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    Small Business

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    maryannandalmorado13
    1. Small businesses are defined as having total assets of less than $5 million and are privately owned with few management layers. They have limited capital but can be efficient in specialized skills. 2. Small businesses contribute to the economy by introducing innovations, creating employment, and providing competition to larger firms by filling niche needs. However, they also face disadvantages like difficulty raising capital and limited managerial skills. 3. Common reasons for small business failure include lack of experience, insufficient funding, poor location selection, inventory mismanagement, and weak financial analysis when starting the business. Personalized customer service and flexibility are advantages, while risk of failure is a

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    Small Business

    Uploaded by

    maryannandalmorado13
    10 views18 pages
    1. Small businesses are defined as having total assets of less than $5 million and are privately owned with few management layers. They have limited capital but can be efficient in specialized skills. 2. Small businesses contribute to the economy by introducing innovations, creating employment, and providing competition to larger firms by filling niche needs. However, they also face disadvantages like difficulty raising capital and limited managerial skills. 3. Common reasons for small business failure include lack of experience, insufficient funding, poor location selection, inventory mismanagement, and weak financial analysis when starting the business. Personalized customer service and flexibility are advantages, while risk of failure is a

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    1. Small businesses are defined as having total assets of less than $5 million and are privately owned with few management layers. They have limited capital but can be efficient in specialized skills. 2. Small businesses contribute to the economy by introducing innovations, creating employment, and providing competition to larger firms by filling niche needs. However, they also face disadvantages like difficulty raising capital and limited managerial skills. 3. Common reasons for small business failure include lack of experience, insufficient funding, poor location selection, inventory mismanagement, and weak financial analysis when starting the business. Personalized customer service and flexibility are advantages, while risk of failure is a

    Copyright:

    © All Rights Reserved
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    Download as pptx, pdf, or txt
    10 views18 pages

    Small Business

    Uploaded by

    maryannandalmorado13
    1. Small businesses are defined as having total assets of less than $5 million and are privately owned with few management layers. They have limited capital but can be efficient in specialized skills. 2. Small businesses contribute to the economy by introducing innovations, creating employment, and providing competition to larger firms by filling niche needs. However, they also face disadvantages like difficulty raising capital and limited managerial skills. 3. Common reasons for small business failure include lack of experience, insufficient funding, poor location selection, inventory mismanagement, and weak financial analysis when starting the business. Personalized customer service and flexibility are advantages, while risk of failure is a

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 18

    Small Business

    • Business- is defined as an organized effort of


    individuals to produce and sell goods or
    services in order to satisfy the need of the
    society. And the primary objective of business
    is to acquire profit.
    Small Business
    The magna Carta of Small Enterprises (R.A. 6977) defines
    small and medium enterprise as any business activity or
    enterprise engaged in industry, agribusiness and services,
    whether single proprietorship, cooperative, partnership or
    corporation whose total assets inclusive of those arising from
    loans but exclusive of the land on which the particular
    business is situated must have value falling under the
    following categories:
    Micro : less than P50,000
    Cottage: P50,001- P500,000
    Small: P500,001- P5,000,000
    Medium: 5,000,001 – P20,000,000
    However, small business has common
    characteristics:
    – It is privately owned
    – It has few or no layers of management
    – Generally, it has insufficient funds to
    dominate its field of business.
    Features of Small Business
    1. A small business is low in capital but high in labor intensity.
    Most small businesses do not have sufficient financial
    resources. So they cannot purchase big machines or modern
    equipments.

    2. A small business is efficient in specialized skills or service. It


    can well produce goods or services that are designed to the
    particular needs of an individual or few clients.

    3. A small business succeeds in small, isolated or overlooked


    markets. In rural communities where markets are small due
    to the few residents, a small business is viable.
    Features of Small Business
    4. A small business often operates in unstable markets. Big
    corporations are careful in their investments. To be sure or safe
    their business ventures, they conduct market or feasibility
    studies to determine viability, such feasibility studies do not
    apply in most small businesses. With little capital they are not
    afraid to experiment or test the market.

