Small-Scale industries have special features which distinguish them from large scale industries. “Small Scale Industry is beautiful” because of its following important characteristics.
1) Ownership:
A small-scale unit is generally a one man show. It is owned by one person or a small group of persons who provide the capital. Proprietorship and partnership are the dominant forms of ownership in small-scale sector in India.
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2) Management and control:
In case of small scale unit, the owner himself is generally the manager. The owner actively participates in all aspects of business decision making. He has firsthand knowledge of working of business.
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Even in case of partnership firm the activities are mainly carried out by the active partner and the rest are generally the sleeping partners.
3) Gestation period:
As compared to large scale units, a small-scale industrial unit has a lesser gestation period. Gestation period is the period after which the return on investment starts.
4) Local area operation:
The scope of operation of small industrial undertakings is generally localized to meet the local and regional demands due to the limited resources of a small scale unit.
5) Labor-intensive:
Small entrepreneurs are generally labor intensive. Capital investment is limited. Small entrepreneurs require very limited capital.
6) Indigenous resources:
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Small entrepreneurs use local or indigenous resources. Therefore, by using local resources, small scale units are decentralized and dispersed to local areas.
The development of small-scale industries in rural areas promotes more balanced regional development, on one hand, and prevents the influx of job seekers from rural areas to cities and urbanizing centers, on the others
7) Flexibility:
Small entrepreneurs are more dynamic in nature and highly reactive and responsive to socio-economic conditions as compared to large scale units.
They are more flexible to adopt new changes like new method of production, introduction of new products etc.
8) Dispersal of units:
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Small entrepreneurs use local resources and can be dispersed over a wide territory. The development of small scale units in rural and backward areas promotes more balanced regional development and can prevent the influx of job seekers from rural areas to cities.
9) Simple organization:
A small business enterprise has few or no layers of management. Division of labor or specialization is low and the recourses are limited.