What Are The Characteristics Of A Small Business?

Do you plan to start a small business, but you still have an unclear understanding of this new venture? Hence, you need to understand the meaning of a small business before you get started. A small business is a privately owned corporation, partnership, or sole proprietor with a small number of employees and smaller yearly revenue. So, if you are planning to start a small business, go here to get some simple and effective ideas for beginners.

Business on a small-scale level

A small business that functions on a small scale level will involve the following:

• Less capital investment
• Less number of labor
• Fewer machines to operate

It is best described as a small business. Small businesses are small-scale industries, a type of industry that produces goods and services on a small scale level. These small scales industries play an essential role in the country’s economic development. The business owner will invest once in the machinery, plants, and industries, or take a hire or lease purchase. These are the industries that don’t invest more crore.

Examples of small-scale industries are:

• Paper
• Toothpick
• Pen
• Bakeries
• Candles
• Local chocolate, etc.

These are industries that mostly settled in urban areas as separate units.

Characteristics of a small business

After you understand the meaning of a small business, comprehending its characteristics is your next objective. Here is a list of the characteristics of a small business or small-scale industry:

• Ownership. It has a single owner known as a sole proprietorship.
• Management. All the management works are under the control of the owner.
• Limited reach. The restricted area of operation can be an industry or local shop located in one area.
• Flexibility. It is open and flexible to sudden modifications, unlike in large businesses.
• Labor intensive. The dependency on technology is very little as they are dependent on manpower and labor.
• Resources. They use local and instantly available resources. They do better use of limited waste and natural resources.

Small business categories

Whether they are a small businesses, they also have different categories:

• Small scale industry
• Ancillary small industrial unit
• Export-oriented units
• Small-scale industries (owned by women)
• Tiny industrial units
• Small-scale service and business
• Micro business enterprises
• Village industries
• Cottage industries

Now, if you are interested to engage in this new venture, it is a good start to understand the meaning and the characteristics of this small-scale industry. It helps you guide in your small business journey and face the future competitively.