EDP

A Small Business Is A Business That Is Privately Owned And Operated, With A

Small Number Of Employees And Relatively Low Volume Of Sales. Small
Businesses Are Normally Privately Owned Corporations, Partnerships, Or Sole
Proprietorships.

The Legal Definition Of "Small" Varies Historically, By Country And By

Industry, But Generally Has Fewer Than 100 Employees In The United States And
Under 50 Employees In The European Union. However, In Australia, A Small
Business Is Defined By The Fair Work Act 2009 As One With Fewer Than 15
Employees. By Comparison, A Medium Sized Business Or Mid-Sized Business
Has Under 500 Employees In The Us, 250 In The European Union And Fewer
Than 200 In Australia.

An Entrepreneur Is “A Person Who Organizes And Manages A Business

Undertaking, Assuming The Risk For The Sake Of The Profit.”

Roles Small Scale Firms Are Helpful In The Achievement Of These Goals In The
Following Ways:
1. Employment: Small Scale Firms Use Labour-Intensive Techniques And,
Therefore, They Have High Potential To Provide Employment To A Larger
Number Of People Per Unit Of Capital. For Every Worker Employed In Large
Scale Industries About Three Workers Are Engaged In Small Scale And Cottage
Industries. Next To Agriculture Small Business Constitutes The Most Popular
Occupation Of People In India. Small Firms Promote Self-Employment
Particularly Among The Educated And Professional Class. They Also Provide
Employment To Agriculturists Who Remain Idle During A Part Of The Year. In
Fact, The Healthy Growth Of Small Scale Industries Can Be An Effective
Approach To The Pressing Problem Of Unemployment In The Country. Several
Empirical Studies Have Revealed That The Employment Generating Capacity Of
Small Scale Industries In About In Times More Than That Of The Large Scale
Industries.
2. Balanced Regional Development: Small Scale Industries Promote
Decentralized Development And Help To Remove Regional Disparities In
Industrialisation. Decentralized Development Contributes To The Process Of Self-
Sustained Growth And Avoids Concentration Of Industries In Particular Areas. By
Providing Employment In Rural Areas They Help To Check Migration And
Overcrowding In Urban Areas. Small Scale Firms Can Be A Useful Means Of
Rural Reconstruction And Development. Development Of Decentralized Sector
Also Improves The Standard Of Living Of People In Backward Regions.

3. Optimization Of Capital: Small Scale Firms Require Less Capital Per Unit Of
Output And, Therefore, Greater Output Can Be Obtained With Small Investment.
The Annual Surveys Of Industries Reveal That Fixed Capital Per Employee In
Case Of Small Scale Industry Was Rs. 3,706 As Compared To Rs. 27,757 In Case
Of Large Scale Industry. Small Firms Also Provide Quick Returns After Their
Establishment On Account Of Short Gestation Period. In India Where The Rate Of
Capital Formation Is Low, Small Scale Industries Are Very Suitable.

4. Mobilization Of Local Resources: Small Scale Industries Facilitate

Mobilization And Utilization Of Local Resources And Family Skills Which Might
Otherwise Remain Talent Or Utilized. Small Business Promotes A New Cadre Of
Small Entrepreneurs And Self-Employed And Encourages Local Talent. The
Growth Of Small Enterprises Helps In Tapping Talent Resources Like
Entrepreneurial Skills And Small Savings Specially In Rural Areas. Small
Business Helps To Protect Technical Skills And Handicrafts.

5. Exchange Earnings: Small Scale Industries Help In Reducing Pressure On The

Country's Balance Of Payments In Two Ways. First, They Do Not Require Imports
Of Sophisticated Machinery And Equipment. Secondly, They Earn Valuable
Foreign Exchange Through Exports Of Their Products. The Exports Of Small
Scale Industries Increased From Rs. 637 Crores In 1975-76 To Rs. 2785 Crores In
1985-86. Small Scale Sector Accounts For 40 Percent Of The Exports Of Non-
Traditional Items And About 25 Per Cent Of The Country's Total Exports. About
90 Per Cent Of Its Exports Are Of Non-Traditional Items.

