Entrepreneurial Mind - Lesson 3: The Nature of Small Business

Lesson 3: The Nature of Small Business

Small Business

One which is independently owned and operated and which is not dominant in its field of operation

Independently owned

ownership is by a private individual, a partnership or corporation

Small Business under total assets approach

as one having total assets that fall within a certain bracket

Types of Small Business

-Manufacturing
-Service
-Wholesaling
-Retailing
-General Construction Firms

Manufacturing

it is one involved in the conversion of raw materials into products needed by society

Service

are those that provide service in one way or another

Wholesaling

Refers to the activities of persons or establishments that sells to retailers and other merchants and/or to industrial, institutional, and commercial users but do not sell in large amounts to final consumers

Retailing

Covers all activities involved in the sale of goods and services to the final consumers

General construction firms

Are those engaged in the construction of buildings whether for private individuals or firms or for the government

Classification of Service

1. Business Services
2. Personal Services
3. Repair Services
4. Entertainment and Recreation
5. Hotels and Motels
6. Education Service

Business Services

Provide service to other business

Repair Services

provide repair services to owners of various machinery and appliances

Entertainment and Recreation

includes movie houses, resorts, billiard, pool centers and the like

Education Services

Include montessori schools for children, high school, correspondence schools

Characteristics of Small Business

1. Independent Management
2. Small Capital Requirement

Independent Management

The owner is also the manager

Small Capital Requirement

Small Business requires

Advantages of Operating Small Business

- Be an employee
- Be an professional
- Be a small business operator

Benefits of Small Business Operator

-Opportunity to gain control over his own destiny
-Opportunity to reach his full potential
-Opportunity to reap unlimited profits
-Opportunity to make a contribution to society and receive recognition for his efforts

Opportunity to gain control over his own destiny

The perspective of small business owners can choose from several business opportunities that they would like to take advantage of

Opportunity to reach full potential

The employees will do his work based on prescribed targets which may only require less than his full potential

Opportunity to reap unlimited profits

It the small succeeds, all profits, big or small, accrue to the owner

Opportunity to make a contribution to society and receive recognition for his efforts

Entrepreneurs who make innovative products available to the public are recognized properly by society

Disadvantages of Operating Small Business

- Uncertainty of income
- Risk of losing your entire capital investment
- Lower Quality of life until the business gets established
- Complete responsibility
- Having to serve undesirable customers
- Paperwork and other chores
- Long hours and demanding work condition