Small businesses are 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 proprietorship. The legal
definition of "small" varies by country and by industry. 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 million in
annual receipts for most non manufacturing businesses.
In the European Union, a small business generally
has under 50 employees. 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.
In addition to number of employees, other methods used to classify
small companies include annual sales
(turnover), value of assets and net
profit (balance sheet), alone or in a mixed definition. These
criteria are followed by the European Union, for instance (headcount, turnover
and balance sheet totals). Small businesses are usually not dominant in
their field of operation.
Small businesses are common in many countries, depending on the
economic system in operation. Typical examples include: convenience stores, other small shops (such as a bakery or delicatessen),
hairdressers, tradesmen,
lawyers,
accountants,
restaurants,
guest houses,
photographers, small-scale manufacturing
etc.
The smallest businesses, often located in private homes, are called
micro businesses
(term used by international organizations such as the World
Bank and the International Finance
Corporation) or SoHos. The term
"mom and pop
business" is a common colloquial expression for a single-family
operated business with few (or no) employees other than the owners. When
judged by the number of employees, the American
and the European
definitions of a micro business are the same: under 10 employees. There is a notable trend to further
segment different-sized micro businesses; for instance, the term Very Small Business is now being used to refer to
businesses that are the smallest of the smallest, such as those operated
completely by one person or by 1-3 employees.
Small businesses are easy to start up because of the low capital
requirement and due to the fact that you do not need a high level of
staffing. However, there are some basic plans you would need to do
before coming on stream.
What do you need to do?
1. Starting
capital: You need to have a starting capital ready. The amount of money
you need depends on the kind of business you have in mind and the level
at which you wish to start off. Generally. You do not need a large
amount of money to start, but you need to plan other areas so that the
small income you start with would be judiciously utilized.
2.
Location: The location where you site your new business is very
important. You should think of a place where you would be guaranteed of
high traffic coming to patronize you. It would be wise therefore to site
your small business in the heart of town/city rather than in outskirt
of the city where anybody can hardly hear about it. If it is sited in
the heart of the city people would not pay huge amount on transport
before they can get to you. After all you have just started, nobody
knows you yet. So why should they spend that much to locate you when
there are several people rendering the same services you wish to render
to them?
3. Accommodation: You need a decent and cheap
accommodation to start up your new business. You have to think of a
place where your customer can be comfortable and feel relaxed when they
come to patronize you. Therefore you should not use a dilapidated place
that would cost you a fortune to put in shape. As you look for a decent
accommodation you must remember you do not have to spend your life
savings securing an accommodation. You need to look for something
moderate yet decent. If possible you should pay for a least a year
upfront and relax thereafter to do business. Sometimes the business may
not pick up on time; so taking care of your accommodation means you
would not be kicked out by your landlord because of failure to meet up
monthly rents.
However, if you are very sure of encouraging daily sales it would be
wise to settle for a monthly rent so you have enough capital to plough
into your business.
4. Staffing: To start up you need few to
moderate staff; you should get competent hands that are willing to work
for a moderate pay so that you would be able to meet up with their
monthly salaries. You can increase their salaries as your business
grows. You must as a rule avoid hiring incompetent hands simply because
they are cheap; instead employ few qualified hands and add your
personnel services to theirs to put your business on its feet. You may
employ cheap labor for the non-sensitive areas like cleaning, security,
transport, etc. Everything must be moderate; don't start two big
otherwise you would run out of cash too soon and also out of business
5.
Running capital: You need to have some reserved capital available for
the daily running of the business. You need money for
transportation/fueling, staff monthly salary, and miscellaneous
expenses. Therefore, you should remember to keep aside some money that
would help you to keep your business running.
6. Advertisement:
Think of how to let people know about your business and the services you
can render. You need to advertise your business either online or
offline. You may need to print business cards or handbills which you
distribute to customers. You may also need to place adverts on
newspapers if you have the money. You definitely need to let people know
your business exists so they would patronize you. On the internet you
may use resources that wouldn't cost you much - social media, blogs,
e-books, newsletters, etc.
