SMALL BUSINESS

Tuheen Tarafder

Poonam Barve

Concept & Definition
 A small scale business is a business which is privately owned and operated, with a small number of employees and relatively low volume of sale.  They are privately owned corporations, partnerships, sole proprietorships.  They are classified in to other methods such as sale, assets, or net profits.  Small business are common in many countries, depending on the ecosystem in operation.  For Instance: convenience stores, and other small stores like kiranas, bakery, tradesmen, lawyers and accountants etc.

What is Small Business?
• An independently owned and operated business, organized for profit and that is not dominant in its field. Qualifying as a small business depends on the industry in which the business operates and the organization that selects the standards. • Depending on the industry, size standard eligibility is based on the average number of employees for the preceding twelve months or on sales volume averaged over a three-year period. • The legal definition of "small" varies by country and by industry, ranging from fewer than 15 employees under the Australian Fair Work Act 2009, 50 employees in the European Union, and fewer than 500 employees to qualify for many U.S.

5 million.0 to $21. depending on the particular product being provided.0 million. Services: Annual receipts may not exceed $2.5 to $21. . Special Trade Construction: Annual receipts may not exceed $7 million. and Agriculture: Annual receipts may not exceed $0. Wholesaling: Maximum number of employees may range from 100 to 500 depending on the particular product being provided. depending on the particular service being provided.0 million.      Examples of small business includes following: Manufacturing: Maximum number of employees may range from 500 to 1500.5 to $9. Retailing: Annual receipts may not exceed $5. depending on the agricultural product. depending on the type of product manufactured.

Characteristics of Small Business Some of the characteristics of small Business includes following:  Entrepreneurial spirit  Limited Managerial skills  Low cost per job created  Size definitions  Demographics  Franchise Business .

yet high risks. energy and desired to get succeed. • They are not scared of risk and they take calculated. .Entrepreneurial Spirit • The Owners of small business enterprise should have motivation. optimism.

human relations etc are generally lacking. production. . sales and marketing. organizing and controlling across all the major activities of a business. • Small business owners generally have one (or a few) strong skill sets. leading. technical.Limited Managerial Skills • Management broadly includes planning. • Skills in important areas of finance.

• Small businesses work using people.Low cost per job created • Small businesses collectively employ a lot of people and comparing the amount of money invested in small businesses. • The cost per jobs created is way lower than big business. . whilst big businesses work using ‘systems’.

a small business generally has under 50 employees. • In the European Union. .Size Definitions • The legal definition of "small" varies by country and by industry. • In the United States the Small Business Administration establishes small business size standards on an industry-byindustry basis. • generally specifies a small business as having fewer than 500 employees for manufacturing businesses and less than $7 million in annual receipts for most nonmanufacturing businesses.

250 in the European Union and fewer than 200 in Australia. .• However. a small business is defined by the Fair Work Act 2009 as one with fewer than 15 employees. a medium sized business or mid-sized business has under 500 employees in the US. • By comparison. in Australia.

about 50% of minute/micro-businesses are owned by women.Demographics According to a survey run in the United States among businesses having <500 employees in late 2010. .

• For example: Mc Donalds. . • The small business owner can leverage a strong brand name and purchasing power of the larger company while keeping their own investment affordable.Franchise Business • Franchising is a way for small business owners to benefit from the economies of scale of the big corporation (franchiser). True value Hardware stores.

which works with a small number of employees and deals in relatively low volume of sales as compared to bigger companies. The Types of small business includes the following: Sole proprietorship Partnership Close corporation Limited Liability Partnership (LLP)     .Types of Small Business A small business is generally a privately owned and operated organization.

Sole Proprietorship • Sole proprietorship is a type of business model in which there is just one owner who has all the rights to take decisions. • All debts of the business are his personal debts and whenever required • The sole proprietor enjoys unlimited freedom within the precincts of his workplace • There is no rules and regulation. .

Partnership • Partnership is a business entity in which some people come together to start a business and share the profits or losses of it collectively. the right of making decisions is distributed amongst the partners. • Unlike sole proprietorship. in this type of small business . • Partnerships are generally preferred over corporations because of the levied taxes.

