture 7 Chapter 4 Understanding Entrepreneurship & New Ventures “Small” Business Locally owned and operated Vs Sony, Nestle Small Business Administration Number of Employees Total Annual Sales Independently Owned/Managed & Does Not Dominate Its Market “Small” Business According to one recent extensive study Total SMEs in the country number around 2 million, of which approximately 0.4 million are manufacturing units, 0.6 million are service sector units and the remaining 1 million are in the retailing/trade sector. “Small” Business According to the same study, SMEs constitute over 90% of the business establishments in Pakistan and contribute Rs. 34 billion (11%) annually to the GDP. Around 67% of the labour force in the Pakistani manufacturing sector works in SMEs engaged in manufacturing. Furthermore, 80% of the employment in the economy is created by SMEs. “Small” Business However, statistics from the same study tell us that 72% of the SMEs are sole proprietary concerns with only one third of the owners receiving a college education. Additionally, only 3% have received any technical training. “Small” Business In other words, the overwhelming bulk of SMEs are run in mostly an informal and unstructured manner as sole proprietorships, by people who have received little or no professional training and possibly have limited access to technical advice and financial resources. “Small” Business Definition used by the State Bank of Pakistan: SME means an entity, ideally not a public limited company, which does not employ more than 250 persons (if it is a manufacturing concern) and 50 persons (if it is a trading/service concern) and also fulfills the following criteria of either “a” and “c” or “b” and “c” as relevant: “Small” Business a. a trading/service concern with total assets at cost excluding land and building upto Rs 50 million. b. a manufacturing concern with total assets at cost excluding land and building upto Rs 100 million. c. any concern (trading, service or | Lecture 7 Chapter 4 Understanding Entrepreneurship & New Ventures “Small” Business Locally owned and operated Vs Sony, Nestle Small Business Administration Number of Employees Total Annual Sales Independently Owned/Managed & Does Not Dominate Its Market “Small” Business According to one recent extensive study Total SMEs in the country number around 2 million, of which approximately 0.4 million are manufacturing units, 0.6 million are service sector units and the remaining 1 million are in the retailing/trade sector. “Small” Business According to the same study, SMEs constitute over 90% of the business establishments in Pakistan and contribute Rs. 34 billion (11%) annually to the GDP. Around 67% of the labour force in the Pakistani manufacturing sector works in SMEs engaged in manufacturing. Furthermore, 80% of the employment in the economy is created by SMEs. “Small” Business However, statistics from the same study tell us that 72% of the SMEs are sole proprietary concerns with only