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The Nature of Small Business

Small businesses are independently owned operations that are not dominant in their market. They are defined as having total assets between 1.5-15 million pesos. Common types include manufacturing, services, wholesaling, retailing, and general construction. Small businesses have local operations, independent management, and small capital requirements. They provide economic opportunities, products/services to consumers and other businesses, and support employment and the government.

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Warren Douglas Melencion
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366 views23 pages

The Nature of Small Business

Small businesses are independently owned operations that are not dominant in their market. They are defined as having total assets between 1.5-15 million pesos. Common types include manufacturing, services, wholesaling, retailing, and general construction. Small businesses have local operations, independent management, and small capital requirements. They provide economic opportunities, products/services to consumers and other businesses, and support employment and the government.

Uploaded by

Warren Douglas Melencion
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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The Nature of Small Business

A small business is one which is “ independently owned


and operated and which is not dominant in its field of
operation.
The Independently owned – means ownership is by a
private individual, a partnership, or a corporation.
The term not dominant – It indicates that a small business
does not control a sizeable share of its market .
The Magna Carta for Small Enterprises (R.A 6977) defines a
small enterprise as “ any business activity or enterprise engaged in
industry, agribusiness activity or enterprise engaged in industry,
agribusiness and or services , whether single proprietorship,
cooperative, partnership or corporation whose total assets, inclusive
of those arising from loans but exclusive of the land on which the
particular business entity’s office , plant and equipment are situated
must have a value of above P1.5 million to P15 million.
Types of Small Business

1. Manufacturing
2. Service
3. Wholesaling
4. Retailing
5. General construction firms
1. Manufacturing Business – It is
one involved in converting raw
materials into products needed
by society.
Examples :
1. Printing press
2. Garments manufacturing
3. Furniture Shops
4. Car Assembly Shop
Small Service Business
Service business are those that provide services in one
way or another. They may be further classified into the
following :
1.Business services – those that provide service to other
business. Examples are accounting firms, janitorial
services, security services, collection agencies, etc.
2.Personal services – those that provide service to the
person. Examples are tutoring services, massage parlors,
voice lessons, etc.
3. Repair services – those that provide repair
services to owners of various machinery and
appliances. Examples are auto repair shops,
watch repair, plumbing services, etc.
4. Entertainment and recreation – include
movie houses, resorts, billiard pool centers,
etc.
5. Hotels and motels
6. Education services – include schools for
children, high school, correspondence
schools, etc.
Wholesaling – It refers to the
activities of those persons or
establishments which sell to retailers
and other merchants, and / or to
industrial, institutional, and
commercial users, but who do not
sell in large amounts to final
consumers.
Examples:

Wholesalers are the softdrinks wholesalers in


the local areas, dealers of supplies and office
equipment, grains wholesalers, etc. A big
number of these wholesale businesses are
owned by small business operators.

Retailing
It covers all of the activities involved in the
sale of goods and services to the final
consumers.
Examples :
1. Drugstore, the fastfood shop, the appliance store , etc.
Other General Construction Firms :
General construction firms are those engaged in the construction
of buildings whether for private individuals or for the
government. Many of them perform subcontracting jobs for
the bigger contractors such as installing electrical facilities and
sewerage.
Characteristics of Small Business
Small businesses have their own distinctive
characteristics.
They are the following:
1.Independent management – The owner is also the
manager.
2.Small capital requirements – Small businesses require
only small capital and this can be supplied by a single or
a few individuals.
3. Mostly local operation – Small business usually
operates in a certain locality although there are cases
when the market is not confined to a local area.
Economic Importance of Small Business
1.Providers of economic opportunities for entrepreneurs-
People who do not feel comfortable as employees have the
option of engaging in small business operation.
2.Providers of products and services to consumers – The
Production of many products and services are oftentimes not
feasible for big and medium business operation. These
limited opportunities are naturally passed on to small
businesses.
3. Suppliers of products and services to other businesses
– Some businesses require raw materials , semi-finished
parts, finished components or even labor, which they
could not produce. The small business perform this task
for them.
4. Distributors of products and services of other
businesses – Some manufacturers are not able to
distribute their products and services. Many Small
business assume this role for them.
5. Supporters of government – Small Businesses
support the government by paying taxes and
performing other functions.
6. Providers of employment – a large proportion of
the labor force are employed by small
businesses.

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