Abstract:
Big companies no longer the dominant players in developing new products and services in
economies. It has generally been recognized that the top-down approach is not the best way
to face this challenge. In order to be flexible, people have to take initiative to exploit new
opportunities, create new businesses etc. In this setting, small business entrepreneurs play
a vital role specially in developing economies.
Raising capital for the entrepreneurship is very important at both start up stage and the
growing stage of businesses. But empirical evidence shows that entrepreneurs face many
difficulties in satisfying their funding needs. Further, many small businesses had to close
their doors merely because of the financial problems. Therefore, it becomes crucial to study
this situation in the Sri Lankan context.
The objectives of the study are to identify the main sources of financing, financial barriers
and study the financial support of financial and other institutions. The research methodology
is basically inductive and the data was collected through a structured questionnaire and
interviews. A sample of 50 entrepreneurs was selected randomly in Gampaha district.
Simple statistical methods such as graphs, tables and percentages were used to analyze the
data.
The study concluded that 92% had some difficulty in financing their businesses. 86%
respondents did not go for bank loans at the start up stage because the relationship with
financial institutions is not at a satisfactory level. Further, they are not satisfied with the
government incentives. Consequently it is essential to formulate a favorable policy to
increase government contribution towards development of the small business sector.
