Small businesses play a vital role in developing the economy of the respective countries in which they operate in. These businesses do not only meet the needs of the local people but also serve the requirements of large businesses e.g. for printing, typing and catering services. As the job market is day by day being overwhelmed with a load of many graduates it is becoming difficult for it to absorb them hence people are encouraged to become self-employed so as to ease the burden of unemployment.
According to a new study it has come out that many people have embarked on starting a business to serve a purpose in society or they just want to become self-employed and relieve themselves of the burden of their commanding and harsh bosses. With this revelation it has been found that many businesses in the UK are small and two thirds are operated by one person. It is also important to note that about 2.5 million workers are self-employed. Having found that many people are self-employed in small businesses it is good to understand that it has its own pros and cons.
Pros of Starting a Small Business
For business start-ups you don’t need to have a lot of money as it is the case with large businesses. Here you just need to have a small amount which will help you start operating and it can be easily raised through grants, donations and borrowing from friends. A small business is able to adapt to changes in its operating environment since it is flexible. For a case like the UK, where laws and registration may change at any time, small businesses are unlikely to feel the brunt as they can easily overcome these challenges by shifting to other areas. Small business owners do enjoy the status of being their own boss and they don’t have their salaries taxed as is the case for employed people hence they enjoy all of their profits. Small business owners do not need necessarily to hire premises for their business; instead they can work from their home office there by forgoing the cost of renting premises. Small businesses are not highly regulated as is the case with large businesses which makes it easier for them to operate in the UK. Small businesses cater for limited markets which have not been well served by the large businesses. These small businesses are able to reap huge profits from these markets since the large businesses find them too small to make profits for them.
It is well known that many small businesses fail before reaching maturity due to lack of experience hence the entrepreneur ends up making heavy losses. Another issue that has been of great disadvantage is lack of much needed business start-up capital to enable it to perform its operation since there are no finance institutions that are willing to loan much needed capital to owners of these small businesses. Competition among similar small businesses have greatly reduced the chances of them to grow hence making many of them to have a stagnated growth since they all have to share the little that is in that niche. Owners of small businesses are solely liable to any errors or mistakes that may occur as a result of their operation. This could either be injury to customers or damage to property.
To sum up this all we should agree that though small businesses have created the much needed employment opportunity, they are faced with challenges. The government should take a step to help these business owners be able to operate their business by equipping them with managerial skills and provision of cheap capital among others.