6. Egalitarian Society : Small Scale Industries Help In Reducing Concentration

Of Economic Power In A Few Hands. They Promote A More Equitable
Distribution Of National Income And Wealth. Development Of Small Scale
Industries Helps To Reduce Monopolies And Exploitation Of Consumers. Benefits
Of Small Scale Firms Are Derived By A Wider Population. A Large Part Of The
Earnings Is Distributed Among Workers.

7. Feeder To Large Industries: Small Scale Sector Is Complementary To The

Large Scale Industries. Small Scale Industries Manufacture Various Types Of
Components, Spare Parts, Tools And Accessories Which Are Required By The
Large Scale Sector.

8. Social Advantage: Small Scale Units Offer Opportunity For An Independent

Way Of Life To People With Small Means. They Offer Savings In Social
Overheads Like Education, Housing And Medical Facilities By Taking Industry
Nearer To The People. They Help To Raise Per Capita Income An Standard Of
Living In The Country. A System Of Widely Diffused Ownership Permits Wider
Participation Of People In The Process Of Economic Development. Small Scale
Sector Provides A Base For Democracy, Socialism And Self-Government.

Problems Faced By the Small Business:-

In The Course Of Their Operations Small Units Have To Face A Number Of

Managerial Problems Which Are Described Below:
1. Shortage Of Materials And Power. There Is Acute Shortage Of Basic Raw
Materials Required By Small Scale Units. These Units Are Under A Handicap In
Obtaining Raw Materials Of Requisite Quality At Reasonable Prices. They Do Not
Get The Benefits Of Bulk Buying. For Instance, The Hand Loom Industries Facing
Shortage Of Yarn. Some Bogus Units Secure The Quota Of Scarce Materials And
Sell Them At Inflated Prices. Small Scale Industries Also Face Shortage Of Power
Due To Which They Are Unable To Make Full Utilization Of Plant Capacity.
Majority Of Them Cannot Afford To Install Their Own Power Generating Plants
To Ensure Uninterrupted Operations.

2. Lack Of Adequate Finance: All Business Firms Require Sufficient Funds To

Meet Their Fixed Capital And Working Capital Requirements. Small Scale Units
Are Often Unable To Procure Adequate Financial Resources For The Purchase Of
Machinery, Equipment And Raw Materials And For Meeting Day-To-Day
Expenses. On Account Of Their Low Goodwill And Little Fixed Investment, They
Find It Difficult To Borrow At Reasonable Interest. Credit Facilities For Small
Scale Firms Are Inadequate And They Have To Depend Largely On Internal
Resources. Sometimes, Small Firms Have To Close Down Or Curtail Their
Operations Due To Shortage Of Funds There Is Very Little Scope For Expansion
And Growth Due To Dearth Of Capital. As A Result Economies Of Scale Are Not
Available.
3. Outdated Technology: Majority Of The Small Units Use Old Techniques Of
Production And Outdated Machinery And Equipment. They Cannot Afford New
Machines And Equipment And Are, Therefore Not In A Position To Use The
Latest Techniques Of Production. They Do Not Find It Possible To Conduct
Research And Development On A Continuing Basis. Therefor, The Productivity
And Quality In Small Scale Firms Tends To Be Low While Unit Cost Of
Production Is Generally High.
4. Inadequate Marketing Facilities: Small Scale Units Have To Face Several
Difficulties In The Marketing And Distribution Of Their Products. Most Of Them
Do Not Have Their Own Marketing Network. They Find It Difficult To Sell Their
Output At Remunerative Prices Due To Higher Cot Of Production And Non-
Standardised Quality Of Products. Small Scale Industries Cannot Afford To Spend
Much On Advertising, Sales Personnel, Marketing Research, Etc. They Have To
Sell Their Products At Throwaway Prices Due To Weak Bargaining Power And
Immediate Need For Money. They Also Face Stiff Completion From Large Firms.

