The Nature of Small Business Chapter II

Sam Walton – Wal-Mart

Richard W. Sears - SEARS

Ray Kroc – McDonald’s

Michael Dell – Dell Inc.

Andrew Grove – Intel

Bill Gates - Microsoft

Small Business Two Approaches: Market Share Total Assets Small business may be defined as one which is independently owned and operated and which is not dominant in its field of operation Total Assets Small business may be defined under the total assets approach as one having total assets that fall within a certain bracket. Magna Carta for Small Enterprises (R.A. 6977)

Businesses according to SIZE Business (Size) Public Enterprises Private Enterprises Micro Business Cottage Business Small Business Medium Business Large Business

Types of Small Business Small Manufacturing Business Involved in the conversion of raw materials into products needed by society. EX: bakeries, tricycle sidecar assembly shops, bagoong manufacturers, restaurants

Types of Small Business Small Service Business Business Services – accounting firms, janitorial services, security services Personal Services – massage parlor, voice lessons, tutoring services Repair Services – auto repair shops, watch repair shops, plumbing services Entertainment and recreation – movie houses, resorts, billiards Hotels and motels Educational services

Wholesaling It refers to activities of 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.

Retailing - covers all activities involved in the sale of goods and or services to the final consumers

General Construction Firms -- are engaged in construction of buildings

Characteristics of Small Business Independent Management – owner is also a manager Small Capital Requirement Mostly Local Operation

Economic Importance of Small Business Provide economic opportunities for entrepreneurs Provide products and services to consumers (production) Supply products and services to other businesses Distribute products and services of other businesses Support the government i.e. taxes Provide employment

Economic Importance of Small Business economic opportunities for entrepreneurs products and services to consumers provides support the government i.e. taxes employment supplies products and services to and for other businesses Small Business distributes

Advantages of Operating a Small Business 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

Disadvantages of Operating a 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 conditions

Characteristics of Small Business FACTOR SBO Employment 1. Income uncertain certain 2. Capital Investment risk of losing none required 3. Quality of Life low until business gets established consistent at certain level   Responsibility: a) control over destiny present absent b) reach full potential c) reap unlimited profits d) contribution to society and receive recognition limited