Small businesses are easy to start and develop as compared to large ones. A business is said to be small depending on various factors, which differ from one country to the other. In the U.S., a business is regarded as small if it has less than 500 employees. Other criteria are asset, sales and annual profits. They are vital to any countries economy through providing employment, revenue among others.
The following paper is a description of the concepts, general terms and statistics of small business. It also outlines the benefits the small businesses have on the economy. I will refer to the U.S economy throughout this paper.
A small business is a business in which ownership and operation are privately managed, and whose sales volume is relatively low. Whether a business is small, is usually determined by the number of employees, which are the same time ranges from one country to the other. In the U.S., companies with less than 500 employees are classified as small businesses. Other criteria for small business classification are net profit, assets and sales. A study in the US by Small Business Administration (SBA), indicated that 99.9% of businesses in the U.S operate with less than 500 employees, qualifying them as small businesses. Small businesses in the U.S. are quite influential in job creation and innovation (Levicki,1984).
Characteristics of small businesses
Spirit of entrepreneurship- Optimism, motivation, enthusiasm and desire to succeed, characterize small businesses owners. Most are not scared about taking risks. This could be attributed to the amount of money invested as compared to large businesses. There are also favorable legislation in place which encourages the establishment of small businesses.
Managerial skills- Leading, planning, organizing, controlling major business activities define management. Small business owners in most cases mostly possess only one of the managerial skills. Managerial skills are limited,...