Roles of Small Business in the Economy
01. INTRODUCTION
What is a small business?
A small business refers to a designation for firms of a certain small size which fall below certain criteria (that varies from country to country) in terms of annual turnover, number of employees, total value of assets, and other factors which may be used.
Small businesses are common in many countries, depending on the economic system in operation. Typical examples include: convenience stores, other small shops (such as a bakery or delicatessen), hairdressers, tradesmen, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing, and online business, such as web design and programming, etc
Characteristics of a small business
A small business may be categorized as a firm with 1 to 50 employees, mainly run by an individual (sole proprietorship) or run on the family basis(life style firm). Usually easy to form and always has a sluggish pace of growth and takes a number of years to grow, small amount of capital to start and a small amount of turnover per year.
There are almost five significant parameters that have been used to define small business. Each of these parameters is being characterized and analyze in order to clarify the existing status and for suggesting the less ambiguous alternative for using that parameter.
First, the business must be independent: For that matter, a subsidiary or a branch can 't be considering as independent business.
Second, the business is not dominant in the industry it 's operating in: Part of 'Monopolistic Competition ' definition can be used to characterize the parameter - There are many sellers and they believe that their actions will not materially affect their competitors.
Third, firm size (number of employees): This parameter is obviously the most popular in defining small business; nonetheless its use varies dramatically. If you 're in U.S. then an employer of up to 500 employees will still be consider as small business, contrary to U.S. in
What is a small business?
A small business refers to a designation for firms of a certain small size which fall below certain criteria (that varies from country to country) in terms of annual turnover, number of employees, total value of assets, and other factors which may be used.
Small businesses are common in many countries, depending on the economic system in operation. Typical examples include: convenience stores, other small shops (such as a bakery or delicatessen), hairdressers, tradesmen, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing, and online business, such as web design and programming, etc
Characteristics of a small business
A small business may be categorized as a firm with 1 to 50 employees, mainly run by an individual (sole proprietorship) or run on the family basis(life style firm). Usually easy to form and always has a sluggish pace of growth and takes a number of years to grow, small amount of capital to start and a small amount of turnover per year.
There are almost five significant parameters that have been used to define small business. Each of these parameters is being characterized and analyze in order to clarify the existing status and for suggesting the less ambiguous alternative for using that parameter.
First, the business must be independent: For that matter, a subsidiary or a branch can 't be considering as independent business.
Second, the business is not dominant in the industry it 's operating in: Part of 'Monopolistic Competition ' definition can be used to characterize the parameter - There are many sellers and they believe that their actions will not materially affect their competitors.
Third, firm size (number of employees): This parameter is obviously the most popular in defining small business; nonetheless its use varies dramatically. If you 're in U.S. then an employer of up to 500 employees will still be consider as small business, contrary to U.S. in
Bibliography: BOOKS; Charton I, (2010), Entrepreneurial Management in Small Firms, 8THEd, Sage Publications, New Delhi Mishkin P (2008), The Economics of money, Banking and Financial Markets, 6th Ed, Pearson International, London WEBSITES; http//en.wikipedia.org http://www.wilsonweb.com http//www.amazon.com http//www.doctorebiz.com http//www.about.com