| Small Business 101 |
 Independently owned and operated businesses are known as small business, with small number of employees and relatively low rate of sale. There is no such concrete definition of small business but if you judge it over number of employees then a business consists of less then 100 employees in US and less than 50 employees in the European Union. Privately owned corporations, partnership farms or sole proprietorships are generally regarded as small businesses. Though number employees is one of the major criterion to classify small business, in it there are other methods which work as the instrument of classification of small business, such as, annual sales or turnover, value of assets and net profit, alone or in a mixed definition. The European Union follows all these criteria. One major characteristic of small businesses is that, they are usually not dominant in their field of operation. Depending on the economic system in operation, small businesses are common in many countries. Typical examples of small business include small shops (example, bakery or delicatessen), convenience stores, hairdressers, tradesmen, restaurants, lawyers, accountants, guesthouses, photographers, small-scale manufacturing etc. Advantages of Small Business:Small business is advantageous from various aspects. Primarily, it can be generated at a very low cost and on a part time basis. Since the introduction of internet marketing, this type of business has received a different dimension, because it is capable of creating a niche of its own in the modern, competitive business arena. If you have a plan to start your small business, then you need to be flexible and ready to adopt changes. If you are sticking to a set of idea then it will be tough for you to create an identity of your own into the market. You need to be intimate with your clients and ready to meet up their demands with proper accountability and responsiveness.Independence is another important factor, which is generating huge number of small business ventures in recent time. If you want to be the boss of your own and ready to undertake all sorts of risks related to your business then small business is most suitable for you. At the same time, you need to do a lot of homework and come up with new ideas to make your venture a successful one. Disadvantages of Small Business:Bankruptcy and undercapitalization are two major problems that you can, if you are planning to start up your small business venture. There is a common rule that before plunging into the market, at least for the first year, you must have access to a sum of money, equal to the projected revenue in addition to your assumed expenses.Apart from assuring that your business has enough capital, you should be careful about the contribution margin, that is, sales minus variable costs. This is common observation that small business owners lower price of their products even under maximum capacity. If you are facing such a condition then by adopting the method of cost control you can resolve this problem. |