Obstacles for Growth of Small Businesses in Sri Lanka. (With Special Reference to the Colombo District)

Abstract

Small businesses play an important role in the development of an economy and are identified as the backbone or the engine of an economy as it contributes to the economic development by providing new employment opportunities, promoting innovations, reducing regional divergence and many more ways. Although small businesses play a crucial role, the failure rate of small businesses is comparatively high in Sri Lanka. Therefore, this study aims to identify the obstacles for the growth of small businesses in the Colombo district, Sri Lanka. The scope of this research is the small businesses in Sri Lanka and the finding of this research will confine to the small businesses particularly in Colombo District, Sri Lanka and may partially applicable to small businesses all around the globe. Data were collected through a self-administrated questionnaire which was built based on literature. A sample of 375 small businesses was drawn from the registered small businesses in the Colombo District. Under this study, four main factors that act as obstacles for the growth of small businesses were tested among the many obstacles that a business might face in its operations. The findings indicate that there is a negative relationship between the independent variables; lack of finance, market challenges, regulatory issues, lack of infrastructure and the dependent variable; small business growth. This implies that these factors act as barriers for growth of small businesses in Colombo District, Sri Lanka.