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buying in bulk as they have no facilities to store the materials.
Because of general scarcity of metals, chemicals and extractive raw
materials in the economy, the small scale sector suffers the most.
(iii) Managerial skills:
Small business is generally promoted and operated by a single
person, who may not possess all the managerial skills required to run
the business. Many of the small business entrepreneurs possess
sound technical knowledge but are less successful in marketing the
output. Moreover, they may not find enough time to take care of all
functional activities. At the same time they are not in a position to
afford professional managers.

(iv) Labor:
Small business firms cannot afford to pay higher salaries to the
employees, which affects employee willingness to work hard and
produce more. Thus, productivity per employee is relatively low and
employee turnover is generally high. Because of lower remuneration
offered, attracting talented people is a major problem in small

business organizations.
(v) Marketing:
Marketing is one of the most important activities as it generates
revenue. Effective marketing of goods requires a thorough
understanding of the customer’s needs and requirements. In most
cases, marketing is a weaker area of small organizations.
These organizations have, therefore, to depend excessively on
middlemen, who at times exploit them by paying low price and
delayed payments.
(vi) Quality:
Many small business organizations do not adhere to desired
standards of quality. Instead they concentrate on cutting the cost and
keeping the prices low. They do not have adequate resources to invest
in quality research and maintain the standards of the industry, nor
do they have the expertise to upgrade technology.

(vii) Capacity utilization:
Due to lack of marketing skills or lack of demand, many small
business firms have to operate below full capacity due to which their
operating costs tend to increase. Gradually this leads to sickness and
closure of the business.
(viii) Technology: