Small business

Small businesses are privately owned corporations, partnerships, or sole proprietorships that have fewer employees and/or less annual revenue than a regular-sized business or corporation. Businesses are defined as "small" in terms of being able to apply for government support and qualify for preferential tax policy varies depending on the country and industry. Small businesses range from fifteen employees under the Australian Fair Work Act 2009, fifty employees according to the definition used by the European Union, and fewer than five hundred employees to qualify for many U.S. Small Business Administration programs. While small businesses can also be classified according to other methods, such as annual revenues, shipments, sales, assets, or by annual gross or net revenue or net profits, the number of employees is one of the most widely used measures.

Small businesses in many countries include service or retail operations such as convenience stores, small grocery stores, bakeries or delicatessens, hairdressers or tradespeople (e.g., carpenters, electricians), restaurants, guest houses, photographers, very small-scale manufacturing, and Internet-related businesses such as web design and computer programming. Some professionals operate as small businesses, such as lawyers, accountants, dentists and medical doctors (although these professionals can also work for large organizations or companies). Small businesses vary a great deal in terms of size, revenues and regulatory authorization, both within a country and from country to country. Some small businesses, such as a home accounting business, may only require a business license. On the other hand, other small businesses, such as day cares, retirement homes and restaurants serving liquor are more heavily regulated, and may require inspection and certification from various government authorities.

Small Businesses - geograph.org.uk - 682645
Small businesses on Dalrymple Street in Greenock, Scotland

Characteristics

Centro de Sao Paulo
Small businesses in the Central Zone of São Paulo.

Researchers and analysts of small or owner-managed businesses generally behave as if nominal organizational forms (e.g., partnership, sole-trader, or corporation), and the consequent legal and accounting boundaries of owner-managed firms are consistently meaningful. However, owner-managers often do not delineate their behavior to accord with the implied separation between their personal and business interests. Lenders also often contract around organizational (corporate) boundaries by seeking personal guarantees or accepting privately held assets as collateral.[1] Because of this behavior, researchers and analysts may wish to be cautious in the way they assess the organizational types and implied boundaries in contexts relating to owner-managed firms. These include analyses that use traditional accounting disclosures, and studies that view the firm as defined by some formal organizational structure.

Concepts of small business, self-employment, entrepreneurship, and startup

Genova-Portici di Sottoripa
Portici di Sottoripa, Genova, Italy Galleries tend to form clusters of small business owners over time.

The concepts of small business, self-employment, entrepreneurship, and startup overlap to certain degree but also carry important distinctions. These four concepts often conflated with each other.

Below are the key differences of these concepts in summary:

  • self-employment: an organization created with the primarily intention to give a job to the founders, i.e. sole proprietor operations.
  • entrepreneurship: all new organizations.
  • startup: a temporary new organization created with the intention to be bigger (at least have employees).
  • small business: an organization that is small (few employees) and may or may not have the intention to be bigger.

From the summaries, we can see that many small businesses are sole proprietor operations consisting solely of the owner, but small businesses can have a small number of employees. When big firms start out, they are known as startups, but not all small businesses are startups that aim to become bigger. Many of these small businesses offer an existing product, process or service, and they do not aim at growth. In contrast, startups aim for growth and often offer an innovative product, process or service, and the entrepreneurs of startups typically aim to scale up the company by adding employees, seeking international sales, and so on, a process which is financed by venture capital and angel investments. Successful entrepreneurs have the ability to lead a business in a positive direction by proper planning, to adapt to changing environments and understand their own strengths and weakness.[2] Spectacular success stories stem from startups that expanded in growth. Examples would be Microsoft, Genentech, and Federal Express which all embody the sense of new venture creation on small business.[3]

Self-employment provides works primarily for the founders. Entrepreneurship refers all new businesses, including self-employment and businesses that never intend to grow big or become registered, but startups refer to new businesses that intend to grow beyond the founders, to have employees, and grow large.

Size definitions

The legal definition of "small business" varies by country and by industry. In addition to number of employees, methods used to classify small companies include annual sales (turnover), value of assets and net profit (balance sheet), alone or as a combination of factors.

  • In the United States, the Small Business Administration establishes small business size standards on an industry-by-industry basis, but generally specifies a small business as having fewer than 500 employees for manufacturing businesses and less than $7.5 million in annual receipts for most non-manufacturing businesses.[4][5] The definition can vary by circumstance—for example, a small business having fewer than 25 full-time equivalent employees with average annual wages below $50,000 qualifies for a tax credit under the health care reform bill Patient Protection and Affordable Care Act.[6] By comparison, a medium-sized business or mid-sized business has fewer than 500 employees.
  • The European Union generally defines a small business as one that has fewer than fifty employees and either turnover or balance sheet less than €10 m.[7] but the European Commission is undertaking a review of this definition.[8] By comparison, a medium-sized business has fewer than 250 employees and either turnover less than €50 m. or balance sheet less than €43 m.[7]
  • In Australia, a small business is defined by the Fair Work Act 2009 as one with fewer than fifteen employees. By comparison, a medium-sized business or mid-sized business has fewer than two hundred employees.
  • In South Africa, the National Small Business Amendment Act (Act 26 of 2003) defines businesses in a variety of ways using five categories previously established by the National Small Business Act (Act 102 of 1996), namely, standard industrial sector and subsector classification, size of class, equivalent of paid employees, turnover and asset value excluding fixed property.[9]

Small businesses are usually not dominant in their field of operation.[10]

The table below serves as a useful guide to business size nomenclature.

