Significance of small businesses Flashcards
What is SMES?
Small to medium sized enterprises
What are the benefits of SMES?
Less conflicts Flat organisation structure Easier to manage Quicker decision making Personalised service Job creation Competition for larger businesses Supply specialist goods and services Lots of small firms give greater variety to consumers May be able to operate at a lower average cost Most big businesses start out small
Features of a micro business
No of employee= <10
Turnovers in Euros= <2m
Net worth shown on balance sheet= <2m
Why do govt. support businesses start ups?
Increase output (increases demand and GDP)
Reduce unemployment
Benefits to society e.g. Help disadvantaged people
Increase competition
How can the government assist small businesses?
Reduce rates of profits tax (corporation tax)
Loan guarantee scheme- guarantees loan repayment % should the business fail
Information, advice and support
What are the advantages of small businesses?
Can be managed and controlled by owner
Often able to adapt quickly to meet changing customers needs
Offer personal service
Find it easier to know each worker
Business culture is well motivated if family owned
Pros of Large businesses
Can afford specialist managers Benefit from cost reduction Have access to sources of finance Risks can be spread e.g. different markets Can afford R&D
What are small businesses- disadvantages?
Limited access to source of finance
Few opportunities for economies of scale
Bigger risks
Disadvantages of large businesses
Difficult to manage e.g. locations
Larger scale production increases
Slower decision making
Poorer communications
