LO 1.1 Describe the characteristics of small business.

Small businesses include a wide variety of business types that are independently owned, operated, and financed. Although specific size definitions exist for each type of business, manufacturers with fewer than 500 employees, wholesalers with fewer than 100 employees, and retailers or services with annual revenues less than $3.5 million are typically considered small. By itself, each individual small business has relatively little
impact in its industry.

LO 1.2 Explain the role of small business in the U.S. economy.

Small businesses provided the economic foundation on which the U.S. economy was built. Today these businesses are creating new jobs even as large businesses continue eliminating jobs. Small businesses are more flexible than large ones in the products and services they offer. Most real product innovations come from small businesses.

LO 1.3  Discuss the importance of diversity in the marketplace and the workplace.

As the population becomes more diverse, the owners and employees of small businesses are likewise becoming more diverse. Businesses owned by women and minorities are growing at a faster rate than the overall rate of business growth. Diversity is important in small business because a wide range of viewpoints and personal backgrounds can, at the least, improve problem solving.

LO 1.4  Identify some of the opportunities available to small businesses.

Small and large businesses need each other to survive—they have a symbiotic relationship. This relationship provides opportunities to small businesses in that they can supply needed parts to large manufacturers and can distribute manufactured goods. Moreover, small businesses often pick up functions that large businesses outsource. Other opportunities exist for small businesses where they enjoy the advantage of being able to profitably serve smaller niches than can their larger coun-terparts. For all these reasons, small businesses are rapidly becoming important players in international trade.

LO 1.5  Suggest ways to court success in a small business venture.

To prevent your small business from becoming another casu-alty noted in business failure statistics, you must begin with a clearly defined competitive advantage. You must offer a product or service that people want and are willing to buy. You must do something substantially better than your competition does it. You must remain flexible and innovative, stay close to your customers, and strive for quality.

LO 1.6  Name the most common causes of small business failure.

Ineffective and inefficient management, which shows up in many ways, is the number one cause of business failure. Inadequate financing, industry weakness, inexperience, and neglect are other major causes.