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Describe The Main Characteristics Of Small Industrial Business

690 words - 3 pages

Q.1 Describe the main characteristics of Small Industrial Business.

Revenue and Profitability
Small-scale business revenue is generally lower than companies that operate on a larger scale. The Small Business Administration classifies small businesses as companies that bring in less than a specific amount of revenue, depending on the business type. The maximum revenue allowance for the small business designation is set at $21.5 million per year for service businesses.
Lower revenue does not necessarily translate into lower profitability. Established small-scale businesses often own their facilities and equipment outright, which, in ...view middle of the document...

A larger small-scale business can often get away with employing fewer than one hundred employees, depending on the business type.
Market Area
Small-scale businesses serve a much smaller area than corporations or larger private businesses. The smallest-scale businesses serve single communities, such as a convenience store in a rural township. The very definition of small-scale prevents these companies from serving areas much larger than a local area, since growing beyond that would increase the scale of a small business's operations and push it into a new classification.
Limited Suppliers
Small businesses also don't often have the massive network of suppliers common to large companies. The benefit in this is the ability to build trust and mutual goals with a few key suppliers. The drawback is limited bargaining power since your suppliers aren't competing as much to gain your business. Small businesses also face challenges in providing customers with enough variety and assortment at reasonable prices to attract them away from larger companies.

Ownership and Taxes
The corporate form of business organization is not well-suited to small-scale operations. Instead, small-scale businesses prefer to organize as sole...

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