Business size definitions (by number of employees)

AUS US CAN EU
Minute/Micro 1-2 1-6 1-4 <10
Small <15 <250 1-99 <50
Medium <200 <500 100-499 <250
Large <500 <1000 >500 <1000
Enterprise >500 >1000 N/A >1000
  • Most cells reflect sizes not defined in legislation
  • Some definitions are multi-parameter, e.g., by industry, revenue or market share

Demographics

In 2016 a study that examined the demographic of small business owners was published. The study showed that the median American small business owners were above the age of 50. The ages were distributed as: 51% over 50 years old, 33% between the ages 35–49, and 16% being under the age of 35. As for sex: 55% were owned by males, 36% by females, and 9% being equal ownership of both males and females. As for race: 72% were white/Caucasian, 13.5% were Latinos, 6.3% were African American, 6.2% were Asian, and 2% as other. As for educational background: 39% had obtained a bachelor's degree or higher, 33% had some college background, and 28% received at least a high school diploma.[11]

The United States census data for the years 2014 and 2015 shows the women's ownership share of small businesses by firm size. The data explains percentages owned by women along with the number of employees including the owner. Generally, the smaller the business, the more likely to be owned by a woman. The data shows that about 22% of small businesses with 100-500 employees were owned by women, a percentage that rises the smaller the business. 41% of businesses with just 2-4 employees were run by women, and in businesses with just one person, that person was a woman 51% of the time.[11]

Franchise businesses

Franchising is a way for small business owners to benefit from the economies of scale of the big corporation (franchiser). McDonald's and Subway are examples of a franchise. The small business owner can leverage a strong brand name and purchasing power of the larger company while keeping their own investment affordable. However, some franchisees conclude that they suffer the "worst of both worlds" feeling they are too restricted by corporate mandates and lack true independence. It is an assumption that small business are just franchisees, but the truth is many franchisers are also small businesses, Although considered to be a successful way of doing business, literature has proved that there is a high failure rate in franchising as well, especially in UK, where research indicates that out of 1658 franchising companies operating in 1984, only 601 remained in 1998, a mere 36%.[12]

Retailers' cooperative

A retailers' cooperative is a type of cooperative which employs economies of scale on behalf of its retailer members. Retailers' cooperatives use their purchasing power to acquire discounts from manufacturers and often share marketing expenses. They are often recognized as "local groups" because they own their own stores within the community.[13] It is common for locally owned grocery stores, hardware stores, and pharmacies to participate in retailers' cooperatives. Ace Hardware, True Value, and NAPA are examples of a retailers' cooperative. Retail cooperatives also allow consumers to supply their own earnings and gain bargaining power outside of the business sector.[13] Retail cooperatives mainly reside within small communities where local businesses are often shut down.[13]

Advantages

BursaMercatiVerde
Small business in Bursa, Turkey. One of the claimed advantages of small business owners is the ability to serve market niches not served by mass production industries. Consider how few major corporations would be willing to deal the risks and uncertainty that small antique store deals with: buying and selling non-standardized items and making quick assessments of the value of rare items.

Many small businesses can be started at a low cost and on a part-time basis, while a person continues a regular job with an employer or provides care for family members in the home. In developing countries, many small businesses are sole-proprietor operations such as selling produce at a market stall or preparing hot food to sell on the street, that provide a small income. In the 2000s, a small business is also well suited to Internet marketing; because, it can easily serve specialized niches, something that would have been more difficult prior to the Internet revolution which began in the late 1990s. Internet marketing gives small businesses the ability to market with smaller budgets. Adapting to change is crucial in business and particularly small business; not being tied to the bureaucratic inertia associated with large corporations, small businesses can respond to changing marketplace demand more quickly. Small business proprietors tend to be in closer personal contact with their customers and clients than large corporations, as small business owners see their customers in person each week.

One study showed that small, local businesses are better for a local economy than the introduction of new chain stores. By opening up new national level chain stores, the profits of locally owned businesses greatly decrease and many businesses end up failing and having to close. This creates an exponential effect. When one store closes, people lose their jobs, other businesses lose business from the failed business, and so on. In many cases, large firms displace just as many jobs as they create.[14]

Independence is another advantage of owning a small business. A small business owner does not have to report to a supervisor or manager. In addition, many people desire to make their own decisions, take their own risks, and reap the rewards of their efforts. Small business owners possess the flexibility and freedom to making their own decisions within the constraints imposed by economic and other environmental factors.[15] However, entrepreneurs have to work for very long hours and understand that ultimately their customers are their bosses.

Several organizations in the United States also provide help for the small business sector, such as the Internal Revenue Service's Small Business and Self-Employed One-Stop Resource.[16] Small businesses (often carried out by family members) adjust quicker to the changing conditions; however, they are closed to the absorption of new knowledge and employing new labor from outside.[17]

Challenges

Small businesses often face a variety of problems, some of which are related to their size. A frequent cause of bankruptcy is under capitalization. This is often a result of poor planning rather than economic conditions. It is a common "rule of thumb" that the entrepreneur should have access to a sum of money at least equal to the projected revenue for the first year of business in addition to his or her anticipated expenses. For example, if the prospective owner thinks that he or she will generate $100,000 in revenues in the first year with $150,000 in start-up expenses, then he or she should have not less than $250,000 available. Start-up expenses are often grossly underestimated adding to the burden of the business. Failure to provide this level of funding for the company could leave the owner liable for all of the company's debt should he or she end up in bankruptcy court, under the theory of under capitalization.

In addition to ensuring that the business has enough capital, the small business owner must also be mindful of contribution margin (sales minus variable costs). To break even, the business must be able to reach a level of sales where the contribution margin equals fixed costs. When they first start out, many small business owners under price their products to a point where even at their maximum capacity, it would be impossible to break even. Cost controls or price increases often resolve this problem.

In the United States, some of the largest concerns of small business owners are insurance costs (such as liability and health), rising energy costs, taxes, and tax compliance.[18] In the United Kingdom and Australia, small business owners tend to be more concerned with excessive governmental red tape.[19]

Contracting fraud has been an ongoing problem for small businesses in the United States. Small businesses are legally obligated to receive a fair portion (23 percent) of the total value of all the government's prime contracts as mandated by the Small Business Act of 1953. Since 2002, a series of federal investigations have found fraud, abuse, loopholes, and a lack of oversight in federal small business contracting, which has led to the diversion of billions of dollars in small business contracts to large corporations.

