8 Advantages of a Small Business 1. Faster response time to customer needs. In a small company, it is less likely that difficult customer problems will fester because the owner will know sooner and take action. Big businesses often take an extended period to react to customer complaints. With no lengthy chain of command, complex bureaucracies filled with all mon to big much quicker to your customers’ concerns. 2. You can handle clients’ questions and concerns immediately. You can be there when all the big boys can offer is a ringing phone anda mail; you can be available nights, weekends and holidays. Customers know that they y with you - the owner - to help get in touch them solve their problems with your prod That is a big plus! or service.3. Ability to offer personal ongoing service to customers. An extremely important advantage to being small is tha you are in a better position to provide a more personal service to your customers. Customers trust businesses that offer them sincere personal attention, and they respond well to businesses that know their names and remember details about former transactions. You put greater pride in customers who say, “I've been doing business with this company since 1995:" whereas a mass marketing giant may less likely to care4. Can send the experts for a lesser cost. Many small business owners are experts in their fields before branching out and starting a business: a small advertising business may be run by a former creative director of a large ad agency, or the owner of a video production house may formerly be a director of independent films. You need to harness quality work, combined with reasonable fees - two important aspects that create value and could form the basis for establishing a growing base of loyal customers. By niche marketing your services and specialty skills, your clients should see you as a specialist despite your size.5. Lower overhead costs. By being small, your business requires fewer resources to operate and maintain. Your lower overhead costs can allow you to offer a cheaper price, and even undercut a big competitor. You can outsell the big corporations by getting a higher percentage of business from within a very narrow niche. You can pinpoint your focus, and do well on a smaller profit margin. 6. More nimble and flexible. Small businesses are more flexible and less bound by policies and procedures. When a customer complains to a Best Buy saleslady, for example, the customer will most likely hear the statement, “Our policies state that so-and- so.” The employees are unable to extend better customer service as their hands are tied by company policies. Asa result, unsatisfied customers who perceive that their needs are not important to the company leave You, on the other hand, can easily provide concessions to complaining customers. To keep the customers happy and satisfied, you can adjust easily a policy; no need to go through the board or the legal department to approve any change in policies of the business. This flexibility fosters confidence and loyalty among customers.7. Quick to react to changing market conditions. Being flexible also relates to the ability to react quickly to changing market conditions. Because of their small size, most small companies are forced to be innovative if they want to compete. Your small business lacks the resources of larger companies, and so the only way you can compete is to come up with something creative, new, and different. Most mass marketers cannot react as quickly to changing market conditions, but you can. You can make changes in your inventory, billing. new product or other procedures more easily in response to changing customer needs. More importantly, you can make decisions NO\W/!8. Can work more closely with customers to correct the company's shortcomings. In large companies, there is often a wide gulf between customers and policymakers. Small business owners are often on the front line, and policies can be chan, needed immediately. To keep ahead of the game, you can monitor customer feedback, e: jally those who ha’ switched from larger companies to your small business and respond to them immediately. The key to excelling against the big boys is to do the things that they don't do. Your small size has its advantages - way more than listed above - use them to outmaneuver and out service them every time and win the game!Disadvantages of Small Business Busi a colleagues preparing for By: George N. Root III Updated September 26, 2017 '55 Meeting image by Vladimir Melnik from Fotolia corr There are several advantages to owning a small business. You may qualify for government funding that larger businesses are not privy to. The small business can adapt to changes in the marketplace quicker than the larger business and can have a more personal feeling with its employees, which helps in creating a better working atmosphere. But there are also several disadvantages to being a small business as well.Attracting Talent A larger company tends to have greater resources to offer top talent within your industry, and those resources are often used to attract that top talent. In order to grow your business you need qualified people in key positions. A larger business can offer more advancement, a more recognizable name that could help in the execution of work duties and potentially more pay and benefits than a small business. A small business would need to use the potential for growth as a way to attract top talent, and that may not be enough to get the people your company needs to become successful. Name Recognition When a small company is out in the marketplace trying to win business, it is inevitable that it will come across some of its larger competitors. A larger business has a level of name recognition that a smaller business does not have. To some potential clients, there is a sense of confidence in doing business with a company that has an established name within the industry as opposed to going with a relatively unknown small business.Raising Funds A small business owner is constantly looking for sources of funding for the business. While the federal government