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something that would have been more difficult prior to the internet revolution which began in the late 1990s. it is typically easier to respond to the marketplace quickly. A small business is also well suited to internet marketing because it can easily serve specialized niches. Adapting to change is crucial in business and particularly small business. A small business can be started at a low cost and on a part-time basis. . not being tied to any bureaucratic inertia. Small business proprietors tend to be intimate with their customers and clients which results in greater accountability and maturity.

and laid the foundations for non-selective (functional) industrial policies to promote SMEs." . abuse of economic power). "empirical research on SME as well as policies to promote SME have a long tradition in [West] Germany. considered SME as a solution to mid-20th century economic problems (mass unemployment. dating back into the 19th century. the founding fathers of Germany's social market economy. According to German economist Hans-Heinrich Bass. Until the mid-20th century most researchers considered SME as an impediment to further economic development and SME policies were thus designed in the framework of social policies. discovered their strengths. Only the ordo-liberal school.

S. and fewer than 500 employees to qualify for many U. Small businesses can also be classified according to other methods such as sales. assets. or net profits. Small businesses range from 15 employees under the Australian Fair Work Act 2009. Small businesses are normally privately owned corporations. What businesses are defined as "small" in terms of government support and tax policy varies depending on the country and industry. 50 employees according to the definition used by the European Union. . Small Business Administration programs. or sole proprietorships. partnerships.

photographers. Small businesses are common in many countries. depending on the economic system in operation. such as web design and programming. and online businesses. small- scale manufacturing. hairdressers. restaura nts. other small shops (such as a bakery or delicatessen). etc. . tr adesmen. accountants. Typical examples include: convenience stores. guest houses. lawyers.

sole-trader or corporation) and the consequent legal and accounting boundaries of owner-managed firms are consistently meaningful. Lenders also often contract around organizational (corporate) boundaries by seeking personal guarantees or accepting privately held assets as collateral. Because of this behavior.. partnership. and studies that view the firm as defined by some formal organizational structure. Researchers and analysts of small or owner-managed businesses generally behave as if nominal organizational forms (e.g. . researchers and analysts should reject the relevance of the organizational types and implied boundaries in many contexts relating to owner-managed firms. These include analyses that use traditional accounting disclosures. However. owner-managers often do not delineate their behavior to accord with the implied separation between their personal and business interests.

 .000 qualifies for a tax credit under the health care reform bill Patient Protection and Affordable Care Act. but generally specifies a small business as having fewer than 250 employees for manufacturing businesses and less than $7 million in annual receipts for most non manufacturing businesses. a small business having fewer than 25 full-time equivalent employees with average annual wages below $50. The legal definition of "small business" varies by country and by industry. In the United States the Small Business Administration establishes small business size standards on an industry-by-industry basis.[2] The definition can vary by circumstance – for example.

A frequent cause of bankruptcy is undercapitalization. This is often a result of poor planning rather than economic conditions . For example. under the theory of undercapitalization. then he should have not less than $250. if the prospective owner thinks that he will generate $100. Small businesses often face a variety of problems related to their size.000 available.000 in start-up expenses.  .it is common rule of thumb that the entrepreneur should have access to a sum of money at least equal to the projected revenue for the first year of business in addition to his anticipated expenses. Failure to provide this level of funding for the company could leave the owner liable for all of the company's debt should he end up in bankruptcy court.000 in revenues in the first year with $150.