Small businesses are usually conducted with nominal investment, aiming
to make profits with a minimum amount of money invested. A small business
is best suited for people who want to start a business without taking
on much risk by investing heavily in the trade. Small businesses are
also well suited for people who are unemployed or disabled and need
some form of employment. No matter what the circumstance, people favor
a small business setup because:
Small businesses offer negligible risk.
Small businesses are easier to handle
Credit is more easily approved for small-scale businesses
It is easier to recover from a small business failure than if
your big business fails
The success of a small business greatly depends upon the administration
and how the business is managed. The administration of a small business
is different from a big business in terms of marketing techniques,
staff, work source and other costs associated activities. Some of
the major small business administration advantages and disadvantages
include the following:
Small Business Administration Advantages
Since a small business is run on a low budget and has low expenditure,
its administration mechanism is dissimilar to those of any big
business. The expansion of any small business is closely tied
to the use of high-quality administration skills and proper supervision.
An advantage of small business administration is that the task
of ensuring proper management is simpler because these businesses
have less staff, lesser management implications and a simpler
accounting system.
Small business administration is timely in the manner in which
its responsibilities can be carried out.
Small business administration is the easy mechanism in which
the staff's expenses and progress is monitored. Since the staff
size is small it is relatively easy to carry out the administrative
procedures with ease.
Small business administration is often used to handle economic
management. This involves all the activities that make it possible
for a company to obtain capital for growth. This task is cheaper
to manage in small business administration, as the resources are
limited.
Small Business Administration Disadvantages
The administrator can only be offered low remuneration in a
small business. As compared to big businesses, the salaries offered
to an administrator in a small business are far less and there
is plenty of job risk associated, such as business failure, which
results in job loss.
The risk factors associated with administration tasks can be
a huge disadvantage. Since small businesses are run with little
investment there is no room for error in administration. The improper
handling of loans and investment money can lead to the small business'
downfall. Even the slightest unprofessional conduct (often over
looked in big businesses) can easily destroy a small business.
The lack of mobility for the administrator coupled with the
burden of the job can be a disadvantage. Small businesses are
often based on new products and experiments leaving only limited
resources available to the administrator. Every activity has to
be properly planned and initiated, which is burdensome.