    5. A small business is closer to the community or the market place.


    Not a few small businesses conduct their operations right inside
    the community. Being closer to costumers or clients, compared
    with corporations, they get first hand information about client’s
    preferences.
    Features of Small Business
    6. Generally the owners of small business are also the
    manager. Most of our small enterprises in the Philippines
    are like these. The owner-manager employs his/her spouse
    and children.
    7. Capital comes from the owner or small group. Here in the
    Philippines a small business is usually financed by the
    family through their savings or loans.
    8. The area of operation is small. This means the business is
    community based.
    9. The size of the enterprise is small in relation to the industry.
    Difference between Big and Small Enterprises:
    1. Small businesses as a group change through a cycle
    of births and deaths. In case of big enterprises,
    change is through expansion and contraction.
    2. Small business risk or reward estimate is done by
    the individual owner who either gets profit or loss,
    while in large corporations the risk and reward
    calculation is done by employee-managers.
    Difference between Big and Small Enterprises:
    3. Small businesses have little or no economic
    power. On the other hand, big businesses
    have tremendous influence on the economy
    including the political sector.
    4. Small businesses serve markets which big
    businesses do not like to serve.
    Advantages of Small Business
    1. Personal relationship with customers and employees.
    Business owners deal with their customers and
    employees in a personalized services and manners.
    2. Flexibility in management. The owner being the boss and
    the manager can easily introduce changes in his product
    or services, experiment on price strategies or change
    service hours to fit market conditions.
    3. Government incentives. The national government has
    been promoting the organization of small enterprises. It
    extends both financial and technical assistance,
    particularly production and marketing to small
    entrepreneurs.
    Advantages of Small Business
    4. Small record keeping. Small enterprises
    require few and simple sets of records.

    5. Independence. Small business owners are the


    masters of their own destinies. They are not
    employees. They make their own decisions.
    Disadvantages of Small Business:
    1.Difficulty of raising capital. Without financial
    assistance from the government, a small business has
    limited ability to obtain funds from others. Initially, it
    is the owner who provides capital for his business. If
    additional funds are needed, these can be obtained
    from relatives, friends or banks.
    2.Risk of failure. A small business does not have enough
    financial resources to survive bad economic
    conditions. Its inability to absorb losses and
    unforeseen events forces the owner or their families
    to go out of business.
    Disadvantages of Small Business:

    3.Limited managerial skills. Owners of small businesses


    lack management skills. They have no formal
    education in management and marketing. They just
    manage their enterprises through institutions or
    practical business skills.
    4.Lack of opportunities for employees. In the
    Philippines, small business is family owned. Those
    holding managerial and supervisory positions belong
    to the family or relatives in most cases.
    Why does Business Fail?

    • Lack of experience
    • Lack of money
    • Wrong location
    • Mismanagement of inventory
    • Poor credit practices
    • Poorly planned expansion
    • Unsound or too little analysis in choosing the business.
    Economic Contributions of Small Businesses:
    • They introduce innovations. Invention and
    innovation are key factors in economic
    development. These are responsible in reducing
    time, labor and cost of production.

    • They create employment. Small businesses are


    main providers of jobs. Almost all non-
    government employees come from small business.
    •
    Economic Contributions of Small Businesses:
    3. They provide competition. Small businesses, as a group,
    challenge big businesses in many ways. This, small businesses
    tend to be more efficient and responsive to the needs of the
    costumers or clients. In their particular fields and ways, small
    businesses have a combined competitive force against bigger
    firms.

    4. They fill the needs of society and big business. Big


    enterprises, because of their large scale and mass production,
    are not willing or are not able to satisfy the special needs of
    smaller group of consumers, while businesses profitably fit
    their products or services to the needs of smaller group of
    consumers or the masses.
    Assignment:
    • Micro business is suitable for our masses. Why?
    • What are the common characteristics of small
    business?
    • Why small business is more effective than big
    business in small and isolated areas.
    • Explain the 3 causes of small business failure.
    • Why are small enterprises important?

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