A business is generally regarded as small if it has the following characteristics:
– Independently owned and operated
– It is not a public company
– It is closely controlled by the owners who contribute most of the capital
– The principal decisions are approved by the owners
In general, businesses employing less than 20 staff members are considered to be small businesses.
Small businesses are the backbone of the economy but running a small business is not always the easiest. While they are likely unable to compete on prices with major players in the market, they are easily able to establish those personal relationships with their clients, employees, creditors and other stakeholders. They are better able to understand the needs of their customers and customize their products/services to suit their customers.
The obvious drawback with a small business is the lack of availability of capital. Small businesses cannot go to the general public to raise funds whereas a listed company can do that should there be a period of poor performance or if funds are required for any other reason.
Small business owners generally find themselves becoming jack of all trades because they are not able to hire the expertise in everything due to smaller budgets. However, this might not be ideal at all times. Although it might seem like a good idea to avoid paying an expert to do a job for your business, it might take the owner 5 hours to do a job which an expert could have done in an hour. Even after spending those 5 hours, there is no guarantee that it will be done properly.
Priority should be given to increasing the expertise in their own field whereby they are continually able to attract new customers by providing better solutions each day.
Running a small business comes with various responsibilities. Refer to our checklist in the resources section as it will guide you to run your business better. If you would like a business plan for your own business, get in touch at info@shahlegacy.com.au
