Vol. 3, Issue 12, Part G (2017)

Small Scale industries encompass vast scope covering activities like manufacturing, servicing, financing, construction, infrastructure etc. In view of Government of India’s ever increasing importance given to the small scale industries in the national economy more & more small scale industries are to be set up in the years to come. By contributing it’s increasing share to the national production, employment & exports, small scale industries also contribute to the economic development of the country. However, these industries are also plagued by the problems of raw material, finance, marketing, underutilization of capacity, etc. cash has become a big problem for small & even big businesses today. Lack of finance has driven many small business units into bankruptcy. Unfortunately many small businesses will become bankrupt because their owners have neglected the principal of cash management which normally determines their successes or failure. Cash is like oxygen to a business. Small scale enterprises, given their small resources find it difficult to have these own. Finance has been the important resource to start & run an enterprise4because it facilitates the entrepreneur to procure land, labour, material, machine& so on from different parties to run his/her enterprise. Report of third all India censuses also clearly indicate that lack of demand& shortage of working capital are the main reasons behind sickness/ incipient sickness of registered & unregistered small scale industries. Developing cash forecast is essential for new business because early sales do not generate enough cash to keep the company afloat. Better financial management can lead the company ahead in competition as well as it will help the entrepreneur to avoid the situation of bankruptcy & industrial sickness. This paper is an attempt to understand various financial techniques to help the entrepreneurs to avoid the situation of industrial sickness.