Small businesses have several advantages such as low startup capital, ease of entry and exit into the market, operational flexibility, and more satisfied customers due to personal attention. However, small businesses also face disadvantages like lack of capital and financial limitations restricting expansion, lack of managerial skills depending on the owner, inability to adopt new technologies due to costs, and difficulty hiring expert staff. The document discusses and compares the key advantages like low costs and responsiveness versus disadvantages such as limited resources and higher risks for small businesses.

1. ADVANTAGES AND
DISADVANTAGES OF SMALL
BUSINESS
Entrepreneurship – Lesson 8

2. Topics to be
Discussed…………..
 Advantages of Small Businesses
 Disadvantages of Small Businesses

3. Advantages of Small
Businesses
 Small businesses obviously have some unique
advantages and these are discussed here:
 Low startup capital
 Ease of entry and exit
 Operational flexibility
 More satisfied customers – Personal Touch

4. Advantages of Small
Businesses
 Low startup capital:
 With a small sum of money a small business can
be started.
 Ease of entry and exit:
 With a small sum of money one can set up a
corn/ popcorn shop, we can easily start and easily
exit the business.

5. Advantages of Small
Businesses
 Operational flexibility:
 Small businesses have the advantage of
operational flexibility as the sole proprietor makes
decisions which are taken quickly and without any
major delays.
 More satisfied customers – Personal
Touch:
 Customers are more satisfied as owners are
easily approachable. They are dealt face to face.

6. Disadvantages of Small
Businesses
 We have discussed some advantages of small
business, now we'll discuss some
disadvantages.
 Lack of Capital – Financial Limitations
 Lack of Managerial Skills
 Lack of adequate technology
 Lack of expert staff
 Risk of losing business

7. Disadvantages of Small
Businesses
 Lack of Capital – Financial Limitations:
 Lack of capital obviously hinders the expansion of
most small businesses. Due to their size, small
businesses are unable to attract bank financing.
 Lack of Managerial Skills:
 Small businesses may face problem of
management as they are only dependent on the
owner(s) managerial skills.

8. Disadvantages of Small
Businesses
 Lack of adequate technology:
 Small businesses find it difficult to cope (manage) with
the rapid changes in science and technology. This is
because they do not have the capital to use new
technology.
 Lack of expert staff:
 It is difficult to hire or take consultancy from experts as
they lack capital.
 Risk of losing business

9. Class Discussion
 List out the kind of businesses in your locality
and which one you like the most and why.
 If you are given money to start a business in
you residential locality, what would you like to
start?

10. Reviewed…………..
 Advantages of Small Businesses
 Disadvantages of Small Businesses