How Does a Small Business Operate?

A small business can be defined as a business that is independently owned and operated, one that has only a few employees, and does a rather small amount of business. A lot of times, small businesses are sole proprietorships, meaning that only one person owns the venture. There are many different types of smaller businesses, and there are unique advantages and disadvantages to owing one.

There are many different kinds of small enterprises and ways to operate and own them. The usual consideration for deeming a business "small," is that it has to have fewer than 100 employees in the U.S., and fewer than 50 in Europe. There are many businesses that are typically small, and a few of these are: hairdressing salons, bakeries, convenience stores and gas stations, photography shops and restaurants, as well as offices for lawyers and accountants, and many others.

All of these are considered a small business for various reasons. Employee size is not the only thing that defines what makes a small business, as other criteria include annual sales, asset value or net profit.

The smallest businesses are called micro businesses, and they are often located inside someone's home. Both the U.S. and Europe defines "mom and pop" businesses, where the operation is almost entirely run by the owner's family, as businesses that have less than ten employees.

Franchising is a great way to own a small business without having to create the whole thing from scratch, as the corporation will often pay to get most of the business going. This allows the owner the freedom to concentrate on running the business and not worry about failing so quickly.

There are some great advantages to owning a small business, and there are great disadvantages as well. If you feel that the advantages are better than the disadvantages, then you are a good candidate for a small business venture. Probably the biggest advantage to opening a smaller business is the fact that most take relatively little start up capital.

Smaller businesses have an easier time finding and keeping a market niche. Advertising for small businesses is usually cheap and easy, and smaller businesses can use internet marketing strategies more effectively than a larger company. The biggest disadvantage to opening a smaller business is that it is very easy to go bankrupt.

There are incredibly high business tax responsibilities for smaller businesses as well, and it is necessary that the gross income is always greater than the fixed costs of the business, otherwise it will fail. Additionally, just because someone has a good business idea does not mean it will be successful.

Now you know a little more about small businesses and how they operate. Just remember, if you are planning to open a small business, then make sure to conduct proper background research, because if you don't, then your business will likely fail within a year or two. In depth research and viable business plans are essential!