Another problem for many small businesses is termed the 'Entrepreneurial Myth' or E-Myth. The mythic assumption is that an expert in a given technical field will also be expert at running that kind of business. Additional business management skills are needed to keep a business running smoothly. Some of this misunderstanding arises from the failure to distinguish between small business managers as entrepreneurs or capitalists. While nearly all owner-managers of small firms are obliged to assume the role of capitalist, only a minority will act as entrepreneur.[20] The line between an owner-manager and an entrepreneur can be defined by whether or not their business is growth oriented. In general, small business owners are primarily focused on surviving rather than growing; therefore, not experiencing the five stages of the corporate life cycle (birth, growth, maturity, revival, and decline) like an entrepreneur would.[21]

Another problem for many small businesses is the capacity of much larger businesses to influence or sometimes determine their chances for success. Business networking and social media has been used as a major tool by small businesses in the UK, but most of them just use a "scatter-gun" approach in a desperate attempt to exploit the market which is not that successful.[22] Over half of small firms lack a business plan, a tool that is considered one of the most important factors for a venture's success. Business planning is associated with improved growth prospects. Funders and investors usually require a business plan. A plan also serves as a strategic planning document for owners and CEOs, which can be used as a "bible" for decision-making [23]

An international trade survey indicated that the British share of businesses which are exporting rose from 32% in 2012 to 39% in 2013. Although this may seem positive, in reality the growth is slow, as small business owners shy away from exporting due to actual and perceived barriers. Learning the basics of a foreign language could be the solution to open doors to new trade markets, it is a reality that not all foreign business partners speak English. China is stated to grow by 7.6% in 2013 and still sadly 95% of business owners who want to export to China have no desire and no knowledge to learn their local language.[24]

Bankruptcy

When small business fails, the owner may file for bankruptcy. In most cases, this can be handled through a personal bankruptcy filing. Corporations can file bankruptcy, but if it is out of business and valuable corporate assets are likely to be repossessed by secured creditors, there is little advantage to going to the expense of a corporate bankruptcy. Many states offer exemptions for small business assets so they can continue to operate during and after personal bankruptcy. However, corporate assets are normally not exempt; hence, it may be more difficult to continue operating an incorporated business if the owner files bankruptcy. Researchers have examined small business failures in some depth, with attempts to model the predictability of failure.[25][26]

Social responsibility

Small businesses can encounter several problems related to engaging in corporate social responsibility, due to characteristics inherent in their size. Owners of small businesses often participate heavily in the day-to-day operations of their companies. This results in a lack of time for the owner to coordinate socially responsible efforts, such as supporting local charities or not-for-profit activities.[27] Additionally, a small business owner's expertise often falls outside the realm of socially responsible practices, which contributing to a lack of participation. Small businesses also face a form of peer pressure from larger forces in their respective industries, making it difficult to oppose and work against industry expectations.[27] Furthermore, small businesses undergo stress from shareholder expectations. Because small businesses have more personal relationships with their patrons and local shareholders, they must also be prepared to withstand closer scrutiny if they want to share in the benefits of committing to socially responsible practices or not. [27]

Job quality

While small businesses employ over half the workforce in the US [28] and have been established as a main driving force behind job creation,[29] the quality of the jobs these businesses create has been called into question. Small businesses generally employ individuals from the Secondary labour market. As a result, in the U.S., wages are 49% higher for employees of large firms.[29] Additionally, many small businesses struggle or are unable to provide employees with benefits they would be given at larger firms. Research from the U.S. Small Business Administration indicates that employees of large firms are 17% more likely to receive benefits including salary, paid leave, paid holidays, bonuses, insurance, and retirement plans.[30] Both lower wages and fewer benefits combine to create a job turnover rate among U.S. small businesses that is three times higher than large firms.[29] Employees of small businesses also must adapt to the higher failure rate of small firms, which means that they are more likely to lose their job due to the firm going under. In the U.S. 69% of small businesses last at least two years, but this percentage drops to 51% for firms reaching five years in operation.[28] The U.S. Small Business Administration counts companies with as much as $35.5 million in sales and 1,500 employees as "small businesses", depending on the industry. Outside government, companies with less than $7 million in sales and fewer than five hundred employees are widely considered small businesses.

Cyber crime

Cyber crime, in the business world can be broken down into 4 main categories. They include loss of reputation and consumer confidence, cost of fixing the issue, loss of capital and assets, and legal difficulties that can come from these problems. Loss of reputation and consumer confidence can be impacted greatly after one attack. Many small businesses will struggle to gain confidence and trust in their customers after being known for having problems prior. Cost of fixing the cyber attack would require experts outside of their field to further the investigation and find the problem. Being down for a business means losing money at the same time. This could halt the online operations and mean the business could potentially be down for a long period of time. Loss of capital and assets ties well in with the cost of fixing the issue. During a cyber attack, a business may lose their funds for that business. Worst-case scenario, a business may actually lose all their working capital and funds. The legal difficulties involved with cyber crime can become pricy and hurt the business itself for not having standard security measures and standards. Security not only for the business but more importantly the customer should be number one priority when dealing with security protocol.[31]

The monetary dollar damage caused by cyber crime in 2016 equalled out to be over 1.33 billion dollars in the United States alone. In 2016, California alone had over 255 million dollars reported to the IC3. The average company this year in the United States amounted to 17.36 million dollars in cyber crime attacks. Certain cyber attacks can vary on how long it takes to solve a problem. It can take upwards to 69 days for an average everyday attack on a business. The types of attacks include viruses and malware issues. Employee activities within the workspace can also render a cyber attack. Employees using mobile devices or remote work access off the job makes it easier for a cyber attack to occur.[32]

Marketing

Although small businesses have close relationships with their existing customers, finding new customers and reaching new markets is a major challenge for small business owners. Small businesses typically find themselves strapped for time to do marketing, as they have to run the day-to-day aspects of the business. To create a continual stream of new business and find new clients and customers, they must work on marketing their business continuously. Low sales (result of poor marketing) is one of the major reasons of small business failure. Common marketing techniques for small business include business networking (e.g., attending Chamber of Commerce events or trade fairs), "word of mouth" promotion by existing customers, customer referrals, Yellow pages directories, television, radio, and outdoor ads (e.g., roadside billboards), print ads, and Internet marketing. TV ads can be quite expensive, so they are normally intended to create awareness of a product or service. Another means by which small businesses can advertise is through the use of "deal of the day" websites such as Groupon and Living Social. These Internet deals encourage customers to patronize small businesses.

Keyword-research-competition-analysis
Example of keyword analysis based on market competition.

Many small business owners find internet marketing more affordable. Google AdWords and Yahoo! Search Marketing are two popular options of getting small business products or services in front of motivated web searchers. Social media has also become an affordable route of marketing for small business. It is a fraction of the cost of traditional marketing and small businesses are able to do it themselves or find small social marketing agencies that they can hire out for a small fee. Statistically, social media marketing has a higher lead-to-close rate than traditional media. Successful online small business marketers are also adept at utilizing the most relevant keywords in their website content. Advertising on niche websites that are frequented by potential customers can also be effective, but with the long tail of the Internet, it can be time intensive to advertise on enough websites to garner an effective reach.

Creating a business website has become increasingly affordable with many do-it-yourself programs now available for beginners. A website can provide significant marketing exposure for small businesses when marketed through the Internet and other channels. Some popular services are WordPress, Joomla Squarespace, Wix and EXAI. Social media has proven to be very useful in gaining additional exposure for many small businesses. Many small business owners use Facebook and Twitter as a way to reach out to their loyal customers to give them news about specials of the day or special coupons, generate repeat business and reach out to new potential clients. The relational nature of social media, along with its immediacy and twenty-four-hour presence lend intimacy to the relationships small businesses can have with their customers, while making it more efficient for them to communicate with greater numbers. Facebook ads are also a very cost-effective way for small businesses owners to reach a targeted audience with a very specific message. In addition to the social networking sites, blogs have become a highly effective way for small businesses to position themselves as experts on issues that are important to their customers. This can be done with a proprietary blog and/or by using a back-link strategy wherein the marketer comments on other blogs and leaves a link to the small business' own website. Posting to a blog about the company's business or service area regularly can increase web traffic to a company website.

Marketing plan

  • Market research – To produce a marketing plan for small businesses, research needs to be done on similar businesses, which should include desk research (done online or with directories) and field research. This gives an insight in the target group’s behavior and shopping patterns. Analyzing the competitor’s marketing strategies makes it easier for small business to gain market share.
  • Marketing mix[33] – Marketing mix is a crucial factor for any business to be successful. Especially for a small business, examining a competitor’s marketing mix can be very helpful. An appropriate market mix, which uses different types of marketing, can help to boost sales.
  • Product life cycle[34] – After the launch of the business, crucial points of focus should be the growth phase (adding customers, adding products or services, and/or expanding to new markets) and working towards the maturity phase. Once the business reaches maturity stage, an extension strategy should be in place. Re-launching is also an option at this stage. Pricing strategy should be flexible and based on the different stages of the product life cycle.
  • Promotion techniques – It is preferable to keep promotion expenses as low as possible. ‘Word of mouth’, ‘email marketing’, ‘print-ads’ in local newspapers etc. can be effective.
  • Channels of distribution – Selecting an effective channel of distribution may reduce the promotional expenses as well as overall expenses for a small business.

Contribution to the economy

In the US, small businesses (fewer than five hundred employees) account for more than half the non-farm, private GDP and around half the private sector employment.[28] Regarding small business, the top job provider is those with fewer than ten employees, and those with ten or more but fewer than twenty employees comes in as the second, and those with twenty or more but fewer than one hundred employees comes in as the third (interpolation of data from the following references).[35] The most recent data shows firms with fewer than twenty employees account for slightly more than 18% of the employment.[36]

According to "The Family Business Review," "There are approximately seventeen million sole-proprietorship in the US. It can be argued that a sole-proprietorship (an unincorporated business owned by a single person) is a type of family business" and "there are twenty-two million small businesses (fewer than five hundred employees) in the US and approximately 14,000 big businesses." Also, it has been found that small businesses created the newest jobs in communities, "In 1979, David Birch published the first empirical evidence that small firms (fewer than 100 employees) created the most new jobs", and Edmiston claimed that "perhaps the greatest generator of interest in entrepreneurship and small business is the widely held belief that small businesses in the United States create most new jobs. The evidence suggests that small businesses indeed create a substantial majority of net new jobs in an average year." The U.S. Small Business Administration has found small businesses have created two-thirds of net new private sector jobs in the US since 2007.[37] Local businesses provide competition to each other and also challenge corporate giants. Of the 5,369,068 employer firms in 1995, 78.8 percent had fewer than ten employees, and 99.7 percent had fewer than five hundred employees.[38]

Sources of funding

StateLibQld 1 119152 Small businesses in Biloela, 1949
Small businesses in Biloela, Central Queensland, Australia, 1949

Small businesses use various sources available for start-up capital:

  • Self-financing by the owner through cash savings, equity loan on his or her home, and or other assets
  • Loans or financial gifts from friends or relatives
  • Grants from private foundations, government or other sources
  • Private stock issue
  • Forming partnerships
  • Angel investors
  • Loans from banks, credit unions, or other financial institutions
  • SME finance, including collateral-based lending and venture capital, given sufficiently sound business venture plans

Some small businesses are further financed through credit card debt—usually a poor choice, given that the interest rate on credit cards is often several times the rate that would be paid on a line of credit at a bank or a bank loan. Recent research suggests that the use of credit scores in small business lending by community banks is surprisingly widespread. Moreover, the scores employed tend to be the consumer credit scores of the small business owners rather than the more encompassing small business credit scores that include data on the firms as well as on the owners.[39] Many owners seek a bank loan in the name of their business; however, banks will usually insist on a personal guarantee by the business owner.

In the United States, the Small Business Administration (SBA) runs several loan programs that may help a small business secure loans. In these programs, the SBA guarantees a portion of the loan to the issuing bank, and thus, relieves the bank of some of the risk of extending the loan to a small business. The SBA also requires business owners to pledge personal assets and sign as a personal guarantee for the loan. The 8(a) Business Development Program assists in the development of small businesses owned and operated by African Americans, Hispanics, and Asians.[40] Canadian small businesses can take advantage of federally funded programs and services. See Federal financing for small businesses in Canada (grants and loans).

On October 2010, Alejandro Cremades and Tanya Prive founded the first equity crowdfunding platform[41] for small businesses in history as an alternative source of financing. The platform operates under the name of Rock The Post.[42]

Business networks and advocacy groups

Small businesses often join or come together to form organizations to advocate for their causes or to achieve economies of scale that larger businesses benefit from, such as the opportunity to buy cheaper health insurance in bulk. These organizations include local or regional groups such as Chambers of Commerce and independent business alliances, as well as national or international industry-specific organizations. Such groups often serve a dual purpose, as business networks to provide marketing and connect members to potential sales leads and suppliers, and also as advocacy groups, bringing together many small businesses to provide a stronger voice in regional or national politics. In the case of independent business alliances, promoting the value of locally owned, independent business (not necessarily small) through public education campaigns is integral to their work.

The largest regional small business group in the United States is the Council of Smaller Enterprises, located in Greater Cleveland.[43] United Kingdom trade and Investment (www.ukti.gov.in) gives out research in different markets around the world, also research in program planning and promotional activities to exporters. The BEXA (British Exporters Association) role is to connect new exporters to expert services, it can provide details about regional export contacts, who could be made informally to discuss issues. Trade associations and all major banks could often provide links to international groups in foreign markets, some could also help set up joint venture, trade fairs etc.[44]

A number of youth organizations, including 4-H, Junior Achievement, and Scouting have special interactive programs and training to help young people run their own small business under adult supervision.[45]

