Assignment on

Small Business in a market economy: value,

problems, prospects

1
Subject:
Submitted to:
Name: Nazma Akhter

Designation: Management Lecturer,

Department of Business Administration
Notre Dame University Bangladesh
Submitted by:
Group Name:Free Thinker (Group 4)
Serial Name ID Number Remarks
No.
1 Rubayet Hossain 193010005
Jim
2 Nimpa Saha 193010013
3 Abid Hossen 193010014
4 Joy Chowdury 193010020

Batch: BBA15
Notre Dame University Bangladesh

Date of Submission: 6.12.2020

 LETTER OF TRANSMITTAL
Nazma Akhter

Lecturer of Management of BBA Department.

Subject: Application for the submission of the assignment on ‘Small Business in a

market economy: value, problems, prospects ’.

Dear Madam,

With due respect, I am submitting our assignment entitled ‘Small Business in a

market economy: value, problems, prospects ’, which was assigned to our group as
partial fulfillment of continuous assessment of the subject ‘’ of our BBA program.
We have found the study to be quite interesting, & insightful. We have exerted our
best effort to prepare this assignment. We hope it will serve the purpose.

We consider ourselves very privileged to prepare this report under your guidance. We
are extremely thankful to you for your valuable guidance, tiresome effort, and
constant attention whenever required. We, therefore pray and hope that you would be
kind enough to accept our assignment cordially.

Sincerely yours,

Nimpa Saha

ID Number: 193010013

On behalf of

Group: Free Thinker

Batch: 15th

Department of Business Administration

Notre Dame University Bangladesh

 ACKNOWLEDGMENT

I would like to express my deepest sense of gratitude to almighty God that I have
completed the report within specified time period.

I would also like to express My special thanks of gratitude to , Nazma Akhter ,

Business Administration, Notre Dame University Bangladesh, who gave me the
golden opportunity to do this wonderful project on the topic , which also helped me
in doing a lot of research and I came to know about so many new things. She gave
supervision, personal guidance, and great encouragement provided to me while
preparing the report. I am really thankful to .

Then I greatly appreciate the contributions of all of my group members (Jim, Abid,
Joy). Without the huge effort, advice, and suggestions of all of my group members, I
would have failed to complete the whole thing in a right manner. I am making this
project not only for marks but also to increase my knowledge.

THANKS AGAIN TO ALL WHO HELPED ME.

The Group “Free Thinker”

 Table of Contents

Title Page……………………………………………………………….1
Introduction…………………………………………………………….2
Letter of Transmittal…………………………………………………...3
Acknowledgement……………………………………………………..4
Summary of the report…………………………………………………6
Introduction of Business……………………………………………….7
Handicraft Short Description…………………………………………...8
Definition & History…………………………………………………..8
Types Of Handicraft………………………………………….………..10
Value of small business…………………………………………………11
Problem of small business………………………………………………13
Prospect of small business……………………………………………….15
Financial Plan…………………………………………..………………..17
Conclusion……………………………………………………………....25
Reference……………………………………………………………...25
 Summary of the report

This report is based on our small Business plan. To prepare the report we have
decided to established an company which Named “HANDICORNER” This Company
will produce various types of products like banner making, cotton goods, silk
products, Show piece, home decorator products like flowers vase, origami fordable
basket. We are four members in our business plan. we all have equally contribute
Taka 5 lakh and in future we can increase the amount of money by taking the consent
of our partners. For our business our supplier will be different kinds of handicraft
business, from the villages people, teenager, poor people etc in a word, who makes in
such product. we will set the reasonable price for our product so that customer can
easily buy our product. we will distribute our products in online and offline way. If
the customer wants to buy product from online there will be a web-page for our
business from where the customer can buy the products. we offer a host product
tailored to the needs of our customers. we believe that in order to success a business
needs a strong client base and therefore concentrate on achieving the above said.
Consulting is a fast paced evolving industry . In response to this climate . we can do
it consulting will offer other services including facilitation.

the keys to success are as follows-

 We focus on purchasing quality material at minimum cost.

