Characteristics, Pros, and Cons of Running a Small Business

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Do you have a plan to run a small business on your own? If you do, then you should first know the characteristics, and also pros and cons of running a small business.

The characteristics of a small business

1.The capital budget is not too much

The easiest characteristic to recognize a small business is in terms of capital used. Usually, small business will not require too large capital. As a new entrepreneur with minimal investment, you must have devised various strategies to be able to continue developing the business you build. Although with limited capital they have a strong motivation to run it. Until now, the government has begun to pay attention to their existence with various business capital loan products channeled through banks.

2. It has only a few employees

The employees of a small business are generally not more than 10 people because it is also influenced by limited capital budget to pay the salaries of employees. You, as the owner of the business, should not only act as a leader or boss, but you should also go directly to take care of your business. And, in the small business, it is very rare for the owner to use other people to control or oversee the business they build.

3.Tend to employ the closest person and family

The limited capital budget makes the small business owners more likely to recruit family members to become their employees who can be trusted. In addition, the way they usually use to be able to improve their business is by working together to stock raw materials from known people or even from their own family relatives, renting a shop that comes from a family environment, or all the ways that can be done to minimize the expenses.

The pros and cons of running a small business

Running a small business will give you many advantages and also require you to overcome the disadvantages that it may have. Here are some pros and cons of running a small business that you may want to know:

1. The advantages of running a small business

a.  It usually requires a small budget

Usually, a small business does not require a large budget. However, the small amount of capital is not a reason not to immediately start a business. No matter how much capital you have, you can immediately start your own business. Especially in the internet business, small capital can be cultivated to get a very large income.

b. It is sometimes tougher than the larger business

Small businesses have the ability to survive. In some cases, small businesses can even survive and help drive the nation’s economy. The toughness of small businesses is, indeed, in line with the character of the entrepreneur who acts as the business owner.

c. It is possible to do an immediate action.

Because you run a small scale business, then you do not have to wait long to make a decision. You are the decision maker whose immediate action is also useful in responding to changing market needs.

d.  It more focuses on consumers

Small businesses are usually more focused on serving consumers. They know who the customer is, who is The customer. By knowing the customers better, a small business also able to serve them more optimally

e.  It is quite adaptable

Because there is no structural hierarchy like big businesses, small businesses have high adaptability. Changing market conditions can be quickly harmonized with the business. New innovations, however small they are, usually appear in these conditions.

f. It engages in the economy of the community

From absorbing employment to participating in moving the economy around, this type of business also becomes a motor of economic growth in its environment.

g. It has flexibility

Small businesses have a flexible nature. This makes it able to adjust to the conditions of the market and the employees. The flexibility of this small business makes it able to survive in business competition.

2. Weaknesses of Small Business

Weaknesses and obstacles in managing small businesses generally relate to internal factors of the small business itself. Some of them are:

a. There are too many costs which are incurred. There is also some unuseful debt, and it usually does not comply with standard bookkeeping provisions.

b. There is no proportionate division of labor and employees often work outside the standard working hours.

c. The business owner sometimes does not know exactly how much work capital needs, because of the absence of cash planning.

d. The source of capital is usually limited to the ability of the owner, especially when it does not have any good investors. Those are some of the pros and cons of running a small business. You can still overcome some disadvantages by planning in advance and managing your business well.

Good luck.