See also

References

Notes
  1. ^ Shailer, Gregory E. P. (1 September 1993). "The irrelevance of organisational boundaries of owner-managed firms". Small Bus Econ. 5 (3): 229–237. doi:10.1007/BF01531920.
  2. ^ Driessen, Martyn P.; Zwart, Peter S. (2010). "The role of the entrepreneur in small business success: the Entrepreneurship Scan" (PDF).
  3. ^ n. Berger, Allen; f. Udell, Gregory (1 August 1998). "The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle". Journal of Banking & Finance. 22 (6–8): 613–673. doi:10.1016/S0378-4266(98)00038-7. ISSN 0378-4266.
  4. ^ Small Business Administration. Summary of Size
  5. ^ Dilger, Robert Jay (17 April 2018). Small Business Size Standards: A Historical Analysis of Contemporary Issues (PDF). Washington, DC: Congressional Research Service. Retrieved 20 April 2018.
  6. ^ Small Business Health Care Tax Credit for Small Employers. IRS.
  7. ^ a b European Commission, What is an SME? accessed 18 October 2017
  8. ^ European Commission, Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs Revision of the EU SME Definition: Inception Impact Assessment, accessed 18 October 2017
  9. ^ Banking Association South Africa, Small Business Definition, accessed 18 October 2017
  10. ^ Small Businesses joined by Facebook. Steve Kaplan. 2014. Retrieved 13 May 2014.
  11. ^ a b "The Surprising Demographics of Small Business Owners". Small Business Labs. Retrieved 3 April 2018.
  12. ^ *Healeas, S. Purdy, D. Stanworth, C. Watson, A.2004. Franchising as small business growth strategy: A resource based view organisational development : International small business journal,22(6), pp 539-599
  13. ^ a b c Network, University of Nebraska-Lincoln | Web Developer. "Types of Cooperatives | Nebraska Cooperative Development Center". ncdc.unl.edu. Retrieved 3 April 2018.
  14. ^ Fox, W.F.; Murray, M.N. (2004). "Do Economic Effects Justify the Use of Fiscal Incentives?". Southern Economic Journal. 71 (1): 78–92. doi:10.2307/4135311. JSTOR 4135311.
  15. ^ Longenecker, Justin G.; Carlos W. Moore; J. William Petty; Leslie E. Palich (2008). Small business management : launching and growing entrepreneurial ventures (14th ed.). Cengage Learning. p. 768. ISBN 978-0-324-56972-8. OCLC 191487420.
  16. ^ "Small Business and Self-Employed One-Stop Resource". Irs.gov. 26 September 2010. Retrieved 26 September 2015.
  17. ^ Walczak, D.; Voss, G. "New Possibilities of Supporting Polish SMEs within the Jeremie Initiative Managed by BGK". Mediterranean Journal of Social Sciences. 4 (9): 759.
  18. ^ "Surveying Businesses on Tax Compliance Costs" (PDF). Retrieved 17 October 2011.
  19. ^ "Small Business: The Art Of The Start". Retrieved 13 January 2015.
  20. ^ Shailer, G. Capitalists and Entrepreneurs in Owner-managed Firms. International Small Business Journal 12(3) April-June 1994: 33–41.
  21. ^ http://media.proquest.com/media/pq/classic/doc/3121621781/fmt/pi/rep/NONE?hl=&cit:auth=Armstrong,%20Craig%20E&cit:title=Competence%20or%20flexibility?%20Survival%20and%20growth%20implications%20of%20...&cit:pub=Journal%20of%20Strategy%20and%20Management&cit:vol=6&cit:iss=4&cit:pg=377&cit:date=2013&ic=true&cit:prod=ABI/INFORM%20Complete&_a=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&_s=isTHBF+8fhiXE4YF6oLH5yZLbn0=#statusbar=1&zoom=110
  22. ^ Coleman, A., 2013. Targeting networking and social media; how to win new business effectively. The Guardian, [online]27 November. Available at https://www.theguardian.com/small-business-network/2013/nov/27/targeted-networking-social-media-business [accessed 15 March 2014]
  23. ^ Richbell, S. M.; Wardle, P.; Watts, H. D. (2006). "Owner-managers and Business Planning in the Small Firm". International Small Business Journal. 24 (5): 496–514. doi:10.1177/0266242606067275.
  24. ^ "Profitable Tactics Using Internet Marketing For Small Business".
  25. ^ e.g., Shailer, G. 1989, The Predictability of Small Enterprise Failures: Evidence and Issues, International Small Business Journal, Vol.7, No. 4, July-September, pp. 54-58.
  26. ^ A list of examples is available at ICSB.
  27. ^ a b c Lepoutre, Jan, and Hoyehnusy Ezekiel "Investigating the Impact of Firm Size on Small Business Social Responsibility: A Critical Review." Journal of Business Ethics 67.3 (2006): 257-273. JSTOR. Web. 3 Jan. 2012.
  28. ^ a b c United States. Small Business Administration. "Frequently Asked Questions." Frequently Asked Question About Small Business. SBA Office of Advocacy, Jan. 2011. Web. 21 Mar. 2012.
  29. ^ a b c Edmiston, Kelley. "The Role of Small and Large Businesses in Economic Development." Economic Review 92.2 (2007): 73-97. Academic Search Complete. Web. 18 Mar. 2012.
  30. ^ Hope, John B.; Mackin, Patrick C. (2007). "The Relationship Between Employee Turnover and Employee Compensation in Small Business". Small Business Research Summary. 308: 1–44.
  31. ^ "4 Ways Cyber Crime Can Hurt Your Small Business". Business Know-How. Retrieved 3 April 2018.
  32. ^ "Topic: U.S. companies and cyber crime". www.statista.com. Retrieved 3 April 2018.
  33. ^ Needham, Dave (1996). Business for Higher Awards. Heinemann.
  34. ^ Kotler, Philip (2007). Principles of Marketing. Pearson.
  35. ^ The Small Business Economy - A Report to the President: 2001 pg. 84 - Table A.3 (the last time data was granular enough for the figures for fewer than 10 employees was 1998)
  36. ^ "U.S. Small Business Administration Office of Advocacy: The Small Business Economy 2008, A Report to the President" (PDF). Retrieved 13 November 2010.
  37. ^ "Small Business Facts: Small Business Job Creation Deconstructed" (PDF). Retrieved 24 July 2018.
  38. ^ "Office of Advocacy - U.S. SBA - Characteristics of Small Business Employees and Owners" (PDF). Retrieved 13 November 2010.
  39. ^ "The Surprising Use of Credit Scoring in Small Business Lending by Community Banks and the Attendant Effects on Credit Availability and Risk" (PDF). Retrieved 26 June 2014.
  40. ^ "8(a) Business Development". SBA.gov.
  41. ^ "Equity Crowdfunding". Retrieved 1 October 2013.
  42. ^ "Crowdfunding comes to small businesses". Business Insider. Retrieved 15 June 2012.
  43. ^ STEVE LOHR Special to The New York Times (15 January 1980). "Steve Lohr, "Small-Business Forces Unite; Meeting Drafts Proposals For Carter Memories of Earlier Gatherings Small-Business Forces Unite", The New York Times, Special, Jan. 15, 1980, Business & Finance, Page D1". Select.nytimes.com. Retrieved 13 November 2010.
  44. ^ Senior, Norah. "Small businesses need to see exporting as a viable option and 'think global'". The Guardian. Retrieved 11 July 2014.
  45. ^ American Business BSA Merit Badge Guide, 22 Jun 2015.
Works cited
  • Birch, D. (1979). The job generation process. Unpublished Report, Massachusetts Institute of Technology, prepared for the Economic Development Administration of the U.S. Department of Commerce, Washington D.C.
  • Birch, David (1987), Job Creation in America, How our smallest companies put the most people to work, The Free Press, New York
  • Edmiston, Kelly (2010). "The Role of Small and Large Businesses in Economic Development". Economic Review. 1: 1–93.
  • Shanker, Melissa Carey, and Joseph H. Astrachan. "Family Business Review." Sage Publication 9.2 (1996): 1-123. Print.

External links

Administrator of the Small Business Administration

The Administrator of the Small Business Administration is the head of the Small Business Administration of the United States Government. President Barack Obama announced in January 2012 that he would elevate the SBA into the Cabinet, a position it last held during the Clinton administration.

Business-to-business

Business-to-business (B2B or, in some countries, BtoB) is a situation where one business makes a commercial transaction with another. This typically occurs when:

A business is sourcing materials for their production process for output (e.g. a food manufacturer purchasing salt).Example- Providing raw material to the other company that will produce output.

A business needs the services of another for operational reasons (e.g. a food manufacturer employing an accountancy firm to audit their finances).

A business re-sells goods and services produced by others (e.g. a retailer buying the end product from the food manufacturer).B2B is often contrasted with business-to-consumer (B2C). In B2B commerce, it is often the case that the parties to the relationship have comparable negotiating power, and even when they do not, each party typically involves professional staff and legal counsel in the negotiation of terms, whereas B2C is shaped to a far greater degree by economic implications of information asymmetry. However, within a B2B context, large companies may have many commercial, resource and information advantages over smaller businesses. The United Kingdom government, for example, created the post of Small Business Commissioner under the Enterprise Act 2016 to "enable small businesses to resolve disputes" and "consider complaints by small business suppliers about payment issues with larger businesses that they supply."Business-to-Business companies represent a significant part of the United States economy. This is especially true in firms of 500 employees and above, of which there were 19,464 in 2015, where it is estimated that as many as 72% are businesses that primarily serve other businesses.

Department for Business, Innovation and Skills

The Department for Business, Innovation and Skills (BIS) was a ministerial department of the United Kingdom Government created on 5 June 2009 by the merger of the Department for Innovation, Universities and Skills (DIUS) and the Department for Business, Enterprise and Regulatory Reform (BERR). It was disbanded on the creation of the Department for Business, Energy and Industrial Strategy on 14 July 2016.

