The power of small businesses: how small companies are driving economic trends
A person who wants to start a business inevitably has a question about what kind of business to do. After all, it is desirable to invest the existing capital in such a business that will provide profit and become a reliable source of income. With the wrong choice, it is easy to lose even the money that you have.
If the initial capital is small, then only a small business is possible. Examples of successful businesses in such a business can be seen everywhere. These are various shops, cafes, hairdressers, photo salons, beauty and health studios, etc.
Provision of services to the population
The service sector attracts entrepreneurs by the fact that it is often possible to open a business here, without going to banks for a loan for initial costs and using only your own resources. Therefore, a large number of individual entrepreneurs operate in this area. Small business (examples will be discussed below) gives them the opportunity to quickly recoup their investment, and then start making a profit.
Successful Small Business Service Examples
Let's start with the most popular activities. Currently, due to the widespread use of computer technologies, office equipment repair and programming services are in demand. And a person with excellent knowledge in this area can choose this particular direction of work. This also includes such a service as website development.
The services of tutors in various subjects of the school curriculum are in great demand, especially in connection with the passing of the exam. But knowledge alone is not enough for such work, you need the ability to transfer your knowledge to another, pedagogical talent. And recognized tutors do not need to advertise their services, the demand for them exceeds the supply.
Trade and catering are very popular in small business. There are many opportunities here due to the variety of products offered for sale and the variety of dishes. Cafes specializing in some national cuisine and fast food establishments attract a large number of customers.
Beauty and health services are widespread. The desire to be beautiful, characteristic of any woman, causes the emergence of all kinds of beauty salons with the services of a hairdresser, manicurist, masseur, make-up artist, stylist. And to keep in shape, you can use the services of various gyms, swimming pools and fitness clubs.
Organization of holidays is also included in small business. Examples are toastmaster services for weddings, anniversaries, arranging New Year trees and congratulations from Santa Claus and Snow Maiden. This is a business for active and creative people who are able to captivate, stir up others. And it does not require special expenses, except for the purchase of costumes and musical equipment.
Home Small Business
Let's say you decide to join the ranks of those who have their own business. What are your chances of success? You may be familiar with the dismal statistics on the number of new ventures going bankrupt. Some believe that your chances of success are only 1: 3; others argue that the chances are even less, because 85% of new businesses go bust within the first 10 years.
Based on recent research, it can be assumed that your chances are slightly higher, but a lot depends on the type of business you choose and the general state of the economy. 80% of newly created enterprises live for at least three years. In general, MANUFACTURING firms have MORE chances to survive than RETAILS. One of the factors determining the firm's survival was the founder's confidence in the future success of the firm.
Searching for a promising business
If you decide to take a chance, then you have THREE ways to enter the world of business:
- Start from an EMPTY place, - BUY FUNCTIONING FIRM or - BUY FRANCHISE.
As a rule, many START FROM ZERO, and this is the most difficult path. Most people who have succeeded have already had enough experience to minimize risk. They start by doing what they do well and capitalize on their well-established professional relationships.
If you lack hands-on experience but still want to start a business, you can try to find a good idea of how to deal with any problem you are facing. It is possible that someone else is struggling with this problem.
PURCHASING an existing enterprise significantly REDUCES the risk - provided, of course, that you have thoroughly assessed its condition and capabilities in advance. By buying a company, you immediately acquire a functioning system for the production of known goods or services. You don't have to go through an agonizing period of effort to build a reputation, attract clientele, and recruit and train employees. Such an enterprise is much easier to finance, since the past of the operating company and its assets serve as a guarantee for creditors. Once these important issues have been resolved, you can focus on improving your firm's performance.
There is another alternative - to purchase a FRANCHISE. The name and products of the company selling the franchise are already known, and you can start your business on the same basis. However, purchasing a franchise is not at all a guarantee of the success of your business. According to one study, buying a franchise is just as likely to be successful as starting from scratch
Choosing a form of ownership
After you have found the most promising business for yourself, you need to decide on the FORM OF PROPERTY. You can choose an INDIVIDUAL PRIVATE FIRM, PARTNERSHIP or CORPORATION depending on your needs, as well as the advantages and disadvantages of each of these forms. To organize any of them, certain legal formalities must be completed.
If you have chosen an INDIVIDUAL private company, then first of all you need to open a current account for it, purchase invoices and other forms, collect money to pay the monthly rent of the premises. You may also need a business license and other legal documents depending on the type of firm.
To establish a PARTNERSHIP, you will need two more documents: a PARTNERSHIP AGREEMENT, which sets out the basic agreements with your partner (or partners), and a PURCHASE AND SALE AGREEMENT, which defines the STATUS of the enterprise in the event of the death of one of the partners.
In the developed countries of the world, small business is of great importance. The authorities understand the value of this sector of the economy, which has a significant impact on the well-being of citizens. For example, in the United States, small businesses account for 99.7% of companies with employees. Between 2021 and 2021, they created more than 65% of new jobs, according to the country's Small Business Administration.
In Russia, the situation is a little different: over the past 25 years, small businesses have been trying with all their might to prove their importance. According to Rosstat, as of August 2021, the number of employees of small and medium-sized businesses was 18.7 million people - about 25% of the entire workforce in the Russian Federation. Moreover, over the past year, this figure has decreased by 570 thousand people. According to a study by Alfa-Bank, this may be due to the main problems of entrepreneurs in Russia: high tax payments, lack of funds for development, and a decrease in consumer demand.
At the same time, whatever the economic background in the country, the Russian government continues to insist on the importance of small business for the development of the country and offers various types of assistance to entrepreneurs: for example, through tax incentives and special credit conditions. Analysts identify several main reasons why small businesses are important to the national economy.
Small business stimulates local production
According to business consultant Leslie Hassler, quoted by Business News Daily, small businesses create new jobs, participate in exports, innovation and other key economic processes. But one of the most important advantages is that such companies have a great influence on their region and contribute to the development of local production. This creates an ecosystem based on work and personal relationships between members of the local community.
Over time, the company becomes a place of attraction for most people in its region. The company is growing and already has a more significant impact on the economy of not only its region, but the entire country. At the same time, the responsibility of the management increases: a small business owner is concerned about both his own success and the well-being of the ecosystem representatives who have trusted him.
Small business is valuable for large enterprises
According to Thibault Clement, CEO of Loomly, small business offers great opportunities for large enterprises. For example, organizations can supply products that regular partners did not have. This avoids downtime and helps you complete your project on time.
Another benefit is that small businesses can be clients of large companies. In 2021, there were more than 30 million small firms in the United States, each of which may have turned to large businesses for one reason or another. This advantage is directly related to the following: a small business is able to turn from a client into a partner, for example, to join the holding and perform the necessary part of the overall work. Finally, small companies can signal new market trends - thanks to their flexibility, they have a better sense of the coming changes, and this ability should be used by large players.
What you can learn from small businesses
Leslie Hassler believes that large companies have a lot to learn from small businesses: more flexible enterprise management, openness to innovation, ingenuity, speed of decision making. While the holding's managers will coordinate the introduction of a new technology for many months, a small company will have time to test and improve it several times.
According to Angelica Rewers, CEO of The Corporate Agent, small businesses can also serve as examples of modern corporate culture. They create exactly the kind of working conditions that are appreciated by young active employees: with business trainings, master classes, motivating events and much more. This is especially beneficial against the backdrop of large corporations that adhere strictly to a conservative work ethic.