Small firms

Question 1

What’s a small firm

Answer 1

A small firm is a firm that is independently owned and operated.

Question 2

Advantages of Small firms

Answer 2

Independence: owners are free to run the business in any way he/she wants.
Control: the owners have full control of the business.
Better communication: because they have less employees.

Question 3

Disadvantages of small firms

Answer 3

1) Vulnerability: When economic conditions changes, small business will have a hard time surviving because they have fewer resources.
2) They will often have to work longer hours.

Question 4

Why do small firms still exists in the market?

Answer 4

1) Entrepreneurs like to stay small: they don’t want to take the risk of growing the business/firm.
2) Government can help with smaller firms: the government usually helps smaller firms because the small firms help in providing employment.