Entrepreneurship

Entrepreneurship is the process of designing, launching and running a new business, which is often initially a small business. The people who create these businesses are called entrepreneurs.Entrepreneurship has been described as the "capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit." While definitions of entrepreneurship typically focus on the launching and running of businesses, due to the high risks involved in launching a start-up, a significant proportion of start-up businesses have to close due to "lack of funding, bad business decisions, an economic crisis, lack of market demand, or a combination of all of these."A broader definition of the term is sometimes used, especially in the field of economics. In this usage, an Entrepreneur is an entity which has the ability to find and act upon opportunities to translate inventions or technologies into products and services: "The entrepreneur is able to recognize the commercial potential of the invention and organize the capital, talent, and other resources that turn an invention into a commercially viable innovation." In this sense, the term "Entrepreneurship" also captures innovative activities on the part of established firms, in addition to similar activities on the part of new businesses.

Google Ad Manager

Google Ad Manager is an online advertisement service brand introduced by Google in June 27, 2018. It consists of two former services, including DoubleClick for Publishers (formerly known as DART for Publishers) and DoubleClick Ad Exchange. It can be used as an ad server but it also provides a variety of features for managing the sales process of online ads using a publisher's dedicated sales team. Should a publisher not sell out all their available ad inventory, it can choose to run either other ad networks or AdSense ads as remnant inventory in Google Ad Manager.

Inc. (magazine)

Inc. is an American weekly magazine which publishes about small businesses and startups. The magazine publishes annual lists of the 500 and 5000 fastest-growing privately held small companies in the U.S., called the "Inc. 500" and "Inc. 5000". It was founded in 1979 and is based in New York City.

Intuit

Intuit Inc. is a business and financial software company that develops and sells financial, accounting, and tax preparation software and related services for small businesses, accountants, and individuals. The company is headquartered in Mountain View, California. More than 95% of its revenues and earnings come from its activities within the United States.Intuit produces TurboTax, a consumer tax preparation application, the small business accounting program QuickBooks, professional tax solutions ProConnect Tax Online, ProSeries and Lacerte, and multiple payroll products. In April 2016, Intuit completed the sale of its original flagship product, Quicken, to H.I.G. Capital.Intuit has lobbied extensively against the IRS creating an online system of tax filing.

Kauffman Index of Entrepreneurship

The Kauffman Index of Entrepreneurial Activity, also known as the Kauffman Index of Entrepreneurship, is a leading indicator of new business creation in the United States, which has been cited in academic journals such as Small Business Economics.The index uses monthly data from the current population survey (US) to calculate the percentage of the adult, non-business-owner population that starts a business each month, providing a national measure of business creation by specific demographic groups. Annual reports date back to 1996, allowing for comparisons over time.

Linda McMahon

Linda Marie McMahon (née Edwards; born October 4, 1948) is a former professional wrestling executive who served as the 25th Administrator of the Small Business Administration from 2017 to 2019.

McMahon, along with her husband Vince McMahon founded sports entertainment company Titan Sports, Inc. (what is now WWE) where she worked as the president and later CEO from 1980 to 2009. During this time, the company grew from a small regional business in the northeast to a large multinational corporation. As president and later CEO of the company, she initiated the company's civic programs, Get REAL and Smackdown Your Vote. Occasionally McMahon made on-screen appearances, most notably in a wrestling "feud" with her husband that culminated at WrestleMania X-Seven.

In 2009, McMahon left WWE to run as a Republican for a seat in the United States Senate from Connecticut, but lost to Democratic Party nominee Richard Blumenthal in the general election of 2010. She was the Republican nominee for Connecticut's other Senate seat in the 2012 race, but lost to Democratic Representative Chris Murphy.On December 7, 2016, President-elect Donald Trump announced that he would nominate McMahon to be the Administrator of the Small Business Administration. The Senate confirmation hearing began on January 24, 2017. On February 1, 2017, her nomination was approved by the Senate Committee on Small Business and Entrepreneurship on an 18–1 vote and confirmed by the full Senate on February 14, 2017 by a vote of 81–19.On March 29, 2019, it was officially made public by the Trump administration that McMahon would be stepping down as the Administrator of the Small Business Administration to assume new responsibilities within President Donald J. Trump's re-election campaign. The resignation took effect on April 12, 2019.

On April 15, 2019, McMahon was officially named Chairman of America First Action, a pro-Trump Super PAC.

List of United States House of Representatives committees

There are two main types of congressional committees in the United States House of Representatives, standing committees and select committees. Committee Chairs are selected by whichever party is in the majority, and the minority party selects Ranking Members to lead them. The committees and party conferences may have rules determining term limits for leadership and membership, though waivers can be issued. While the Democrats and Republicans differ on the exact processes by which committee leadership and assignments are chosen, most standing committees are selected by the respective party steering committees and ratified by the party conferences. The Ethics, House Administration, Rules and all select committees are chosen by the party leaders (Speaker in the majority and Minority Leader in the minority). Most committees are additionally subdivided into subcommittees, each with its own leadership selected according to the full committee's rules.The modern House committees were brought into existence through the Legislative Reorganization Act of 1946. This bill reduced the number of House committees, as well as restructured the committees' jurisdictions.

Market research

Market research is an organized effort to gather information about target markets or customers. It is a very important component of business strategy. The term is commonly interchanged with marketing research; however, expert practitioners may wish to draw a distinction, in that marketing research is concerned specifically about marketing processes, while market research is concerned specifically with markets.Market research is one of the main factors used in maintaining competitiveness over competitors. Market research provides important information which helps to identify and analyze the needs of the market, the market size and the competition. Market-research techniques encompass both qualitative techniques such as focus groups, in-depth interviews, and ethnography, as well as quantitative techniques such as customer surveys, and analysis of secondary data.

Market research, which includes social and opinion research, is the systematic gathering and interpretation of information about individuals or organizations using statistical and analytical methods and techniques of the applied social sciences to gain insight or support decision making.

