Small-scale enterprises have many characteristics which distinguish it from large scale enterprises and which also justifies separate analysis of their roles in the economic development of countries. The report on financing of small-scale enterprises in Nigeria had identified the following as the major characteristics of small-scale enterprises.

1.      LARGE NUMBER: The small-scale enterprises are large in number when compared to large-scale enterprises. This is because the money/capital needed to establish the business is relatively small and may not need legal provision to be fulfilled before they are set up.
2.    INADEQUATE SPECIALIZATION: There is usually no much specialization/proprietor handles or supervises the financing, production, marketing and personnel of the enterprises.
3.      INDEPENDENT MANAGEMENT: The manager is usually the owner of the business and as such it is independent, unlike the large scale business where the management is in most cases different from the owners; hence, usually dependent.
4.      INADEQUATE CAPITAL: The working capital is usually small due to the fact that it is financed by the owners, friends or close relatives, not like in large-scale enterprises where they collect loans from financial institutions and contributions from partners.
5.      LACK OF ACCOUNTING RECORDS: The small-scale enterprises have little or no accounting records. The small-scale business owner believes that the maintenance of book of accounts and other business records is costly and necessary.
6.   ONE-MAN BUSINESS: Small scale enterprises in Nigeria are operated like a sole proprietorship i.e. it is been owned and managed by the owner of the business.
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