offers opportunities for grants to small business, private investors may not be as willing to give access to funding. A small business that does not have the market share or presence in the marketplace that a larger business has may find it difficult to convince venture capitalists and other private investors to put money into the business and help with growth. Even banks may make lending difficult for a small business by offering higher interest rates on loans than they would offer to a larger business. Downturns in Revenue When a larger company experiences a downturn in revenue, it may have enough reserve cash on hand to survive the downturn. The reputation of the larger business may allow it to negotiate terms with vendors that would help to stretch revenue until sales pick up again. A small business operates on a tighter budget and a large downturn in sales could mean the end of that small business if reserves are not available or a line of credit is not offered by a lender.Reasons for Starting a New Business by Brian Hill Entrepreneurs often have more than one motivation for starting a company. Personal and financial considerations come into play. Because starting a company is such a challenging task, individuals taking the entrepreneurial path must be highly motivated, willing to accept work days involving long hours and be resilient enough to bounce back from the setbacks that almost certainly will occur. Build Wealth Owners of successful businesses create wealth for themselves and their families. The owner's annual compensation can be higher than the salary he would earn working for someone else. If the company is sold, there can be a substantial payout to the owner when he exits the business. Each milestone the company reaches in terms of revenues, profits or market share creates equity for the founders of the company. Challenge Many people are drawn to entrepreneurship for the challenge involved in starting a company from ground level and building it. They are excited about the risk vs. reward tradeoff -- the chance the business might fail vs. the chance of making lots of money with the venture, Compared with working for a large corporation, where job responsibilities are more narrowly defined, the CEO of a startup venture has to be proficient with all aspects of the company's operations, including finance, product development and marketingIndependence The opportunity to be your own boss has always been one of the primary motivations for starting a business. Many people who work a 9 to 5 job in a large company find it to be frustrating and tedious. They may not deal well with the rules and restrictions most company enforce, and they may not believe they are adequately compensated for the contributions they make at work. Quitting the corporate job and going out on your own appeals to people who have an independent nature. Sense of Accomplishment Entrepreneurs feel tremendous pride when their startup venture turns into a thriving enterprise. As with any creative endeavor, this sense of accomplishment comes from building something out of nothing. The company is truly their creation. Even if employees contributed to the company's growth, the credit primarily goes to the founder of the company--she took the risk to start the company. Provide for Family Members Parents have a desire to make sure their children are provided for. This can take the form of an inheritance--naming the children beneficiaries in a will--but another way to ensure children's prosperity is to create a family business that can be passed on to them when the parents retire. Working side by side can help build stronger family bonds. Help Others Many entrepreneurs strive to develop products and services that benefit society as well as creating financial opportunity for the company's founders. Some go so far as to make personal financial goals secondary to contributing to society. The global emphasis on being better stewards of the environment has partially been driven by entrepreneurs creating technologies to protect the environment or provide renewable energy.What Are the Benefits of a Business Plan? The bigger picture: This is one of the key advantages of a business plan. When you plan your business right, you can get a clearer picture of the business as a whole. You can easily comnect the dots between strategy and tactics, and everything is easier to work out. Strategic focus: As a startup, you need to create an identity and focus on building that identity. Itis usually defined by your target market, and the products and services you are tailoring to match their needs. Set priorities: It's impossible to do everything at once in a business. When you plan your business, you can order things in terms of their importance and allocate your effort, resources and time in an efficient and strategic manner. Manage change: When you plan your business effectively, you can check your assumptions, track your progress and see new developments right from the beginning, allowing you to adjust accordingly. Forces you to be accountable: When you plan effectively, you set expectations for yourself and a means by which you will be able to track your results. You can constantly review your business plan in terms of what you expect and what eventually happens.Short term finance » Short term financing deals with raising money required for a short period, i.e. less than one year. » It is raised to meet the short term working capital requirements of the business. > sources: Trade Credit Installment Credit Customer Advance Bank Credit aicWhat is working capital * Working capital is the amount of money that a company has tied up in funding its day to day operations. + A company has to tie up money to fund its stocks, credit sales and other current assets, but this is offset by its ability to fund this from current liabilities such as purchases on credit. If a company buys on credit it does not have to tie up (as much) money in its stocks. In some businesses (such as grocery retail) working capital can even be negative. A business that buys on credit and sells for cash is being partly funded by its suppliers. 62