THE SMALL

BUSINESS
Business

organized effort of individuals to produce and

sell goods and services in order to satisfy the
needs of society
COMMON CHARACTERISTICS OF SMALL BUSINESS

01
Privately owned

02
few or no layers of
management

Insufficient resources to
03
dominate its field of
business
Magna Carta for Micro, Small and Medium
Enterprises (REPUBLIC ACT NO. 6977)
defined as any business activity or enterprise engaged in industry, agribusiness
and/or services, whether single proprietorship, cooperative, partnership or
corporation whose total assets, inclusive of those arising from loans but exclusive
of the land on which the particular business entity’s office, plant and equipment are
situated, must have value falling under the following categories:

https://pnl-law.com/blog/magna-carta-for-micro-small-and-medium-enterprises-msmes-republic-act-no-6977-as-amended/
Features of a Small Business

01 Low in capital but high in labor intensity

02 Efficient in specialized skill or service

03 Succeeds in small, isolated or overlooked markets

04 Often operates in unstable markets

Features of a Small Business

05 Closer to the market place

06 Owner are also the managers

07 Capital comes from the owner or small group

08 Area of operation is small

Features of a Small Business

09 Size of the enterprise is small in relation to the

industry
Advantages of Small Business

Retailers and shop owners deal 1. Personalized relationships with

with their customers on customers and employees.
personalized services. The owners
know many of their customers by
name.
Advantages of Small Business

easily introduce changes in its 2. Flexibility in management

products or services.
Advantages of Small Business

The national government has 3. Government incentives

been promoting the organization
of small enterprises. It extends
both financial and technical
assistance, particularly
production and marketing, to
small entrepreneurs. Such
programs of the government are
relevant to the nature of our
economy. The masses have to be
helped in helping themselves. A
micro business is possible for
them through government
guidance and assistance.
Advantages of Small Business

Small enterprises require few and 4. Simple record keeping

simple sets of records.

They may consist only of a cash

receipt journal which records all
sales, and a cash disbursement
journal which records all
expenses or payments.
Advantages of Small Business

Small business owners are the 5. Independence

masters of their own destinies.

They are not employees.

They make their own decisions.

Disadvantages of Small Business

Without financial assistance from

1. Difficulty of raising capital the government, a small business
has limited ability to obtain funds
from others.
Disadvantages of Small Business

A small business does not have

2. Risk of failure enough financial resources to
survive bad economic conditions.
Its inability to absorb losses and
unforeseen events forces the
owner to go out of business.
Disadvantages of Small Business

lack of management skills.

3. Limited management skills
They have no formal education or
training in management and
marketing.

They just manage their

enterprises through intuitions or
practical business techniques.
Disadvantages of Small Business

4. Lack of opportunities for

employees
Why Small Businesses Fail

Lack of experience

Lack of money

Wrong location

Mismanagement of inventory

Poor credit practices

Poorly planned expansion

Unsound or too little analysis in choosing the business

Economic Contributions of Small Businesses

Introduces innovation

Invention and innovation are key factors in economic

development. These are responsible in reducing time,
labor and cost of production.
Economic Contributions of Small Businesses

Creates employment

Small businesses are the main providers of jobs.

Small businesses are the main providers of jobs.

Almost all non-governmental employees come from
small businesses.
Economic Contributions of Small Businesses

Provides competition

small businesses tend to be more efficient and

responsive to the needs of the consumers.
Economic Contributions of Small Businesses

fill the needs of society and big businesses

Big enterprises, because of their large-scale and mass

production, are not willing or are not able to satisfy the
special needs of smaller groups of consumers, while
small producers or sellers can profitably fit their
products and services to the needs of smaller groups
of consumers.
Thank
You