Small Business Management - Week 1- chapters 1,2

What is a small business ?

chapters 1 & 2 on Hatten's Small business management textbook

A Business is considered small if it is independently owned, operated and financed, has fewer than 100 employees and has relatively little impact on its industry. Did you realize that small businesses - - Represent more than 99.7 percent of all employers - Employ more than half of all private sector employees - Employ 39 percent of high-tech employees - Create 60 to 80 percent of net new jobs annually. - Represent 97 percent of all exporters of goods. - Produce 13 to 14 times more patents per employee than large firms. - Create more than 50 percent of private gross domestic product (GDP) - Pay 44.5 percent of total U.S private payroll.

Small businesses are the driving force of change in the development of new technology !

The term "Creative Destruction" fits the profile of many small businesses. It means that a small business creates a new and better idea that replaces an older idea. (A simple example is Microsoft Windows software that replaced basically all other previous softwares. And even a simpler example is DVD that replaced VCR).

What makes a small business a success? what makes it fail ?

The main reason for failure in the small business world is bad management. Incapable management, lack of experience, insufficient funds, high operating costs and high competition.

In order for a small business to succeed - it needs to offer something unique, innovative, that no one else offers. There needs to be a demand for this idea / product - otherwise it will fail.

This is where the role of the ENTREPRENEUR comes in...

Chapter 2 on the Hatten book "Small Business Management, Entrepreneurship and beyond" talks about the role of the entrepreneur in the process of managing a small business.

It basically takes a good idea to make a small business. The entrepreneur needs to have an innovative idea that nobody else offers. There needs to be a demand or a market for this idea in order for it to develop into a small business.

Do I have what it takes to be a good entrepreneur ? Don't know. There are no specific characteristics for successful entrepreneurs, but it is assumed that such a person will be willing to take a financial risk, work long hours, be willing to live without pay at first. There are all kinds of negative and positive aspects for being self-employed.

Small business management is a process that begins with an innovative idea of the entrepreneur, starts up by a triggering event that leads to the implementation of the idea, continues to grow (growth stage of the process), matures and then ends with the "harvest" : the selling of the business and profit pick-up.

To be honest - I don't really know if I'd make a good entrepreneur. I like financial stability but on the other hand - I like changes , and I like them to happen fast. Thinking about it, I always go back to the book I've recently read "Who moved my cheese? " . If I'd ever have a brilliant idea that could develop into a small business I might just go back to that book and read it in order to get motivated to take an action about my idea.....

I will finish with a quote from Hatten's book :

"When you own a business - it becomes an extension of your personality ....."

("unfortunately - it can also take over your life...")

Here's a link to an article that relates to small business failure and success. http://www.businessweek.com/smallbiz/content/jun2005/sb20050622_9223_sb013.htm