This paper discusses the characteristics, the contribution of SMEs to economic development, and barriers to Small Business development in developing countries, especially in Ghana. Small businesses in Ghana have been recorded to provide about 85% of Ghana's manufacturing employment. They are also believed to contribute 15.5% of the labor force in Ghana (Kuada 2005). Notwithstanding the role of SMEs which is so greatly to this country, it should be recognized that actually there are many obstacles that must be faced by the SME such as the economics of the country, law and regulation from government and the other aspects. Inscription of this paper also aims to provide solutions for the policy maker or SME party its self to develop strategies in order to survive in that country
2.1 Small Business Definition
Small businesses are usually well thought-out as the driver of economic growth, job creation, and poverty diminution in some developing countries. A positive relationship has been acknowledged between small-business development and economic growth in developed countries (Summer 2002).
As well as Storey (1994) believed, there is no single uniformly definition of Small Business. Differences in perceptions about the limit of the employees hired and scope of business employees result in confusion in determining small and large business.
The definition of small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales (Small Business Forum 2010). The Ghana Statistical Service (GSS) considers firms with less than 10 employees as Small Scale Business and more than 10 employees as Medium and Large-Sized Enterprises (Ghana Statistical Service n.d.) .
As Storey (1994) stated, there are three key distinguishing features between large and small business. Firstly, level of external uncertainty which is greater in the small business. Secondly, the different level of...