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Characteristic of SME Corp

Characteristic of SME Corp

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Published by Lee Wong
Characteristic of SME Corp
Characteristic of SME Corp

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Published by: Lee Wong on Aug 05, 2014
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(4) Briefly explain the characteristic of a small business

(a) Ownership
- The business is privately owned by individuals or partners, typically registered as sole proprietorship,
partnership, or private limited (Sdn.Bhd) Company.
(b) Management
- The business is managed and operated by the owners. The entrepreneur or founder of the business
leads the company, and acts as both manager and worker. The development of the business is
determined by the owner. The decision making is mostly done by the owner.
(c) Resources
- A small business often has limited resources. This is especially true for new startups due to lack of
track records and business to convince potential investors and bankers. Thus, it is highly dependent on
the ability of the owner to generate resources.
(d) Organizational Structure
- For a small business, the structure is often flat and informal. The owner has to do almost everything
and workers are normally expected to be able to function as generalist since there is no clear
demarcation of task.
(e) Flexibility of change
- The business has more flexibility to adapt to changes in the environment due to its sized and informal
structure.
- It’s also vulnerable to the business environment. For instance, any changes in technology or
government policy might have a great impact on the business.
(f) Firm Age
- A new venture usually needs an average of eight years to finally achieve profitability. The barriers of
eight years should be analyzed depending on several factors, such as the industry that the firms operate
in, or the initial capital rose for starting new venture.
(g) Annual Revenue
- In order to able to characterize this parameter, a preliminary step of defining the industry to which the
business relates must be taken. There is a substantial difference regarding the revenue in the different
revenues in different industries.

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