Strengths and Weaknesses of a Small BusinessStaring your own small business can be a dream come true. The ability to be your own boss

can give you more flexibility in your work schedule and the opportunity to reach your fullest

potential. Your talents, skills and creativity can be maximized without worrying that you are

stepping on toes of your superiors.

There are many positive sides to running your own small business. Of course, there are also

some potential pitfalls if you are self employed. The advantages to running small business

can be quickly identified. If your goal is to become your own boss, you do not need to

achieve success overnight. Starting a small business, especially one based out of your own

home, allows you to slowly build a business while maintaining your full time job. You can

work a few hours each day to develop and grow your business rather than quitting your day

job all at once. When your business becomes successful enough to support you and your

family entirely, you can resign from your other job. If your business is not a success, you are

not out of a job.

Most small businesses require very little start-up money. This is a big advantage for anyone

who does not have much money to invest in a business but who does have the work ethic

and talents to create a lucrative business. There are many online business opportunities that

require little more than a home computer and Internet access. Small businesses generally

have low operational costs. A larger percentage of revenue from a small business can be

converted into profit as opposed to revenue from a big business.

Many small businesses are based right out of your home. You can provide freelance services

(such as web design, programming or freelance writing) online. There are affiliate programs

and multi-level marketing programs available to people who have good sales and/or people

skills. Individuals with training in Medical transcription, coding or billing can work from their

home computer. There are endless opportunities for individuals who want to work from

home. The ability to work at home and spend more quality time with your family is another

big advantage to running a small business.

Small business owners typically have less money to invest on advertising. This can correlate

into an advantage. Small businesses need to find creative ways to reach their customers.

They usually offer a more personalized approach to interacting with clients. Customers who

are treated like family are more likely to return to that business in the future. Small business

owners and people who are self employed can take the time to get to know each customer

and provide a higher level of customer service.

Of course, in some cases having limited funds for advertising can be a disadvantage. As a

small business owner it can be difficult to reach enough potential customers to establish a

successful base of customers. Potential customers might be less likely to do business with a

small business that does not offer a well known brand of products or services. Some clients

will give their business to the “bigger guy” with the name they recognize.

One of the largest disadvantages for small business owners is the potential misuse of

money. Many business owners invest their own money at the start of a business or if the

business falls upon hard times. If money is not used wisely, the business owner can take a

hit to their own personal wallet if they have floated the business cash from their personal

accounts.

Small businesses and work from home opportunities are becoming more prevalent with so

many advantages. It was once common for large numbers of small businesses to fail,

however, times are changing as people are learning how to make their small business a

success.

The Strengths of Small Business

Small businesses have flexibility to innovate, create new products, services

 

(The following one-page essay is taken from the U.S. Department of State publication, Principles of Entrepreneurship.)The Strengths of Small Business

Any entrepreneur who is contemplating a new venture should examine the strengths of small businesses as compared to large ones and make the most of those competitive advantages. With careful planning, an entrepreneur can lessen the advantages of the large business vis-à-vis his operation and thereby increase his chances for success.

The strengths of large businesses are well documented. They have greater financial resources than small firms and therefore can offer a full product line and invest in product development and marketing. They benefit from economies of scale because they manufacture large quantities of products, resulting in lower costs and potentially lower prices. Many large firms have the credibility that a well-known name provides and the support of a large organization.

How can a small firm possibly compete?

In general, small start-up firms have greater flexibility than larger firms and the capacity to respond promptly to industry or community developments. They are able to innovate and create new products and services more rapidly and creatively than larger companies that are mired in bureaucracy. Whether reacting to changes in fashion, demographics, or a competitor's advertising, a small firm usually can make decisions in days – not months or years.

A small firm has the ability to modify its products or services in response to unique customer needs. The average entrepreneur or manager of a small business knows his customer base far better than one in a large company. If

a modification in the products or services offered – or even the business's hours of operation – would better serve the customers, it is possible for a small firm to make changes. Customers can even have a role in product development.

Another strength comes from the involvement of highly skilled personnel in all aspects of a start-up business. In particular, start-ups benefit from having senior partners or managers working on tasks below their highest skill level. For example, when entrepreneur William J. Stolze helped start RF Communications in 1961 in Rochester, New York, three of the founders came from the huge corporation General Dynamics, where they held senior marketing and engineering positions. In the new venture, the marketing expert had the title "president" but actually worked to get orders. The senior engineers were no longer supervisors; instead, they were designing products. As Stolze said in his book Start Up, "In most start-ups that I know of, the key managers have stepped back from much more responsible positions in larger companies, and this gives the new company an immense competitive advantage."Another strength of a start-up is that the people involved – the entrepreneur, any partners, advisers, employees, or even family members – have a passionate, almost compulsive, desire to succeed. This makes them work harder and better.

Finally, many small businesses and start-up ventures have an intangible quality that comes from people who are fully engaged and doing what they want to do. This is "the entrepreneurial spirit," the atmosphere of fun and excitement that is generated when people work together to create an opportunity for greater success than is otherwise available. This can attract workers and inspire them to do their best.

[Author Jeanne Holden is a free-lance writer with expertise in economic issues. She worked as a writer-editor in the U.S. Information Agency for 17 years.]