V. Answer the questions to discuss the details of the text. Use the text for reference. 

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V. Answer the questions to discuss the details of the text. Use the text for reference.

1. What type of a person may succeed in building a business?

2. What are the aims and motives for establishing small firms?

3. In what way do small businesses create competition among manufacturers and merchants?

4. What are the economic contributions of small business?

5. Is it necessary to be an expert at everything to run a small business?

6. What must you choose carefully to succeed in your business?

7. What must you do to control your business properly?

8. What may be the causes of failure in business?

9. In what way should you watch out the crucial factors in your

10. What are the three criteria for successful business?

11. What does a failure of a small business venture often turns out to be?

12. What is the positive effect of unsuccessful attempts to start a business?


VI. Read the text attentively. Make up a logical plan and retell the text. Use the material of the tasks above.



Read the texts «What Special Problems Face Small Business», «Starting-up Financing», «Small Business in the USA» with a dictionary. Make a list of new words and expressions.


What Special Problems Face Small Business

Small firms (with, say, less than 500 workers) are often faced with the problems of limited capital. This has a number of side-effects. It means first that they are unable to benefit from economies of scale. Bank managers will be less inclined to lend them funds and will charge them higher rates of interest when they do.

People will be prepared to buy shares in well-known companies. They will not want to buy securities of any sort from small unknown companies. Whereas large firms can threaten to with-draw their business, if debts owing to them are not settled on time, they tend to be regrettable slow on paying their own bills.

An engineer may set up a firm using his technical skills as the basis of the business. As the business grows, his defects as a marketing manager, accountant and personnel manager will begin to appear. He cannot be an expert in all sections of the business, nor can he afford to consult his larger competitors.

The small firm is also unlikely to be able to afford sophisticated technological equipment such as a mainframe computers or visual display, however useful they might be. Advertising cost spread out over a large number of units may be insignificant, but given a smaller level of output they prove an intolerable burden. Inevitably, television advertising tends to be a resource available only to the larger concerns.

Starting-uр Financing

The young businessman must find sources of money that will last until revenue begins to exceed cash outflows. He must be creative in finding start-up funding. New small businesses can start with the businessman's own assets. On top of that, start-up financing may come from friends and relatives. The larger businesses can obtain funds from venture capital investors.

One of the personal assets the businessman can use to raise funds for the business is his home. The value of the home that the owner has paid for is called the owner's equity in the home. By 128 pledging this equity, the homeowner can obtain a second mortgage or a home equity loan.

A businessman can find another source of start-up financing by a life insurance policy. Many policies build up cash surrender value - the money that the policy holder can borrow at a low interest rate.

Those who need more funds can obtain a variable rate installment loan. It is a personal loan with an interest rate tied to the prime rate or some other index. When the index changes the rate changes in the same direction.

Some good sources of start-up funds are family members and friends. Many people can afford to lend at a low interest rate. The lender can share ownership of the business or can become a partner or shareholder in a corporation.

In some cases new companies can obtain cash from venture capital firms. These financial intermediaries specialize in funding ventures with good promise and invest in businesses which generate high profits within five years. Initially venture capital firms invested in high-tech industries, but now other branches enjoy this kind of financial aid, especially those working in the health-care field. The venture capital firms provide seed money to start a new company funds to help the venture grow and gain the market and money to buy out a business.

Small Business in the USA

Not all people who start businesses dream of huge multimillion-dollar corporations with international sales. Many just want to sell things - fruits and vegetables, home appliances, clothes or computers so that they can be «their own bosses». These small businesses are an important part of the economy. Many of them provide needed goods and services in city neighborhood, in small towns or in rural areas, where large companies might not provide adequate service.

Every year hundreds of thousands of Americans start their own businesses. A government agency, the Small Business Administration helps with information, advice, and, sometimes, loans and grants. Many large companies with many stores started as one-store operations.

The Coca-Cola company, which distributes its soft drinks around the world, began when a pharmacist mixed together the first Coca-Cola drink and began selling in the southern city of Atlanta, Georgia. Вlue jeans, the popular denim trousers known to teenagers around the world, were invented by a poor cloth peddler who sold his first pair to gold miners in California in the 1880s. His company, Levi Strauss, remains one of the largest clothing manufacturers in the United States.

One of the most significant changes in recent decades has been a shift away from the production of goods to the delivery of services as the dominant feature of the American economy. Where once most workers in the United States produced actual goods - from tooth-paste to tires - most Americans today work in the sector of the economy that is broadly defined as providing services. Service industries include retail businesses, hotels and restaurants, federal and local government, office administration, banking and finance, and many other types of work. At the same time, as many traditional manufacturing enterprises in the United States decline or grow slowly, new companies spring up that are developing high technology computer, aerospace or biochemical products and services.

Business organizations in the US have been eager to spread the message of free enterprise to new generations of Americans.

Through a variety of means, they carry their message into the schools and into the television screens of the nation. One of many activities sponsored by US businesses is a nationwide program called Junior Achievement. Local business people help high-school-age «junior achievers» to organize small companies, sell stock to friends and parents, produce and market a product (key chains, perhaps, or wall decorations) and pay stockholders a dividend. The same young people act as company officers, sales people and production workers. The idea is to give young people a deeper appreciation to the role entrepreneurship plays in a capitalist society and to give them experience in business practices.

The list of best selling books often includes works by successful business people relating their personal formulas for getting ahead.



I. Read the texts attentively. Make up logical plan and put questions to each of the text. Retell the texts concentrating on the problems of a) starting and running small business; b) small business in America. Compare the situation with small business in the USA to that in your country.


II. Read and discuss the proverbs. Use them in your speech to make it more expressive.

Nothing ventured, nothing gained.

Fortune favours the brave.

If you want a thing to be done well do it yourself.

Better a little fire that warms than a big fire that burns.

III. Speak about the aims and motives for starting small business and its economic contributions. Use the material of the unit.


IV. Imagine that you are going to start your own business. Use the material of the unit to describe the situation (your actions, problems, perspectives, etc.).




If you start a business of your own, your aim is to do well, in other words — to succeed. Every person under stands the word "success" in his own way. And what does "success" in business mean for you? Tick the suitable answer and explain why you have chosen it.

Success is

when you are popular with your customers;

when your products cost a lot;

a lot of money earned;

when you win all the competitions among other companies specializing in the same area;

when you reach all your goals;

when your company is constantly expanding;

when the staff is working as a good team.



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