Pros and Cons of Small Business

Pros and Cons of Small Business


Little businesses are different forms of corporations, partnerships, or sole proprietorships that have fewer employees and/or lower yearly income than an average-sized company or firm. Companies are considered “small” if they are eligible for government assistance and favourable tax treatment. Different standards are necessary depending on the country and sector. According to the Australian Fair Work Act 2009, small businesses can have as few as 15 employees, 50 employees in accordance with the EU criteria, and fewer than 500 employees to qualify for various SBA programmes in the United States. 

Advantages and Disadvantages of Small Businesses

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1. Low Cost

Although a person maintains a regular job with an employer or takes care of family members in the home, many small enterprises can be created at a minimal cost and on a part-time basis. Many small enterprises that generate a meagre income in developing nations are sole proprietorships, such as those that sell goods from a market stall or cook hot meals to be sold on the street. A small firm is also ideally adapted to Internet marketing in the 2000s because, unlike before the Internet revolution, which started in the late 1990s, it can readily serve specialised niches.

2. Independence of Work 

Another benefit of running a small business is independence. A small business owner is not required to answer to a manager or supervisor. Additionally, a lot of people want the freedom to decide for themselves, take calculated risks, and profit from their actions. Small business owners have the freedom and flexibility to decide for themselves within the limitations set by a variety of environmental and economic considerations. But, business owners must put in a lot of overtime and realise that their clients are ultimately in charge. 


1. Bankruptcy

The proprietor of a small business may declare bankruptcy if it fails. This can typically be resolved by filing for personal bankruptcy. Although corporations can declare bankruptcy, doing so has little benefit if the company is out of business and its valuable assets are likely to be seized by secured creditors. Small businesses can continue to function both during and after personal bankruptcy because of exemptions provided by many states for their assets. 

2. Poor Job Quality 

The quality of the employment that small firms produce has come under scrutiny, despite the fact that they employ more than half of the workforce in the US and are widely recognised as a key factor in job creation. Typically, small enterprises hire people from the secondary labour market. As a result, earnings for workers at large companies are 49% higher in the U.S. Furthermore, many small businesses struggle or are unable to offer their staff the same advantages that staff at larger organisations receive.  

The Bottom Line

To promote their causes or to obtain economies of scale that larger firms benefit from, such as the chance to purchase less expensive health insurance in bulk, small businesses frequently merge or band together to form organisations. These associations comprise national or worldwide industry-specific organisations as well as local or regional associations like Chambers of Commerce and independent business alliances. 

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