Nature of Small Business - Vocabulary Flashcards

Vocabulary flashcards covering key definitions and concepts from the notes on the nature of small business and related classifications.

Small business

Privately owned, independently operated enterprise that operates on a smaller scale and is not dominant in its field.

Privately owned enterprise

An enterprise owned by individuals or private entities rather than by the state or public shareholders.

Not dominant in its field

Has limited influence or market control within its industry.

Ownership

The legal arrangement of who owns and controls the business.

Capital & Assets

Financial resources and assets available to a business; typically limited in small firms.

Employees

Number of workers; for small business definitions, usually fewer than 100.

Market Area

Geographic area served by the business (local or regional, not national/international).

Management

How the business is run; often directly by owners with less formal structures.

Revenue

Annual sales income; typically lower in small businesses and may be subject to thresholds.

Magna Carta for Micro, Small and Medium Enterprises (RA 9501)

Philippine law that defines micro, small, and medium enterprises by staff and asset size.

Micro enterprise

1–9 employees; assets less than Php 3 million.

Small enterprise

10–99 employees; assets between Php 3 million and Php 15 million.

Medium enterprise

100–199 employees; assets between Php 15 million and Php 100 million.

Initial Capital Outlay

Total money needed to establish and start operating the business, including one-time costs.

Start-up capital

Synonym for initial capital outlay; funds required to launch the business.

Facilities and equipment

Premises, furniture, tools, and machinery needed to operate.

Initial inventory or raw materials

Stock and materials required to begin production or sale.

Technology

Hardware, software, and systems used to start and run the business.

Marketing and promotion

Advertising, branding, and launch campaigns to attract customers.

Working capital reserve

Funds set aside to cover operating costs until the business earns revenue.

Information and Communication Technology (ICT)

Tools like computers, internet, and software used for business operations.

Digital and Online Technology

Online platforms, websites, and e-commerce used for marketing and sales.

Ownership Structure

How ownership and management responsibilities are organized and distributed.

Sole Proprietorship

Owned and managed by one person; full control but unlimited liability.

Partnership

Owned by two or more individuals sharing capital, profits, and risks.

Corporation (Close or Small Corporation)

A separate legal entity with limited liability; more compliance and capital needs.

One Person Corporation (OPC)

A Philippine provision allowing a single individual to form a corporation.

Cooperative

Owned and controlled by a group with a common interest; profits shared.

Production and Operations Technology

Machines and equipment tailored to the business type; typically small-scale.

Financial Technology (FinTech)

Mobile banking, digital wallets, and POS systems to simplify finance.

Management and Productivity Tools

Accounting software, inventory systems, scheduling apps, cloud storage.

Green or Sustainable Technology

Eco-friendly tech like solar panels and energy-efficient equipment.

Trading and Commerce Enterprise

Buys and sells goods; focuses on distribution and sales, profits from margins.

Service Enterprise

Provides skills or labor as the main product; earns from service fees.

Small Manufacturing Enterprise

Produces goods on a small scale using local labor and limited capital.

Advantages of Small Business

Benefits such as low start-up costs, flexibility, and close customer relationships.

Low Start-up Capital Requirement

Can be established with relatively little initial investment.

Flexibility and Quick Decision-Making

Faster adaptation due to fewer management layers.

Close Customer Relationships

Local focus enables personalized service and quick feedback.

Employment Generation

Creates jobs in local communities, supporting local economies.

Innovation and Creativity

Owners often test new ideas and implement creative solutions.

Supports Local Economy

Profits reinvested locally; supports suppliers and producers.

Independence and Control

Autonomy in managing the business and making decisions.

Diverse Business Opportunities

Opportunities to operate in trading, services, or manufacturing.

Disadvantages of Small Business

Limitations and risks typical for small firms.

Limited Capital and Resources

Difficulty in raising funds for expansion or operations.

High Risk of Failure

Many close in first years due to poor planning or competition.

Limited Market Reach

Usually local or regional markets, not nationwide.

Dependence on Owner's Skills

Success often hinges on the owner's knowledge and ability.

Low Economies of Scale

Higher per-unit costs due to inability to bulk-buy.

Difficulty in Attracting Skilled Workers

Lower pay and benefits can lead to turnover.

Vulnerability to Competition

Large firms can outcompete small firms on price and reach.

Limited Use of Technology

Financial constraints limit tech adoption.

Small-scale production (Small Manufacturing)

Limited output compared to large factories.

Use of local raw materials

Inputs sourced from the local community.

Labor-intensive

Production relies on manual labor and simple machinery.

Market scope (local or regional)

Markets served are typically local or regional.

Sari-sari stores

Small neighborhood convenience stores common in the Philippines.

Small bakeries and tailoring shops

Examples of small manufacturing/service enterprises producing goods or services on a small scale.