5. Weak Organization And Management: Small Scale Firms Are Generally

Managed By The Owner Who Very Often Does Not Posses The Skills Required
For The Efficient Management Of The Enterprise. There Is Lack Of Proper
Division Of Work And The Benefits Of Specialisation Are Not Available, Some
Owner-Managers Are Reluctant To Adopt Modern Methods Of Organisation And
Management. There Is Instability In Business Because The Sickness And Death Of
The Owner Manger Directly Affect The Survival And Growth Of The Small Firm.

6. Lack Of Trained Personnel: There Is Lack Of Trained And Experienced

Employees Because Small Firms Cannot Pay High Salaries And Cannot Spend
Much On Training Of Employees. Small Scale Firms Find It Difficult To Recruit
And Motive Skilled Managerial And Technical Personnel As They Look For
Better Opportunities In The Large Scale Industries. Therefore, They Get The
Second Rate Talent Or Have To Depend On Family Members Who Do No Have
Diversified Skills.
conclusion;-
Small Scale Forms Also Face Competition From Large Scale Sector. They Have
To Suffer When There Is Recession In The Organised Sector, The Incidence Of
Sickness Has Been Very High. One June 30, 1985 About 98 Thousand Small Units
Were Sick. In Fact, Small Scale Industries Face Problems At Every Stage Of Their
Operations Whether It Is Buying Of Raw Materials, Manufacture Of Products,
Marketing Of Goods Or Raising Of Finance. These Industries Are Not In A
Position To Secure The Internal And External Economies Of Scale.

Strengths And Weakness Of Small Business

Staring Your Own Small Business Can Be A Dream Come True. The Ability To
Be Your Own Boss Can Give You More Flexibility In Your Work Schedule And
The Opportunity To Reach Your Fullest Potential. Your Talents, Skills And
Creativity Can Be Maximized Without Worrying That You Are Stepping On Toes
Of Your Superiors.

There Are Many Positive Sides To Running Your Own Small Business. Of Course,
There Are Also Some Potential Pitfalls If You Are Self Employed. The
Advantages To Running Small Business Can Be Quickly Identified. If Your Goal
Is To Become Your Own Boss, You Do Not Need To Achieve Success Overnight.
Starting A Small Business

Most Small Businesses Require Very Little Start-Up Money. This Is A Big
Advantage For Anyone Who Does Not Have Much Money To Invest In A
Business But Who Does Have The Work Ethic And Talents To Create A Lucrative
Business. There Are Many Online Business Opportunities That Require Little
More Than A Home Computer And Internet Access. Small Businesses Generally
Have Low Operational Costs. A Larger Percentage Of Revenue From A Small
Business Can Be Converted Into Profit As Opposed To Revenue From A Big
Business.
Many Small Businesses Are Based Right Out Of Your Home. You Can Provide
Freelance Services Online. There Are Affiliate Programs And Multi-Level
Marketing Programs Available To People Who Have Good Sales And/Or People
Skills. Individuals With Training In Medical Transcription, Coding Or Billing Can
Work From Their Home Computer. There Are Endless Opportunities For
Individuals Who Want To Work From Home. The Ability To Work At Home And
Spend More Quality Time With Your Family Is Another Big Advantage To
Running A Small Business.

Small Business Owners Typically Have Less Money To Invest On Advertising.

This Can Correlate Into An Advantage. Small Businesses Need To Find Creative
Ways To Reach Their Customers. They Usually Offer A More Personalized
Approach To Interacting With Clients. Customers Who Are Treated Like Family
Are More Likely To Return To That Business In The Future. Small Business
Owners And People Who Are Self Employed Can Take The Time To Get To
Know Each Customer And Provide A Higher Level Of Customer Service.

Of Course, In Some Cases Having Limited Funds For Advertising Can Be A

Disadvantage. As A Small Business Owner It Can Be Difficult To Reach Enough
Potential Customers To Establish A Successful Base Of Customers. Potential
Customers Might Be Less Likely To Do Business With A Small Business That
Does Not Offer A Well Known Brand Of Products Or Services. Some Clients Will
Give Their Business To The “Bigger Guy” With The Name They Recognize.

