David Stokes

Nicholas Wilson
Small Business Management and
Entrepreneurship
Fifth Edition

Lecture outline
What is small business?
Definitions of small business
Why bother with small businesses?
The revival of the small enterprise
Reasons for revival

What is a small business?

Define the term small business

t
Quantitative definitions
Numerical parameters to differentiate between
smaller and larger businesses
It can affect the eligibility of a business for
certain types of grants or assistance
These definitions are simple to apply
These measures may differ across industries

Non- quantitative measures

It may be difficult to define small business precisely on
paper, but more easy to recognize once they are in
operation
A committee of inquiry on small firms set up by the UK
government came up with three important
characteristics
A small firm is managed by its owner(s)in a personalized way
It has a relatively small share of the market in economic terms
It is independent in the sense that it does not form part of a
larger enterprise and its ownership is relatively free from
outside control in its principal decisions

These criterion are subject to a lot of critisizm

Low market share may not be a criteria as

firms can operate in highly niche segments or

limited geographic markets

What do you think are

the
threats
to small
Economies
of scale
Research and development on new products
businesses?
Trade barriers

The Bolton Report 1971

The report recognized the contributions made by

the small enterprises to the economy as follows:

A productive outlet for enterprising and

independent individuals
The most efficient form of business organization in
some industries where optimum size of production
or sale is small
Specialist suppliers, contractors to large companies
Dealing in specialized markets
Competition to the monopololistic tendencies of
large companies

Reasons for small

business
revival
Growth of the service
sector
Information technology
Flexible specialization and networks
Subcontracting
Unemployment, redundancy and golden

handshakes

It is a turbulent sector with huge movements

in and out

Innovators of new products

The breeding ground for new industries
The seedbed from which tomorrows large

companies will grow