Module

9
Characteristic of Small Business

Introduction
Small-scale businesses employ smaller teams of employees than companies that
operate on larger scales.
The smallest businesses are run entirely by single individuals or small teams. A larger
small-scale business can often get away with employing fewer than one hundred
employees, depending on the business type.

Small business
Small business is defined as a privately owned corporation, partnership, or sole
proprietorship that has fewer employees and less annual revenue than a corporation or
regular-sized business.

Small business have their own distinctive characteristics. They are the following:
1. Independent management – The owner is also the manager.

2. Small capital requirement - Small business requires only the small capital and
this can be supplied by a single or few individuals.

3. Mostly local operation –

Small business usually
operates in a certain locality
although there are cases
when the market is not
confirmed to a local area.

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Advantage of Operating a Small Business
1) Be an employee
2) Be a professional
3) Be a small business operator (SBO)

Types of Small Business

Sole proprietorship
A sole proprietorship is easy to form and gives you complete control of your
business. You're automatically considered to be a sole proprietorship if you do business
activities but don't register as any other kind of business.

Partnership
Partnerships are the simplest structure for two or more people to own a business
together. There are two common kinds of partnerships: limited partnerships (LP) and
limited liability partnerships (LLP).
• Limited partnerships (LP)
A limited partnership exists when two
or more partners go into business together,
but one or more of the partners are only
liable up to the amount of their investment.
• Limited liability partnerships (LLP).
Limited liability partnerships (LLPs)
allow for a partnership structure where each
partner's liabilities is limited to the amount
they put into the business.
This Photo by Unknown Author is licensed under CC BY-SA

Limited liability company (LLC)

An LLC lets you take advantage of the benefits of both the corporation and
partnership business structures.
LLCs protect you from personal liability in most instances, your personal
assets like your vehicle, house, and savings accounts won't be at risk in case your
LLC faces bankruptcy or lawsuits.

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Corporation  C corporation
A corporation, sometimes called a C corporation, is a legal entity that's separate
from its owners. Corporations can make a profit, be taxed, and can be held legally
liable.
• S corporation
An S corporation, sometimes called an S corporation, is a special type of
corporation that's designed to avoid the double taxation drawback of regular C corps.
S corps allow profits, and some losses, to be passed through directly to owners'
personal income without ever being subject to corporate tax rates.
• B corporation
A benefit corporation, sometimes called a B corporation, is a for-profit corporation
recognized by a majority of U.S. states. B corps are different from C corps in purpose,
accountability, and transparency, but aren't different in how they're taxed.
• Close corporation
Close corporations resemble B corps but have a less traditional corporate
structure. These shed many formalities that typically govern corporations and apply to
smaller companies.
• Nonprofit corporation
Nonprofit corporations are organized to do charity, education, religious, literary,
or scientific work. Because their work benefits the public, nonprofits can receive
taxexempt status, meaning they don't pay state or federal taxes income taxes on any
profits it makes.

Cooperative
A cooperative is a business or organization owned by and operated for the benefit of
those using its services. Profits and earnings generated by the cooperative are
distributed among the members, also known as user-owners.

Five qualities of successful small business owners

URS-IM-AA-CI-0061 Rev 00 Effective Date: August 24, 2020

 1. Proactive communication
Is assertive, honest, and focused
on objectives. It keeps the project
manager in front of the curve,
enabling teamwork, effective
decisions, and accountability
throughout the project.

2. Impeccable organization
The bigger the project, the more important it is to be organized.

3. Constant Learning
A desire to learn can help you continually evolve. Reading books and other
publications, growing your business network, and seeking mentors can all provide
learning opportunities that you can take back to your business. In addition, looking
at other companies’ successes and failures can help you learn valuable business
lessons.

4. Strategic planning
Strategic planning is an organizational management activity that is used to set
priorities, focus energy and resources, strengthen operations, ensure that employees
and other stakeholders are working toward common goals, establish agreement around
intended outcomes/results, and assess and adjust the organization’s direction in
response to a changing environment.

5. Language skills
With the majority of client communications occurring via email and text, and the
growing need for a strong online presence, grammar matters more than ever. Print
out important documents and read them aloud. That can reveal grammar mistakes
along with other crucial writing issues involving tone, word choice, and structure.

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 REFERENCES:

Roberto G. Medecina (Entrepreneurship And Small Business Management )

https://wellsfargoworks.com/planning/article/five-qualities-of-successful-small-business-owners

https://balancedscorecard.org/strategic-planning-basics/

https://smallbusiness.chron.com/list-explain-characteristics-small-scale-business-
10472.html#:~:text=Small%2Dscale%20businesses%20employ%20smaller,depending%20on%20the%20
business%20type.

https://www.sba.gov/business-guide/launch-your-business/choose-business-structure

https://www.investopedia.com/terms/l/limitedpartnership.asp

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