One Of The Largest Disadvantages For Small Business Owners Is The Potential
Misuse Of Money. Many Business Owners Invest Their Own Money At The Start
Of A Business Or If The Business Falls Upon Hard Times. If Money Is Not Used
Wisely, The Business Owner Can Take A Hit To Their Own Personal Wallet If
They Have Floated The Business Cash From Their Personal Accounts.

Small Businesses And Work From Home Opportunities Are Becoming More
Prevalent With So Many Advantages. It Was Once Common For Large Numbers
Of Small Businesses To Fail, However, Times Are Changing As People Are
Learning How To Make Their Small Business A Success.

10 Causes Of Small Business Failure And How To Avoid Them

There Are A Variety Of Reasons Why A Small Business Often Fails. There Are
Some Steps That Small Business Owners Can Do To Avoid Them. Here Are Ten
Causes Of Small Business Failure And How To Avoid Them.

1. Most Small Business Owners Don't Have Enough Money Saved Up. You Need
To Save Up At Least Six Months Of Worth Living Expenses Along With Six
Months Of Worth Of Expenses For Your Business Too.

2. Some Companies Don't Have Enough Advertisements Through Out The Year.
You Need To Have Do More Advertising In Order For People To Know About
Your Company. Advertisements Are The Most Important To Spend On Since It
Will Help Your Business Become Even More Successful.

3. Some Companies Fail Since They Don't Generate Enough Sales. You Need To
Do More Advertising So More People Know About Your Company Or Lower The
Prices. You Need To Do A Few Specials In Order To Get More Sales.

4. The Company Doesn't Hire Enough Staff. You Need To Hire More Staff When
You Have Too Much Work Too Handle. You Don't Want To Get Behind On The
Work Otherwise Your Customers Won't Be Happy.

5. The Company Doesn't Have A High Enough Budget. This Is Where Most
Companies Fail At Since They Don't Have Enough Money To Pay Everything. The
Business Owner Needs To Have More Money Before Starting The Company Or
Get A Business Loan.

6. The Company Can't Survive During The Slow Season So They Often Fail. The
Company Needs To Figure Out A Way To Generate Enough Sales Or Save Up
Enough Money To Survive During The Slow Season Of The Company.

7. A Company Doesn't Have Enough Money To Expand The Business Even

Though It Needs Too. The Company Needs To Get A Business Loan, Save
Money, Or Even Outsource The Work Somehow.
8. The Company Doesn't Have Enough Money To Keep A Professional Image.
Most Companies Lose Sales When They Don't Look Professional Or Even Stay
Professional. They Need To Have The Best Of Everything In Order To Succeed.

9. Some Try To Be Cheap On Products Or Service Then They Often Fail. In Order
To Stay Successful In A Business Then You Can't Sell Cheap Products Or Service
Cause The Only Result Is People Not Being Impressed. You Want People To Feel
They Aren't Getting Ripped Off.

10. Some Try To Violate City Rules Or State Regulations. This Is A Big Reason
Why Companies Go Out Of Business Real Quick. You Need To Follow City Rules
And Follow The State Regulations Otherwise You Won't Be In Business Anymore.

Six Success Factors For Small Ecommerce Businesses

Many Small Ecommerce Businesses Are One-To-Five Person Shops Whose

Income Is Derived Solely From Their Websites. As The Ecommerce World
Evolves And Becomes More Sophisticated, However, Success For These Smaller
Merchants Has Become More Challenging.

Through The Past Year, Certainly A Harrowing One Economically, We Have Seen
Quite A Few Smaller Site Owners Thrive. We Have Also Seen A Significant
Number Succumb To The Current Economic Conditions. Here Are Six Factors We
See For Those Who Are Achieving Success.

