Essential Tips Before Starting a Small Business
Planning to start up with your own business? Neither mind whether that should be small or big, opening a small business also requires much effort. I will recommend knowing the basic before getting started with a small business.
So, what is a small business? Privately owned businesses that can be a sole proprietorship or can be a partnership and can be corporation too are termed as a small business. These small businesses are identified by the employee’s size and/or annual revenue. Depending on the industry and the country on which the business belong, there are a variety of definition to avail for tax policies and government support.
Some of the factors for identifying a small business can be as follows:
- Employee’s size
- Annual revenue
- Net revenue
Among these factors, the most widely used method is the number of employees.
Have you ever visited a small grocery store or say a bakery? These are one type of small business. A convenience store is also termed as a small business. This store generally provides retail or service operations. Other examples of small business can be that of restaurants, boarding houses, photographers and event management organization. Do you believe that even a carpenter or electricians can count as a small business?
Some small scale manufacturers or web designers or computer programmers are also viewed as a small business. Doctors that can be dental, medical and ENT or lawyers or accountants who are running their own chambers are also termed as small business owners.
If you are planning to open a small business like home accounting then you need a business license whereas liquor business may require certification and inspection as well. Some other small businesses that require certifications and inspection are retirement homes and day cares. This small scale business requires certifications from different government authorities.
1. Characterizing Small Businesses
Generally, small businesses are owner managed and have inseparable personal whereas business interest too. They receive business through personal guarantee or by personal assets.
Analysts are needed to be careful with the terms and conditions they access the business. Here we will be discussing some factors that are important for a small business to be categorized.
2. Size of the organization
A small business is generally identified by the size of the employees or people working for the corporation or in a partnership firm or in a sole proprietor business. Each and every country has certain norms determining the size of the small business organization. So, by legal terms and conditions, the small business definition can vary with the country and the industry.
For example, united states of America standardize the size of the employee by less than five hundred and annual receipts of no more than $7.5 million, so as to avail the benefits of the United States small business programs. Through some relaxation are provided that states if a small business organization have a minimum of twenty-five employees who work full time and with average annual wages of under $50,000 are said to be qualified for the tax credit under the Patient Protection and Affordable Care Act bill.
Whereas, according to the Australian small business rules, an organization with less than fifteen employees is termed as the small business. The act that describes the size of the small business is Fair work Act 2009. With a midsized business, it had not more than two hundred employees. In the European Union, a small sized business had not more than fifty employees.
3. Entrepreneurship relationship with small businesses
Small businesses are often mixed up with the term entrepreneur. Necessarily not those small businesses are entrepreneurial in nature on the other side it is true that each entrepreneur business is to be started with small business at the beginning. There are certain businesses that include the owner or the sole proprietor of the firm or sometimes owner with a very few employee that offers services or existing products.
4. This business does not aim at expanding.
Whereas an entrepreneurship business offers at selling new products, services or processes and also aims at growth in company size, employee size and receiving international sales. If an entrepreneur realizes about the business strength and the weakness by proper planning and adapts according to the requirement, he/she can direct the business to a positive direction.
Demographics according to the Survey of Business Owners reports in 2012 stated that nearly 10 millions of businesses are run by women among the 27.6 million of overall business in the United States.
6. Franchise Business
Visited McDonald’s? It is a perfect example of franchising business. A small business earning profit from the big corporation is generally termed as a franchise business. The small business gets excess benefits and earns profits with a brand name by keeping basic investment affordable.
Though there is quite a number of restriction as claimed by the franchisees, still they enjoy vast facilities. Some think small businesses are a franchise but the reality is that many franchisees are the small business.
7. Cooperative of retailers
Scale economics are being employed on basis of retailer members. They use their purchasing power for getting manufacturers discounts. These types of the retail cooperative are usually viewed in grocery stores, pharmacies, and hardware stores.
8. Advantages of getting started with a small business
As per my opinion, the basic advantage of starting a small business is that a person can start at a very low cost. Small businesses are started with the minimum needed to be invested. One can start the business on a small scale and thus then expanding as per the requirement.
Generally, there are many who wanted to start their business without affecting their primary work. Small scale business gives you that facility. If you are employed and does want to do something on your own without affecting your work then small scale business is the perfect option for you.
Independence is another factor for starting a small business. No need to answer anyone. You are the boss of your own self and can thus take the decision needed for your business.
Small businesses always receive benefits from government organization and other organizations.