The Small Business:

Business management begins after a business has been started—therefore identification of business opportunities is the foundation for starting a business. The question of what business opportunities are available is very important. Many people would like to be their own bosses and therefore may start their own small businesses. But owning one's business has some risks especially because the income is not guaranteed unlike salaried employment.

When is a business small?
In general a small business has few employees, limited capital, low investment and low sales. A small business will be a business that has the following characteristics:-

(a) Management is independent; generally the managers are also the owners.
(b) The capital is contributed by one person or a small group.
(c) The area of operation is local—the owners and employees reside in one home community.
(d) The size within the industry is small.

From the above we see that a small business is self-initiated, largely self-financed and closely self managed and is of relatively small size when considered as part of the industry. Small businesses service big ones as many products produced by big companies are distributed by small companies. Apart from the matter of size small businesses have three other distinguishing characteristics.

    •    Management
    •    Capital requirements
    •    Local operations

Management: The management is relatively independent since usually the managers are also the owners. They make their own decisions; the owner is both the investor and the employer. This gives him complete freedom of action, and most small business are either sole proprietorships or partnerships.

Capital requirements: The capital requirements are usually small and can be provided by one person.

Local operation: Both employees and owners come from the local community and location of the business.