 Charging competitive rates by our clients for the products.
 Maintaining a favorable working condition for the employees and a good
relationships with suppliers and distributors.
 Increase sales revenue and margins profitability.
 Introduction of Business:

Small business is that part of Business which is organized and managed by his owner
or his family.Small business is a crucial part of the total business scenario of any
country. Especially it plays a vital role in case of the economic development of a less
developed country. Area that small Business cover are manufacturing, whole selling,
retailing, service and so on. An interesting point to be consider is that the growth
dam development of medium and large industry is mostly dependent on small
Business. Today, small business is providing strong contribution the national
economy. Features that have made small business separate from other business forms
are – large contribution of owner, source of finance, size and capital of the firm, size
of investment, less legal restrictions and so on. Like other countries small business is
in a firm position in our country. As the unemployment in our country is high, so
small business may play an essential role in reducing the rate of unemployment.
Some government and non government organizations are assisting in the expansion
of small business in our country. But unfortunately, small business is facing some
unexpected problems.

Nowadays handicrafts are very popular in Bangladesh. It is also known as craftwork.

In Dhaka city it is very difficult to find Handicraft because only fashionable people
collect it to decorate their home. Most of the people have little idea about it. The
most common material used for making Handicrafts products are wicker,Jute, paper,
wood ,stone, glass, and a combination of different metal. Our target customer is
couple those who both husband and wife are job owners and Fashionable people and
middle range public who buy easily. We also target young generation though they are
not our main focus. we have selected eight division of Bangladesh also we are
providing online service.

Handicraft Corner is the name of our showroom and we have no branch in our
country because we start a small business in a city. Handicraft Corner is a new SMI
( small and medium Industry) investing in an existing but prosperous sector of
Bangladesh. In Bangladesh there are lots of people who are looking for different
types of Handicraft Products from different District of Bangladesh.
We know handicraft shop are Nothing new but why our company is different from
others because we have designed in such a unique way that’s why we are the
different than other company.

Handicraft Short Description

Definition & History:

Handicraft is a type of craft where people make things using only their hands or basic
tools. The items are usually decorative and have a particular use. Usually the term
refers to traditional methods of making things.The items often have cultural or
religious value. Things made by mass production or machines are not handicraft
goods.In Bangladesh we can see many handicappers living there live only by making
handicrafts objects. Also, handicraft things are different from "arts and crafts"
because they are meant to be used for something. Handicraft items are generally
contrasted with mass production . It stimulates a person's creativity through art . Not
only that,it enhances a person's thinking power . It has been protecting our culture in
many ways and will further help preserve culture in the future through practice.
Handicrafts products from cottage based small manufacturing units. Some handicraft
products often have identifying features such as traditional or artistic deriving from
the region of production by craftsmen, working generally on a cottage industry basis.
The customer-oriented definition of handicrafts suggests that it is the creative
expression of a group of people with unique artistic skills who apply their talents to
the production of material goods, which reflect their culture and heritage. Handicrafts
products from cottage based small manufacturing units. Some handicraft products
often have identifying features such as traditional or artistic deriving from the region
of production by craftsmen, working generally on a cottage industry basis. The
customer-oriented definition of handicrafts suggests that it is the creative expression
of a group of people with unique artistic skills who apply their talents to the
production of material goods, which reflect their culture and heritage.Besides
contributing to foreign exchange earnings, generating employment, and creating the
opportunities to utilize indigenous resources, handicraft plays a vital role in
sustaining the rural economy and cultural heritage of the country. Handicrafts created
by the works of painters and sculptors, as well as craft workers who have little or no
training as artists and create their work for other people rather than museums or
wealthy collectors, embody the cultural heritage of the country. Most handicrafts
cater to the needs of the common people, although they originate through the
patronage of the rich. Over time, they acquire the dignity of a craft. The members of
the craftsmen family or cooperatives are employed in the handicraft production unit
at the cottage level. The workers (skilled or semiskilled) are paid their wages on a
daily basis. The handicraft sector is an important employment provider, especially in
the rural areas. In the 1990s, according to a study covering seven countries in Asia, 4
million people worked full-time on craft production, while another 4 million worked
part-time. In export trade of the country, handicrafts are considered non-traditional
items with a huge potential for expansion. Being a developing country, Bangladesh
faces tough competition in export of finished goods in the manufacturing sector, but'
many developed countries, however, give preferential treatment to the import of
handicraft from Bangladesh. handicraft, sometimes more precisely expressed as
artisanal handicraft or handmade, is any of a wide variety of types of work where
useful and decorative objects are made completely by hand or by using only simple
tools. It is a traditional main sector of craft and applies to a wide range of creative
and design activities that are related to making things with one's hands and skill,
including work with textiles, mold-able and rigid materials, paper, plant fibers, etc.
One of the world's oldest handicraft is Dhokra; this is a sort of metal casting that has
been used in India for over 4,000 years and is still used. In Iranian Baluchistan,
women still make red ware hand made pottery with dotted ornaments much similar to
the 5000 year old pottery tradition of Kalpurgan, an archaeological site near the
village. Usually, the term is applied to traditional techniques of creating items
(whether for personal use or as products) that are both practical and aesthetic.
Handicraft industries are those that produce things with hands to meet the needs of
the people in their locality. Machines are not used. Handicraft has its roots in the
rural crafts—the material-goods necessities—of ancient civilizations, and many
specific crafts have been practiced for centuries, while others are modern inventions
or popularization of crafts which were originally practiced in a limited geographic
area.Many handcraft use natural, even entirely indigenous, materials while others
may prefer modern, non-traditional materials, and even unicycle industrial materials.
The individual partisanship of a handcrafted item is the paramount criterion; those
made by mass production or machines are not handicraft goods.

