Advantages of Small Businesses Have Over Large Businesses

Written by admin on October 17th, 2011

The structural, technological, strategic and human facets of a business become complex as the organization expand in size.  There is a direct correlation between the managerial inputs and the size of the business.  The larger the organization the more demanding it becomes for the management to initiate its managerial function.  As small businesses advance to transform into large corporations, the managers and investors are confronted with more challenges to put the company into performance.  It’s therefore evident that running small business entities is quite simplistic and easy than operating big businesses.  This does not mean that investors should not strive to have their business expand.  In fact, when businesses grow, it provides more opportunities for the investors to earn good returns.  There is also a test of ability to apply the human skills of intellectual, intuitive, cognitive thinking and conceptualization in business management.  The investors are able to enjoy the economies of scale in a larger proportion compared to their counterparts with the small businesses.  Otherwise, who doesn’t want to have a large piece of the economies of scale in the business platform?  Some of the advantages that small businesses have over large companies are;

Less capital requirement

There is obviously little capital required to set up of small businesses as compared to large corporate.  This implies that more prospective business investors can manage to establish small businesses.  It must be agreed that the financial aspect is one of the setbacks to setting up of businesses. Large business entities require enormous amount of starting capital and many people who would like to put up businesses are tumbled around constrains of financial abilities.  Although with the visions, aspirations and plans to have big businesses, they end up starting small entities and build up their visions from that platform.  The small businesses profile provides a building block for the larger entities.  With good managerial initiative the small business owners are able to transform the small entities into large corporate.  It’s just a matter of time and focus and soon an investor begins enjoying large economies of scale.

Easy management portfolio

Due to the fact that the structural, technological, and human aspects of small business are inexpensive, there is easy management of these resources.  The manpower is controllable, the financial resource is manageable, the technological innovations are sizable and the strategic approaches are simplified.  Basically there is less input in the management aspect of small businesses.  It thus requires a basic understanding of business operations to run a small business which would be difficult in the case of large corporate.

Less cost implications on risks and uncertainties

The small businesses are preferred by many because of the conceptual framework in cost analysis in case of eventualities.  Indeed, there are fewer costs that are attached to risks and uncertainties in small businesses.  Any way, businesses are but just about taking risks, and when the events of uncertainties occur, there is a cost implication.  The amount in which a small business suffers is much less than in the case of large businesses.  For instance, when a natural disaster such as an earthquake strikes in an area, the big businesses suffer more losses than the small businesses.  Nevertheless, investors should not shy off from running big business where appropriate, as the opportunities are great in terms of monetary achievements.

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