Define advantages and disadvantages of small businesses in relation to large firms.

There are some of the advantages and disadvantages of small businesses compared to large companies. Advantages:

· Flexibility

Perhaps the greatest strength of small businesses is their ability to adapt to circumstances quickly and efficiently. If market conditions or technological advances mean that your products are significantly less desirable, you can quickly and easily make the decision to revamp your product range. If a customer or client comes in with a particularly unusual order, you can drop everything to make it happen.

· Lower Overheads

It’s pretty obvious, but large businesses are expensive to run. The larger you get, the more time and money has to be invested to keep the business going. Yes, small businesses have overheads too, but if you can start off in your home and find inexpensive ways of getting things done then you’ll have a significant advantage over larger rivals who have to concern themselves with HR, utilities, rent, software licensing, hardware, legal and accounting fees etc.

· The Opportunity to Experiment

Many of the best businesses succeed because of their ability and willingness to experiment. In larger businesses there can be an aversion to experimentation – in the mistaken belief that this could threaten the very thing that has made the business successful in the past.

· You Can Compete on Price

This is slightly contentious, but we’ll work on the basis that you’re starting up a business in your spare time. If this is the case, you actually have more freedom to compete on price than much larger businesses.

Disadvantages:

· High commitment: You'll need to spend more time and effort to start up. This will include developing your customer base, establishing lines of credit and supply and finding experienced staff.

High risk- Success depends totally on you and your business talents. That's why future of your business remains uncertain and nothing can be taken for granted.

Delayed profitability- Where the market may not already be established, it may take longer to become profitable

· More responsibility: All of the details of starting the business, including licenses, marketing, naming the business, finding product sources, etc. are the responsibility of the owner.

 

Dwell upon the peculiarities of running a small business.

Small-scale businesses display a distinct set of identifying characteristics that set them apart from their larger competitors.

· Lower Revenue and Profitability

Small-scale business revenue is generally lower than companies that operate on a larger scale. The Small Business Administration classifies small businesses as companies that bring in less than a specific amount of revenue, depending on the business type.

· Smaller Teams of Employees

Small-scale businesses employ smaller teams of employees than companies that operate on larger scales. The smallest businesses are run entirely by single individuals or small teams.

· Small Market Area

Small-scale businesses serve a much smaller area than corporations or larger private businesses. The smallest-scale businesses serve single communities, such as a convenience store in a rural township.

· Sole or Partnership Ownership and Taxes

The corporate form of business organization is not well-suited to small-scale operations. Instead, small-scale businesses prefer to organize as sole proprietorships, partnerships or limited liability companies.

· Limited Area of Fewer Locations

A small-scale business, by definition, can be found only in a limited area. These companies are not likely to have sales outlets in multiple states or countries, for example