Types Of Handicraft:

The word handicrafts are made by two words hand and craft. Hand mean by made of
hand or using simple tools in making of any item, and craft mean a unique expression
that represent a culture, tradition and the heritage of a country. Handicraft is also
known as artisanry, which mean a type of work where useful and decorative devices
are made completely by hand or using simple tools. The history of artistic handicraft
only began during the 5th century AD, when different religions began to form their
bases among the people of Nepal. The handicraft of Nepal is produced in a traditional
way, from generations to generations leading the footpath of ancestors. Handicrafts in
Nepal are classified mainly in two types. There are:

1. Textile products:A textile is a flexible material consisting of a network of

natural or artificial fibers (yarn or thread). Yarn is produced by spinning raw
fibers of wool, flax, cotton, hemp, or other materials to produce long strands.
2. Non-textile products; Products that do not contain any cotton or polyester
are called Non-textile products.
 The Value of business

Valuing our business isn’t just about offering a snapshot of the profit and loss of your
business, it can give a detailed overview of your company’s chances of sustainability
over a prolonged period of time, so it’s definitely something that you should
considered.

1. People:

If our management team have a strong record of steering the business in a

successful direction, then this this can have a positive impact on your business’
value. And if you have a band of loyal, experienced staff who are likely to stick
with your business through thick and thin, this can cause your business’ value to
rise too. It’s also a good idea to consider how much the success and longevity of
your business depends on your skill-set. If you think your business would sink
without your captain-ship, this can prove risky and cause your business value to
slump.

2. Financial record:

If our hoping for a favourable business valuation it’s important that your business’s
finances add up as they should. Detailed records showing how you’ve business
managed costs, well-evidenced past, present and future cash-flow and profit
projections, and the level of debt you’re currently in can all have an impact on your
business valuation

3. Intangible assets

our business’ intangible assets play an important role in its overall value. From
your company’s growth potential and reputation, to trademarks, intellectual
property and the strength and profitability of your company’s relationship with
customers and clients, each has an accumulative impact on your business valuation.

4.Tangible assets

The physical assets that we’ve acquired to help with the day-to-day running of
your business can also boost your business valuation. This includes assets such as
 your business premises, equipment – including computers and tools – stock, and
the number of clients and customer you have.

5. Asset valuation

If our business has sizable assets, then an asset valuation could be an ideal way
to get to grips with the overall value of your business. There are two types of asset:
tangible and intangible. Tangible assets are the physical things belonging to your
business, such as your business premises, stock, land and equipment. Intangible
assets are any non-physical assets, such as your business’ brand, reputation and
intellectual property including copyrights and patents. To get the Net Book Value
of your business, you subtract the costs of your business liabilities from the total
value of your tangible and intangible assets. It’s a good idea to regularly update
records of your assets so that their value takes inflation, depreciation and
appreciation into consideration, to help keep your asset valuations accurate. Often,
this asset valuation method yields the lowest value for a business because it doesn’t
take into account any ‘goodwill’ towards the business – a technical accountancy
term that covers the difference between a company’s market value (what people are
willing to pay for it) and the value of its net assets .