Product Line

A Niche Product Line Is A Very Good Thing. If What You Are Selling Is
Available On Amazon, Then You Should Ask Yourself What You Can Offer As A
Value-Add, Such As Service, Information, Guarantees, Or Possibly Even Some
Entertainment. Successful Ecommerce Niches Can Include Pet Supplies, Hobbies,
Industry-Specific Tools/Supplies, And Specialized Business-To-Business Markets.
If Your Product Line Naturally Generates Repeat Orders Or If You Can Creatively
Build Your Business To Encourage Repeat Orders, You Will Be Doing Yourself A
Big Favor.
Mindset :-

If Your Business Is Small, Then You Want To Use Your Size To Your Advantage.
You Are Going To Have A Tough Time Going Head-To-Head Against The Big
Players In The Industry. Instead, Develop Your Personalized Message And
Emphasize The Human Touch That You Provide. Build Relationships With Your
Customers After Your Initial Product Sale With Follow-Up Emails, Requests For
Reviews, And Email Marketing With Specials. The Successful Owner Is Pulling
Out All The Stops. Sell Yourself With Your Photo And Your Story On Your
Website. People Want To Do Business With Someone They Can Trust. If You Are
A Sincere, Helpful, And Trustworthy Person, Don't Be Shy About Sharing That
With The World, Or At Least With Your Customers.

Abilities

You Can Build A Successful Web Business, Even If You Don't Possess A Wealth
Of Technical Knowledge. Be Realistic About Where Your Skills And Abilities
Are. Don't Get Bogged Down In The Technical Minutiae Of Running A Web
Server. Go With An Ecommerce Platform That Provides The Tools And Resources
You Need To Be Successful. Unless You Have Some Computer Expertise, Going
The Bare Bones Route Is Probably Not Going To Serve Your Business For Very
Long. Make Sure Your Site Is Built On Top Of A Solid Content Management
System That Allows You To Focus On Your Marketing And Customer Service
And Not The Mechanics Of Having A Website.

Website Presentation

Your Website Is At The Center Of Your Success. You Will Want To Put A
Priority On Nurturing And Improving Your Site Over Time. The Simplest Step
You Can Take Is To Update Your Home Page Regularly So The Information Is
Accurate And Timely. The Site Owners We See Who Are Successful Are Pretty
Obsessive About Their Sites. The Most Successful Sites Are Not Necessarily The
Most Beautiful. But They Have Well-Developed Category And Product
Presentation. The Home Page Is Always Displaying A Timely Message.
Relationship Building

Over The Past Year, The Social Aspect Of The Web Has Flourished. As A Small
Business Owner, You Need To Pick Your Spots Carefully And Develop A Social
Media Plan. If You Have Time To Devote To A Blog, Facebook, Or Twitter, That
Is Fabulous. It Will Benefit You To Explore All Available Channels. But If Your
Time Is Limited, Focus On Taking Small Steps To Develop Your Website As A
Social Hub. Build Strong Bonds With Your Customers By Asking For Their
Feedback, Giving Them Incentives To Refer Others, And Genuinely Listening To
What They Say.

The Successful Site Owner Responds To Customers Immediately, Has The Ability
To Communicate Via Online Formats, And Is A Phenomenal Resource For
Customers. If You Have A Knack For Writing Then Take Advantage Of That At
Every Turn, Whether It Is Via A Blog Or Some Featured Relevant Articles On
Your Site. Always Be Asking Yourself How You Can Connect And Build Trust
With Your Customers.

Use Of New Technology

You Don't Need To Be A Tech "Whiz" To Make Your Business Work. But You
Do Need To Embrace Technology. In A Rapidly Changed Online World, It Is Hard
To Flourish By Standing Still. Whether It Is Your Site's Search Engine
Optimization, Comparison Shopping Feeds, Or On-Site Merchandising Features,
You Want To Identify Ways To Keep Moving Forward. Many Elements Like
Social Bookmarking Widgets Are Free And Easy To Add To Your Website.

Conclusion

The Successful Small Ecommerce Business Owner Is Competing On Her Own

Terms. With A Focused Product Line, A Commitment To Connect Closely With
Customers, And Intelligent Use Of Available Technologies. You Can Stay Ahead
Of The Curve And Build A Strong, Sustainable E-Business