Search engine optimization

Search engine optimization (SEO) is the process of increasing the quality and quantity of website traffic, increasing visibility of a website or a web page to users of a web search engine.

SEO refers to the improvement of unpaid results (known as "natural" or "organic" results), and excludes the purchase of paid placement.

SEO may target different kinds of search, including image search, video search, academic search, news search, and industry-specific vertical search engines.

Optimizing a website may involve editing its content, adding content, modifying HTML, and associated coding to both increase its relevance to specific keywords and to remove barriers to the indexing activities of search engines. Promoting a site to increase the number of backlinks, or inbound links, is another SEO tactic. By May 2015, mobile search had surpassed desktop search.As an Internet marketing strategy, SEO considers how search engines work, the computer programmed algorithms which dictate search engine behavior, what people search for, the actual search terms or keywords typed into search engines, and which search engines are preferred by their targeted audience. SEO is performed because a website will receive more visitors from a search engine the higher the website ranks in the search engine results page (SERP). These visitors can then be converted into customers.SEO differs from local search engine optimization in that the latter is focused on optimizing a business' online presence so that its web pages will be displayed by search engines when a user enters a local search for its products or services. The former instead is more focused on national or international searches.

Small Business Administration

The U.S. Small Business Administration (SBA) is a United States government agency that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses and by assisting in the economic recovery of communities after disasters". The agency's activities are summarized as the "3 Cs" of capital, contracts and counseling.SBA loans are made through banks, credit unions and other lenders who partner with the SBA. The SBA provides a government-backed guarantee on part of the loan. Under the Recovery Act and the Small Business Jobs Act, SBA loans were enhanced to provide up to a 90 percent guarantee in order to strengthen access to capital for small businesses after credit froze in 2008. The agency had record lending volumes in late 2010.SBA helps lead the federal government's efforts to deliver 23 percent of prime federal contracts to small businesses. Small business contracting programs include efforts to ensure that certain federal contracts reach woman-owned and service-disabled veteran-owned small businesses as well as businesses participating in programs such as 8(a) and HUBZone. Another resource the SBA launched earlier this year is the SBA Franchise Directory, aimed to connect entrepreneurs to lines of credit and capital in order to grow a business.SBA has at least one office in each U.S. state. In addition, the agency provides grants to support counseling partners, including approximately 900 Small Business Development Centers (often located at colleges and universities), 110 Women's Business Centers, and SCORE, a volunteer mentor corps of retired and experienced business leaders with approximately 350 chapters. These counseling services provide services to over 1 million entrepreneurs and small business owners annually. President Obama announced in January 2012 that he would elevate the SBA into the Cabinet, a position it last held during the Clinton administration, thus making the Administrator of the Small Business Administration a cabinet-level position.

Small Business Saturday

Small Business Saturday is an American shopping holiday held during the Saturday after US Thanksgiving during one of the busiest shopping periods of the year. This Saturday is always the last one in November, so falls between November 24 and November 30.

Small and medium-sized enterprises

Small and medium-sized enterprises (SMEs) or small and medium-sized businesses (SMBs) are businesses whose personnel numbers fall below certain limits. The abbreviation "SME" is used by international organizations such as the World Bank, the United Nations and the World Trade Organization (WTO).

SMEs outnumber large companies by a wide margin and also employ many more people. For example, Australian SMEs make up 98% of all Australian businesses, produce one-third of the total GDP and employ 4.7 million people. In Chile, in the commercial year 2014, 98.5% of the firms were classified as SMEs. In Tunisia, the self-employed workers alone account for about 28% of the total non-farm employment and firms with fewer than 100 employees account for about 62% of total employment. In developing countries, smaller (micro) and informal firms, have a larger share than in developed countries. SMEs are also said to be responsible for driving innovation and competition in many economic sectors. Although they create more jobs, there is also a majority of job destruction/contraction.

United States House Committee on Small Business

The United States House Committee on Small Business is a standing committee of the United States House of Representatives.

United States Senate Committee on Small Business and Entrepreneurship

The U.S. Senate Committee on Small Business and Entrepreneurship is a standing committee of the United States Senate. It has jurisdiction over the Small Business Administration and is also charged with researching and investigating all problems of American small business enterprises.

Windows Server Essentials

Windows Server Essentials (formerly Windows Small Business Server or SBS) is an integrated server suite from Microsoft designed for running network infrastructure (both intranet management and Internet access) of small and midsize businesses having no more than 25 users or 50 devices. Application server technologies are tightly integrated to provide and offer management benefits such as integrated setup, enhanced monitoring, Remote Web Workplace, a unified management console, and remote access.

Since the release of SBS 2003, the same service packs as those for Windows Server or other server products can be used to update the OS.

Yahoo!

Yahoo! is an American web services provider headquartered in Sunnyvale, California, and owned by Verizon Media. The original Yahoo! company was founded by Jerry Yang and David Filo in January 1994 and was incorporated on March 2, 1995. Yahoo was one of the pioneers of the early Internet era in the 1990s.It provides or provided a Web portal, search engine Yahoo! Search, and related services, including Yahoo! Directory, Yahoo! Mail, Yahoo! News, Yahoo! Finance, Yahoo! Groups, Yahoo! Answers, advertising, online mapping, video sharing, fantasy sports, and its social media website. At its height it was one of the most popular sites in the United States. According to third-party web analytics providers Alexa and SimilarWeb, Yahoo! was the most widely read news and media website – with over 7 billion views per month – ranking as the sixth-most-visited website globally in 2016.Once one of the largest internet companies, Yahoo! slowly declined starting in the late 2000s, and in 2017 Verizon Communications acquired most of Yahoo's Internet business for $4.48 billion, excluding its stakes in Alibaba Group and Yahoo! Japan, which were transferred to Yahoo's successor company Altaba. Despite its decline from prominence, Yahoo! domain websites are still one of the most popular, ranking 8th in the world according to the Alexa rankings as of January 2019.

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