6. Industry best-practice

Not all industries are created equal. And for some, the buying and selling of
businesses may be more common than in others. The industries where the selling of
businesses take place frequently such as retail, where business turnover, customer
volume and outlets are key indicators of value might have specific rules of thumb
that you can use as a guide to lead you through your business valuation process.

7. Discounted cash flow

The discounted cash flow method is one of the trickiest ways of valuing a
business. This is an income-based approach to business valuation that’s focused on
working out what a future stream of cash flow is worth today. It tends to be used by
established businesses who project stable, predictable cash flows for the years
ahead. Discounted cash flow. The discounted cash flow method is one of the
trickiest ways of valuing a business. This is an income-based approach to business
valuation that’s focused on working out what a future stream of cash flow is worth
 today. It tends to be used by established businesses who project stable, predictable
cash flows for the years ahead.

8. Comparable analysis

An easy but popular approach to valuing your business, the comparable analysis
method involves assessing the value of businesses similar to yours that have
recently been sold or whose business valuation is currently common knowledge in
the public domain. Comparable analysis gives an observable value for your own
business, based on what rival or similar companies are worth at present.

Problems of small Business

Quality and Standards:

Bangladesh has failed to ensure the quality of products and services to

consumers not only in the domestic market but also in international markets. There
is no national quality policy and adequate support systems that provide assistance
to all enterprises to understand the principles of quality and to develop quality
consciousness in business behavior. Currently, the Bangladesh Standards and
Testing Institution (BSTI) formulates national standards of industrial, food, and
chemical products. However, the most important problem is that BSTI lacks
credibility.

Marketing:

SBs in Bangladesh, especially the small enterprises, do not have enough

marketing capability and network. An overwhelming majority of small firms do not
have resources to be invested in marketing. Advertisement is an important
determinant of demand but SBs in Bangladesh in most cases are not in a position to
use this as a marketing tool. Export-oriented SBs have very little marketing
activities and most of them try to survive by linking up with multinational buyers
or setting up subcontracting relationships with them.
Investment and Working Capital:

One of the most important problems affecting supply is the access to finance.
SBs need finance to enable them undertake productive investment in order to
expand their business, to introduce new products, and to market them. Various
survey and microstudies in Bangladesh have identified access to finance as the
main problem facingthe SBs

Shortage of Skilled Workers:

Although Bangladesh is a labor abundant country, shortage of skilled

workforce is perceived to be a major constraint for manufacturing production. This
problem is particularly acute for medium scale export oriented enterprises.
Manufacturing good snow overwhelmingly dominate Bangladesh’s export basket,
but a significant proportion of it comprises very low domestic value addition
because of limited backward linkage in the RMG sector, which will require skilled
manpower. Therefore, supply capacity is preconditioned by availability of skilled
workers.

Lack of entrepreneurship and management skills:

Most owner-managers and entrepreneurs often lack wider managerial skills

that hinder their long-term success. Strategic planning, medium to long-term
vision, marketing, commitment to quality, knowledge of quality systems,
communicating languages, cash-flow management, information technology are a
few critical elements of management required to meet challenges of the market
economy, especially in the international market environment. In such a complex
setting since it is not possible for an individual to muster all of these qualities,
firms make division of Labor.

Physical Infrastructure:

The state of physical infrastructure is weak in Bangladesh. It is evidenced that

in countries with poor infrastructure, business must devote more resources to such
tasks as acquiring information, procuring inputs, and getting their products to
market. There are two dimensions of poor infrastructure – one is the unavailability
of a certain service or utility (such as telephone, water, electricity, roads and
highways, etc.) and the other is the unreliability of the services provided. In
 Bangladesh there are problems on both fronts and together undermines the
competitiveness of SBs.

Transport costs:

In some recent survey finds that transport to be a bigger problem in

Bangladesh than in some cooperator countries. Three factors interact to accentuate
this problem. First, the recent research works on economic geography and
international trade suggest that unfavorable geographical locations (e.g. distance).

