The Power of Small Businesses

Small Businesses

• Small businesses are not characterized by having a large market share or high profits.

Definition of Small Business

• A small business is defined by its size, with a specific limit that varies depending on the country and industry.

Entrepreneurial Spirit

• The entrepreneurial spirit is the mindset and attitude of individuals who take initiative, innovate, and thrive in a competitive environment.

Business Plan

• A business plan is a detailed document outlining the goals, strategies, and financial projections of a business.

Role of Small Businesses in the Economy

• Small businesses play a vital role in the economy by creating jobs, stimulating innovation, and providing specialized goods and services.

Size Limit for Small Businesses

• The size limit for a business to be considered small varies depending on the country and industry, but typically includes businesses with fewer than 500 employees.

Risks Associated with Small Businesses

• One of the risks associated with small businesses is the high failure rate, often due to lack of financing, market competition, and management inexperience.

Meeting the Needs of Larger Organizations

• Small businesses meet the needs of larger organizations by providing customized goods and services, filling niche markets, and offering specialized expertise.

Financing Sources

• The most popular source of financing among companies, excluding bonds and stocks, is commercial banks and other financial institutions.

First Infusion of Capital

• The first infusion of capital used to get a business started is called seed money or startup capital.

Alternative Financing

• The Small Business Administration (SBA) lends smaller amounts of money to business owners who don't qualify for conventional bank loans.

Venture Capitalists

• Venture capitalists are investors who provide money to finance high-growth new businesses in exchange for a portion of ownership, with the goal of reselling the business at a profit.

Angel Investors

• Angel investors are private individuals who put their own money into start-ups, with smaller amounts than Venture Capitalists (VC), with the intent of selling their share for a profit later on.

Business Arrangements

• A business arrangement in which one company obtains the right to sell the products and use various elements of a business system of another company is called franchising.

Initial Public Offering (IPO)

• The term used when a company goes public and issues shares of its ownership to the public for the first time is an Initial Public Offering (IPO).

Debt Financing

• Debt financing covers every source of funding except bonds and stocks, including commercial banks, credit unions, and other financial institutions.