The paper "Small Business Management" is a perfect example of management coursework. Businesses exist in many forms, but the most common form of business is a retail business which is commonly referred to as small businesses. The developments of businesses usually start with small enterprises which are major drivers of the global economy. In the world of business, most of these businesses are referred to as SMEs (Small and Medium Enterprises), due to the many challenges these businesses face they tend to remain small in size (Bridge, 2003). Definition of Small Businesses Small businesses have very many defining factors that differentiate them from other types of businesses.
The impact of small businesses in the global economy is very significant, that is why many governments are making efforts to support work done by these small businesses. The most defining characteristic of small businesses is sole ownership; according to the institute for the study of Labour around 80% of small businesses are owned by a single individual who solely operates the business with little or no help (Scarcelia 1999). Small businesses provide self-employment to many people worldwide especially to families since nearly all small businesses are family-owned (Longenecker, 2006).
According to statistics, approximately 70% of small businesses engage in one line of business, for instance, it may be a family-owned grocery, restaurant, or law firm. The definition of a small business is a challenge, but according to the United Nations Industrial Development Organisation (UNIDO), a small business is one in which it employs between 1-49 people. Other nations and organizations define small businesses according to revenue turnover, size, and taxation laws (Puryear, 2008). Studies conducted by international organizations on small business owners reveal a lot as is concerned with inheritance and family ties.
Most small businesses owned by family members show that people with parents or family members who are self-employed tend to later in life own small businesses. Strong intergenerational links exist in the emergence of many small businesses (Moore 2006). According to statistics around 15% of small business owners inherited their business from family. Most small business owners started a business due to influence from family, it is estimated that there is a likelihood that two to three times of people who had parents in self-employment through business are likely to own a business in the future (Fairlie, 2005).
The linkage between parents and their children in the establishment of businesses is very strong; this could be attributed to experience gained by the family in managing such businesses or entrepreneurial skills gained by a certain individual in the small business (Lyles, 2001). Type and Scope of Small Businesses Small businesses are found within many sectors of the economy and range from professional, skilled, or non-skilled industries. The services offered by small businesses range from highly sophisticated industries such as energy consultancy work to simple businesses such as groceries.
According to research and statistics, many small start-up businesses never make it beyond the first and the more educated the business owner is the higher the rate of success of the business (Weinrauch, 1992). In a study conducted in the United States, many small business owners who had a college degree and above had twice the chances of doing well compared to business owners with no or little formal education (Lyles, 2001).
The advantage of small businesses over big businesses is that they provide personalized services to their customers due to closer interaction with the customer.
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