“WORK HARD DOESN’T

GUARANTEE SUCCESS BUT

IMPROVES ITS CHANCES.”

- B.J. GUPTA
CHAPTER 2

THE NATURE OF SMALL

BUSINESS
-
WHAT IS A SMALL BUSINESS?

Small business may be defined by using any of the two

approaches: market share or total assets.

TYPES OF SMALL BUSINESS

 Manufacturing
 Services
 Wholesaling
 Retailing
 General construction firms
CHARACTERISTICS OF SMALL BUSINESS

 Independent management
 Small capital requirement
 Mostly local operation

ECONOMIC IMPORTANCE OF SMALL BUSINESS

 Providers of economic opportunities for entrepreneurs

 Providers of products and services to consumers
 Suppliers of products and services to other business
 Distributors of products and services of other
businesses
 Supporters of government
 Providers of employment
ADVANTAGES OF OPERATING A SMALL BUSINESS

 Be an employee
 Be a professional
 Be a small business operator (SBO)

DECISION-MAKING

 Opportunity to gain control over his own destiny

 Opportunity to reach full potential
 Opportunity to reap unlimited profits
 Opportunity to make a contribution to society and
receive recognition for his/her efforts
DISAVANTAGES OF OPERATING A SMALL BUSINESS

 uncertainty of income
 Risk of losing your entire capital investment
 Lower quality of life until the business gets established
 Complete responsibility
 Having to serve undesirable customers
 Paperwork and other chores
 Long hours and demanding work conditions