Importance of Small Business to the Economy:

(a) Make significant contributions towards employment. In Kenya the rate at which Jua Kali sector is creating employment is encouraging.

(b) Small business provides the economy with financial vitality. Overhead costs are low and can respond to external changes faster than big ones. They are quick to adapt to changing demands.

(c) Small businesses are also a main source of innovation e.g. the Jua Kali sector with things like energy saving stoves.

Reasons for Small Business:

(a) Becoming one’s boss. The desire to be one’s own boss is a powerful motive for people to venture into small businesses.

(b) Providing job opportunities through self employment. Few chances in white collar employment are forcing many into small businesses.

(c) Realizing entrepreneurial dreams. Some people have entrepreneurial desire to want to make more money than in regular employment.

Critical Success Factors In Small Business:

(a) Learning the trade. An overriding reason for failure is lack of knowledge about the business. No knowledge of the market and their competitive strength and what is actually involved in running the company.

One can learn the trade by working for others or start as a Franchisee (right or licence owner using the product or the production or selling method of a product or service developed by another company known as the Franchiser).

(b) Gaining a competitive edge. i.e delivering better than competitors. May be by low pricing, differential product, through better quality, or by finding a niche in the market by serving a limited segment of the market.

(c) Getting the most from employees. Employees can break or make a business as they are the ones who carry out the firm’s business plans. Adequate compensation and provision for development and responsibility are important