Small scale industries are small businesses that do not have a large output. They may be contrasted to large corporations that use huge factories to create thousands of products a day. An example of a small scale industry is a man run workshop creating hand made products like clothing, bags and jewelry. With few employees and a small production space, this is definitely a small scale industry.

Advantages of Small Scale Industries:

Small Scale Industries have potential to create employment opportunities on a large scale. They use more labor than other factors of production. Products manufactured by Small Scale Industries form a significant portion of the industrial output of the country.

Small Scale Industries are more suitable for manufacturing non-standardized products. For people who do not like to hand over their money to large corporations, small scale industries provide an alternative source of goods and services.

Since the enterprise is small and there is not much hierarchy, can be taken quick decisions. Quick decisions are helpful in solving problems in the initial stages and also to exploit market opportunities.

Small business is generally run by the sole proprietor of the business. He earns all and risks all. Self interest act as a strong motivator. Therefore he would put in his best efforts to make the business a success.

Disadvantages of Small Scale Industries

When products are in high demand, small scale industries can often struggle to increase their output sufficiently to meet that demand. Because of the limited resources and financial weakness, the small scale producers cannot face economic crisis. The producers do not have the capacity to bear losses for long.

Small scale industries usually do not have the space or the money to use large scale machinery. The cost of production per unit increases because there is a high cost of labour, a very little scope for division of labour and lesser use of machinery.

In the small scale industries, the production is undertaken with the help of old techniques or old and obsolete machines.

Small scale industries may be concentrated in a particular town or even in one single building. This can limit their ability to become household names across the globe.

Small scale industries usually deal with less money than larger factories and so have less financial weight.

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