PECBE 001 –Entrepreneurial Management

MODULE 3 – THE NATURE OF SMALL BUSINESS

III. CHARACTERISTICS OF SMALL BUSINESS

1. Independent management- the owner is also the manager.

2. Small capital requirement-small business requires only a small capital, supplied by a
single or a few individuals.
3. Mostly local operation- small business usually operates in a particular locality
although there are cases when the market is not confirmed to a local area.

IV. ECONOMIC IMPORTANCE OF SMALL BUSINESS

1. Providers of economic opportunities for entrepreneurs do not feel comfortable, as

employees can engage in small business operations.
2. Providers of products and services to consumers- the production of many products
and services is often not feasible with the big and medium business operation. These
limited opportunities are naturally fitted for small businesses.
3. Suppliers of products and services to other businesses require raw materials, semi-
finished parts, finished components, or even labor that they cannot economically
produce. Small businesses perform this task for them.
4. Distributor of products and services of their businesses- some manufacturers cannot
distribute their products and services. Many small businesses assume this role for them.
5. Supporters of government- small businesses support the government with the taxes
they pay and perform other functions.
6. Providers of employment- small businesses employ a large proportion of the labor
force.

➢ An illustration below illustrates the Small business and its importance to the economy:

economic opportunites
provider of
for entreprenuers
small business

products and services to

provider of
consumers

funds to the govenrment

provider of
in theorm of taxes

employment ot he labor
provider of
force

products and services to

supplier of
other businesses

products and services

distributor of
produced by large firms

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