• A close corporation is almost like a company but less expensive and easier to run. • This model of business is particularly helpful and suitable for small to medium-sized enterprises. shareholders or a chairperson of the board. • Unlike a company. .Close Corporation • A Close Corporation is a form of business ownership which combines the aspects of sole proprietorship and partnership. a close corporation does not have directors.

none of the partners are liable for the actions of others. • n this type of business entity. the number of members and the initial investment. . like.Limited Liability Partnership • A limited liability partnership is almost similar to a general partnership. • The formation of a small business and the blueprint of its installation is solely decided by factors.

managers. • A mission statement sets out the business vision and values that enables employees. . • Other businesses may wish to state exactly what they are aiming to do.for example to survive for the first year.Objectives of Small Business • When a sole trader sets up they may have some unstated aims or objectives . customers and even suppliers to understand the underlying basis for the actions of the business.

• Objectives give the business a clearly defined target. measurable targets of how to achieve business aims. It also enables the business to measure the progress towards to its stated aims. .• Business objectives are the stated. Plans can then be made to achieve these targets. This can motivate the employees.

T. a hotel might have an objective of filling 60% of its beds a night during October. .Time specific – they have a time limit of when the objective should be achieved. e.Measurable – the business can put a value to the objective.g. but it should also be able to be achieved by the resources available.g. e. M . an objective specific to that business. by the end of the year. R .000 in sales in the next half year of trading.g.Agreed by all those concerned in trying to achieve the objective. A .• • • • • The most effective business objectives meet the following criteria: S – Specific – objectives are aimed at what the business does.Realistic – the objective should be challenging. €10. e.

Large businesses can also benefit from economies of scale. This may be because the managers believe that the survival of the business depends on being large. or when a new firm enters the market or at a time of crisis. .The main objectives that a business might have are: • : • Survival – a short term objective. • Sales growth – where the business tries to make as many sales as possible. • Profit maximization – try to make the most profit possible – most like to be the aim of the owners and shareholders. • Profit satisfying – try to make enough profit to keep the owners comfortable – probably the aim of smaller businesses whose owners do not want to work longer hours. probably for small business just starting out.

Loans from family and friends and new equity are the least common sources. . grants and overdraft had become substantially harder to obtain for a significant minority of businesses.Problems faced by Small Business CASH • The majority of companies don’t manage it well. Commercial loans.

. and throwing money at problems. Equally important is revising your plan according to changing economic and business conditions and to ensure your survival in recession . Lack of a plan worsens the cash problem by wasting cash chasing tempting diversions.Lack of a clear plan Most businesses don’t knowhow to plan .

and b) fails to enlist support of competent managers and staff behind him or her either through recruitment. It is frequently in the form of depth of leadership . . The founder of the company is too much hands-on and a) does not concentrate enough on his primary role as a leader rather than a manager.Ineffective leadership This issue takes many forms.

Many businesses have not taken the time to decide what their USP is. such as lowest price and highest service. Part of the planning process for a new product should include a very clear answer to one simple question.Sales/marketing effectiveness This leads back to planning and leadership. They try to compete in conflicting areas. One takes away money and the other adds cost. “with all of the products and service available to my customers why should they buy from me?” .

..Other problems. Employees don’t know their company’s strategy. Organizations don’t have performance measurements in place. Strategies that are developed are never executed Improvement projects fail Leader spends less than 1 hour per month on strategies..

encouraged the growth of small scale industries in order to generate employment. promote balanced regional growth. have equitable distribution of wealth and promote exports. The industrial policy resolutions had.Growth of Small Scale sector of India • A major objective of planned economic development has been industrialization and employment generation. from time to time. .

. next only to Agriculture. It has been estimated that 100.• SSI Sector in India creates largest employment opportunities for the Indian populace.000 rupees of investment in fixed assets in the small-scale sector generates employment for four persons.

small-scale manufacturing and online business. other small shops such as a bakery. . tradesman. accountants. photographers. hairdressers. lawyers.• Typical examples include: convenience stores. etc. guest houses. or delicatessen). restaurants. such as web design and programming.

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