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Though small businesses are privately owned, operated with a small number of employees and relatively low volumes of sales they still play a major role in the development of the world's economy. A small business is defined by the number of employees, annual sales (turnover), value of assets and net profit. Small businesses are also not dominant in their field of operation. The advantage of running a small business is that it can be run at a low cost and on a part-time basis. Sole proprietors tend to be intimate with their customers and clients which usually results in greater accountability and responsiveness. A small entrepreneur has independence; he can make his own decisions, risks and reap the rewards of his own efforts alone However, entrepreneurs have to work long hours and understand that ultimately their customers are their bosses. Running a small business also comes with a variety of problems which are related to their size. One of these major challenges is under-capitalization mostly brought about by poor planning. It is common knowledge that an entrepreneur should have access to money at least equal to the projected revenue for the first one year of business in addition to the anticipated expenses but usually this is not the case. Small Businesses need to be mindful of contribution margin (sales minus variable costs). This means that a small business must be able to reach a level of sales where the contribution margin equals fixed cost. Small business owners under price their products to a point where even at their maximum capacity it would be impossible to break even. But cost control or price increase often resolves this problem. Stephen is an Business Organizing Expert . He researches and studies on big and small business strategies . Website:- Business Management Solutions for efficient business operations.
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small business, business management, management, sole proprietor, accountability, entrepreneurship, capital, sales, operation, price, cost, money, bus,
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