Prospect of small business

Small business in Bangladesh has a significant prospect in respect of social,

economical & cultural perspective. In previous & current year, we observe the owner
of the small business; get auspicious result from conducting this business. Here we
identify some reasons for the prospects of small business in Bangladesh.

Supporting Industry:

Small business work as a supporting industry for the large business unit. Large
business develops products, select market and produce large scale of products
which are distributed to the ultimate consumers by small business. To distribute
large scale product small businesses like distributors, wholesale business, retail
business etc. are developed over time.

Easy formation:

Easy start up & less rules &regulation also help the growth of small business
unit in Bangladesh. As we know to start up a business like small business the
formal procedure is very easy compared to other country in world.
Cultural product demand:

Culture specifies norms and customs of a society. Bangladesh has a established

culture and different cultural event. Bangladeshi people with their norms and in
different cultural events use cultural products. This demand may be fulfilled more
efficiently by small business rather than large business. For example, we use
Punjabi and Shari in cultural events like Pohela BOishak, Pohela Falgun etc.

Unemployment effect:

A large number of unemployed people are playing a crucial role in establishing

small business. In rural area seasonal unemployed people support the small
business a lot. Current global recession also help a large number of skilled people
who loss their jobs will contribute in small business with their skilled labor.

Skilled worker:

For starting small business expensive training program is not necessary. It also
does not require modern technology. Workers can gather experience from their
family members.

Women participation:

Women participation in outside work environment is still limited in our country

because of social conservativeness. So women can easily engage in small business
activities. As a result they can play a greater role for the development of their
family as well as our country.

Local demand:

Local demand mainly created according to local culture, people’s idea modes
and norms. Specific local demand can not be fulfilled by large industry. By
fulfilling local demand small business can earn more profit

Location:

For establishing small business it is not so much important for managing area
as large location. Most of the small businesses are established by the combination
of family members. It is not necessary to buy or rent extra land for establishing
small business.
Loan facility:

Different financial institutions provide financial support for the development of

small business. Now a day’s different N.G.O’s also play a greater role for
providing support to the small business.

Financial Plan

.Here, We started a business with 3 friends and the name of the Company is XX and
our Business budget is 60,000. Our business product are all types of folk art and craft
which helping arising our tradition. which its almost extinct though our main
business purpose is achieving profit but we will try to preserve our tradition.
Therefore, its our partnership business so we will invest 20,000 Taka per person and
total amount of 60000 Taka which we would invest.

5.1 Starting business value

Account Amount (tk) Amount (tk)

Capital (20000×3) 60,000
( -) One-off capital cost:
Advance store rent 1 0,000
Decoration Cost 11,000

(21,000)
39,000

In the amount of 60,000 we will purchasing the product with 10,000 Taka and the
rest of the money keep our hand which amount is 50,000 Taka. Basically we are
purchasing the ready made product from the villages people. we will try to met their
needs and demands. we will give them great opportunities among them we will give
10% discount on our profit. we will give Bonuses to our staff at every festival. In
future we will increase our business based on customers demand.

Below is our monthly business income statement.

5.2 Monthly income statement

Account Amount (Tk) Amount (tk)

Income:

Shop\out-let income- 70,000

70,000
Expense:
Shop rent - 5,000
Worker’s salary (1×7,000) - 7,000
Utility Bill - 1,000
Warehouse Rent - 500
Carrying Cost – 500
Product Purchasing expense- 20,000

( 34,000)
36,000
Net profit:

Since we are the 3 number of person are partners in this business so we will share the
profit equally. Total profit earn is 36,000 in every month each person will get 12,000
Taka from the business.
 Conclusion
Handicrafts are a valuable part and culture of Bengali people and also economic
value, prospect, problem. Besides regular basis, people buy handicrafts on special
cultural occasion such as pahela Falgun and Pahela Baishakh. Sometimes members
of the family buy handicrafts as a gift. Our main proverb is getting profit with
customer satisfaction. For this reason, we try to provide best service for the customer.
Small business as like as handicrafts is important part that’s create a value in a
market place and economic site.

Reference

Google: www.google.com
Book link:
1. Microeconomics 3rd Ed. 2019 - Book

https://www.researchgate.net/publication/339090571_Micro
economics_3rd_Ed_2019_-_Book

2. Principles of Microeconomics
https://open.umn.edu/opentextbooks/textbooks/193