Features of a small business
A small business is low in capital but high in labor intensity. Most small businesses do not have sufficient financial resources. So they cannot purchase big machines or modern equipment. What is only possible for them to do is to use labor instead of machine in their business operations. These are usually in retailing and service industries.
A small business is efficient specialized skill or service. It can well produce goods or services that are designed to the particular needs of an individuals or a few clients. For instances, repair works on cars and appliances require individualized service. Also taikors, barbers, real estate agents and other provide services that require specialized knowledge for specific needs.
A small business succeeds in small, isolated or overlooked markets. In rural communities where markets are small due to the few redidents, a small business is viable. For example, a convenient store, tailoring shops, small restaurant and grocery stores are profitable enterprises. Clearly, giant corporations cannot survive in small towns where demand is limited.
A small business often operates in unstable markets. Big corporations are careful in their investments. To be sure of safe in their business ventures, they conduct, market or feasibility studies to determine viability. This is actually the standard procedure in putting up a business which involves huge resources in terms of money, machines and materials. Such feasibility studies do not apply in most small businesses. With little capital, they are not afraid to experiment or test the market. They can easily respond to changing economic conditions. if these are not favorable, they can quickly get out. Unlike big corporations, they have a big buildings or large factories. It is not eay for them to retreat from business wthout suffering from huge losses.