Small Business
The definition and understanding of small business varies across the world. Privately owned enterprises, small businesses are often assigned to this category using criteria such as the number of employees, sales, assets, or profits. Also, a small business may be a partnership between several individuals, a sole proprietorship with a single business owner, or even a corporation.
The contribution of small businesses to the economy is incredible, given the variety of fields that a small business may choose to operate in. As a result, small businesses may encompass any companies from bakeries (small shops) to lawyers, restaurants, convenience stores, hairdressers, or small-scale manufacturers. In today’s world of digital marketing, online web design or programming businesses are also considered small business.
A small business has its benefits. It is a venture that doesn’t take up a huge initial investment. More, a small business can even be started on a part-time basis and developed in time. The internet world has demonstrated just how important small businesses are in serving the needs of niche markets. Plus, a small business is more likely to adapt to market changes easily than heavy corporations. As for the customer service, a small business will always surpass the quality of service of any other large organization. The intimate and emotional bond with the customer leads to increased maturity and accountability.
Yet, small businesses are not all about benefits. The main problem with such ventures is undercapitalization, which often leads to bankruptcy. If some years ago, bankruptcy was the result of poor funding management, the recent years stand evidence that bankruptcy is often the cause of economic changes and hardships. Furthermore, a small business is also concerned with, and often taken out of business by excessive insurance costs, taxes and tax compliance, and also rising energy costs.
The recession has had a terrible effect on small businesses.
More, it has turned many medium size businesses to small businesses. Then, the economic situation getting more and more difficult has brought up many funding problems to small businesses. Getting a traditional bank loan became impossible. If a small business was perfectly eligible before 2007, in 2009 it was impossible for the same business to get a loan.
Within this context, it became simply impossible for a small business to cope and survive. Many of them disappeared, paralyzing the economy further, and putting a higher strain on the consumer. Most of them ruined their creditworthiness with late payments on their loans and to their suppliers. Over the recent years, a new category of lenders decided to take the risk and fund small businesses through alternative small business financing, such as small business cash advance or unsecured business loans.
Credit card debt, failure to pay secured loans on time, foreclosure and bankruptcy lurking at every corner, these are just some of the threats that a small business needs to live with every day. Although they are vital for the health of the economic environment and for the good of the consumer, small businesses need to fight many times as hard as large organizations in order to survive.