Small Business

Small Business – one which is independently owned and operated and which is not dominant in its field of operation.

Types of Small Business

1.       Manufacturing – is one involved in converting raw materials into products needed by society.

2.       Service – those that provide services in one way or another.

They may be further classified into the following:

1.       business services – those that provide services to other businesses. Ex. security, janitorial, accounting, collection, etc.

2.       personal services – those that provide service to the person. ex. tutorial, massage, voice lessons, etc.

3.       repair services – those that provide repair services to owners of various machineries, appliances, and equipments. Ex. auto repair, watch repair, plumbing, etc.

4.       entertainment and recreation – include movie houses, resorts, billiard pool centers, etc.

5.       hotels and motels

6.       education services – include preschools(Montessori), correspondence schools, etc. 

3.       Wholesaling – it refers to activities of those persons or establishments which sell to retailers and other merchants and /or to industrial, institutional, and commercial users but who do not sell in large amounts to final consumers.

4.       Retailing – covers all of the activities involved in the sale of goods and/or services to final consumers.

5.       General Construction Firms – those engaged in the construction of buildings whether for private individuals or for the government. many of them perform subcontracting jobs for the bigger contractors such installing electrical facilities and sewerage.

Economic Importance of Small Business

1.        providers of economic opportunities for entrepreneurs.

2.        providers of products and services to consumers

3.       suppliers of products and services to other businesses

4.       distributors of products and services of other businesses

5.       supporters of government

6.       providers of employment

Characteristics of Small Business

1.       Independent Management – the owner is also the manager

2.       Small Capital Requirements – can be supplied by one or few individuals

3.       Mostly local operation – usually operates in a certain locality

Advantages of Operating a Small Business

                 The Opportunity

1.       To gain control his own destiny

2.       To reach his full potential

3.       To reap unlimited profits

4.       To make contribution to society and receive recognition for his efforts

Disadvantages of Operating a Small Business

1.       Uncertainty of income

2.       Risk of losing invested capital

3.       Lower quality of life until the business gets establish

4.       Complete responsibility

5.       Have to serve undesirable customers

6.       Paper work and other chores

7.       Long hours and demanding working conditions

Advantages and Disadvantages of Small Business Operation Compared to Employment

Factor	Small Business Operation	Employment in a Firm
Income	uncertain	Certain
Capital Investment	risk of losing	no capital investment required
Quality of Life	lower until business gets established	Consistent at a certain level
Responsibility	Complete/all encompassing	Restricted to one’s job
Opportunity to: a.        gain control over his own destiny b.       reach his full potential c.        reap unlimited profits d.       make a contribution to society and receive recognition for his efforts	present present present present	absent absent absent limited