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here are some interesting characteristics of small businesses ;
Entrepreneurial spirit – The owner/s of small businesses have an incredible amount of motivation, optimism, energy and a desire to succeed. They are not scared of risk and they take calculated, yet high risks. They see things differently. Successful small businesses are run by successful people and not by your average person.
Limited management skills – Management broadly includes planning, leading, organising and controlling across all the major activities of a business. Small business owners generally have one (or a few) strong skill set/s, usually the skill set that prompted the start-up of the business. Skills in important areas of finance, sales and marketing, technical, production, human relations etc are generally lacking.
Have limited funding – Most small businesses are under-funded and constantly need money. They don’t always have enough cash reserves to ride-out trade cycles, to finance growth and to maximise opportunities. The main reason for this is that small business owners don’t have collateral to offer lenders (banks etc) and obtaining ‘unsecured’ finance is near impossible.
Contribute little income taxes – Due to low profitability and ‘survivalist’ performances small businesses are not significant contributors to taxes on profits. Their economic contribution is mainly through contributing to payroll related taxes and consumption taxes on the goods and services they buy and sell.
Trade within competitive markets – Competitive markets are generally those that have a high number of participants, prices are under pressure, margins are low, barriers to entry are low and failure is high. Most small businesses don’t have a unique quality or strength that differentiates them from competition.
Low cost per job created – Small businesses collectively employ a lot of people and comparing the amount of money invested in small businesses, the cost per job/s created is way lower than big business. Small businesses work using people, whilst big businesses work using ‘systems’.
High failure rate – Due to the weaknesses and problems mentioned above, the majority of start-up businesses fail and those that do survive don’t always reach full potential. Reasons for failure are usually poor management and/or lack of funding.
Personal rewards – Owning and managing a small business is very rewarding psychologically as owners are responsible for their own successes and there is freedom to make decisions and implement them. The financial rewards are great too.
Entrepreneurial spirit – The owner/s of small businesses have an incredible amount of motivation, optimism, energy and a desire to succeed. They are not scared of risk and they take calculated, yet high risks. They see things differently. Successful small businesses are run by successful people and not by your average person.
Limited management skills – Management broadly includes planning, leading, organising and controlling across all the major activities of a business. Small business owners generally have one (or a few) strong skill set/s, usually the skill set that prompted the start-up of the business. Skills in important areas of finance, sales and marketing, technical, production, human relations etc are generally lacking.
Have limited funding – Most small businesses are under-funded and constantly need money. They don’t always have enough cash reserves to ride-out trade cycles, to finance growth and to maximise opportunities. The main reason for this is that small business owners don’t have collateral to offer lenders (banks etc) and obtaining ‘unsecured’ finance is near impossible.
Contribute little income taxes – Due to low profitability and ‘survivalist’ performances small businesses are not significant contributors to taxes on profits. Their economic contribution is mainly through contributing to payroll related taxes and consumption taxes on the goods and services they buy and sell.
Trade within competitive markets – Competitive markets are generally those that have a high number of participants, prices are under pressure, margins are low, barriers to entry are low and failure is high. Most small businesses don’t have a unique quality or strength that differentiates them from competition.
Low cost per job created – Small businesses collectively employ a lot of people and comparing the amount of money invested in small businesses, the cost per job/s created is way lower than big business. Small businesses work using people, whilst big businesses work using ‘systems’.
High failure rate – Due to the weaknesses and problems mentioned above, the majority of start-up businesses fail and those that do survive don’t always reach full potential. Reasons for failure are usually poor management and/or lack of funding.
Personal rewards – Owning and managing a small business is very rewarding psychologically as owners are responsible for their own successes and there is freedom to make decisions and implement them. The financial rewards are great too.
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