Characteristics of Small Business

Small business has their own distinctive characteristics. They are the following:
1. Independent Management- the owner is also the manager
2. Small capital requirement- small business requires on small capital and this
can be supplied by a single or a few individuals.
3. Mostly local operation- small business usually operates in a certain locality
although there are cases when the market is not confined to a local area.
 Economic Importance of Small Business

Small Business plays an important role in the development of our economy. They assume the following
functions:
1. Providers of economic opportunities for entrepreneur- people who do not feel comfortable as
employees have the option of engaging in a small business operation.
2. Providers of products and services to consumers- the production of many products and services is
sometimes not feasible with big and medium business operation. This limited opportunities are
naturally fitted for small business.
3. Suppliers of products and services to other businesses- some business requires raw materials, semi-
finished parts, finished components, or even labor, which they cannot economically produce. The
small business perform this task for them.
4. Distributors of products and services or other businesses- some manufacturers do not have the
ability to distribute their products and services. Many small business assume this role for them.
5. Supporters of Government- small business support the government with the
taxes they pay, as well as performing other functions.

6. Providers of employment- a large proportion of the labor force are

employed by a small business.
 Advantages of Operating Small Business

An individual has a various option to improve his economic lot. They are the
following:
1. Be an employee;
2. Be an professional;
3. Be an small business operator (SBO)
 The Opportunity to Gain Control Over His Own Destiny
The perspective small business owner can choose from several business opportunities that he would like to take
advantage of. If, after a few years, he thinks that the business is not worth operating anymore, then he can dissolve it
and open a new one this option is not made available to plain employees and professionals.
 The Opportunity to Reach Full Potential
The employee will do his work based on prescribed targets which may only required less than his full potential.
This is not so with the small business operator. His freedom to act is limited only by his potential and he can revise or
amend his targets within short notice.
 The Opportunity to Reap Unlimited Profits
If the small business succeeds, all profits, big or small, accrue to owner. If he is not satisfied, he may exert more
efforts to increase his profits. This opportunity is not afforded to the plain employee.
 The Opportunity to Make a Contribution to Society and Receive Recognition for His Efforts
The entrepreneurs who make innovative products available to the public are recognized properly by society.
Some of them, like Henry Ford, became billionairs. Others like Walter Disney, merited listing in books of eminent
personalities.