1. aot.edu.au http://www.aot.edu.au/business-articles/161-small-business-management.html
Elearning - Small Business Management Articles
Dream Job
Franchise Businesses
How to Keep Business Costs Down
Is Business Planning Important?
Is Your Workplace Safe? Occupational Health & Safety In Australia
Promoting Your Small Business
Small Business Bankruptcy
Small Businesses Provide Unique Advantages
Why People Start Their Own Small Business
The Pitfalls of Micro and Small Businesses
Getting Your Work Priorities In Order
Dream Job
Many people dream of owning their own business. Some make their dreams come true and some still dream
of the ultimate – owning their own business. No matter what it is that fuels your dreams, it is up to you to
bring them to life.
Owning your own business has incredible rewards but they do come at a price. The price can include overcoming
your fears, working harder than ever, learning new skills, and working with integrity and tenacity. Is this a price you
are willing to pay for the freedom of being your own boss?
Many people succeed as small business owners so there is no reason why you cannot join them.
What helps your Success?
There are many keys to small business success but the following will help you achieve the business goals and
financial freedom you want:
research your idea
write a business plan
look at marketing strategies
research your audience
create a budget
Even more so today, many small businesses start at the very grass roots level in our homes. And many small
businesses start as a hobby that turns into dreams of becoming a profitable business. Becoming a small business
owner can be the way to take control of your working life. Consider starting out part-time and work towards phasing
out working for a boss.
When you reach the point where you realise you are surviving and not worrying too much about paying the rent, you

2. can start looking at the benefits of your achievements. So, what are the benefits of working for yourself?
Control your Life/Work Balance
More and more we seek life/work balance. The popular catchphrase is ‘worker smarter not harder’. Being in control of
your business life gives you control of your entire life – flexibility and independence is totally yours to control. In the
first few years this may not be as apparent as you build a reputation and client base. If you use persistence and hard
work, balancing your life will become easier the more successful your business is.
Personal Empowerment
Have you ever looked around your workplace and seen things you wish you could just walk away from? Maybe a
culture that promotes fear or just a job you do not really like. Creating or going into business for yourself is the
opportunity to create a work environment that suits what you want to achieve and can reflect your personal
philosophies.
Sure there are times you will find yourself in a situation you do not like or taking jobs you may not really want to grow
your business. This is about building solid foundations and is the basis of any small business success. Lay the
foundations and reap the rewards later on.
Then there is the knowledge you gain – maybe you further your education to arm yourself with the knowledge to turn
your ideas into a successful business. In business you are always learning and smart small business owners keep
upgrading their skills to stay on top of a changing market place. Knowledge personally empowers you with the
confidence to make sound decisions and see beyond the obvious.
Personal Satisfaction
The personal satisfaction you get from achieving your goals will drive you forward and motivate you to set new goals.
It gives you personal confidence and a belief in your integrity as the demand for your services and good grows.
A sense of security within yourself will make you want to achieve more. A good philosophy for small business owners
to consider is not ‘how much can I make out of a potential client’ but ‘how can I best service a potential client to meet
their needs’. You’ll be surprised how this type of attitude attracts good clients which brings plenty of rewards along the
way.
Whatever level of achievement you want to reach, the small business basic requirements are the same:
business skills
industry knowledge
marketing
business planning
knowing your market
Financial Rewards
Of course there are the financial rewards. Sure, it may be tough for a few years but once you stabilise and have solid
business growth you start to enjoy the rewards of financial success. Whatever these may be you have the personal
empowerment to use them to help you achieve other goals in your life. Once again there is the personal satisfaction
in being in control of your life; the freedom to make choices whatever they may be.
Being a small business owner takes stamina, vision, compromise and, sometimes, sheer tenacity. But, there is
nothing more satisfying than achieving your dreams and being totally independent and responsible for your own
destiny.

3. If being a small business owner is one of your dreams the first step to achieving it is research and knowledge. Take a
look at what skills you lack and take some courses to bring you closer to achieving financial freedom. And join the
growing ranks of people working for themselves.
Franchise Businesses
Are you thinking about putting up your own business franchise but aren’t so sure what to do or how to start
it? In reality, there are a few things you might want to consider before venturing into franchise businesses.
This article will guide you on how franchise business works and will help you determine whether or not it is
right for you.
Franchising – What Is It?
Famous fast food chains like that of McDonald’s is one of the wide arrays of franchise businesses you can choose
from. Franchising involves carrying a famous brand’s name as well as using their unique sense of business,
marketing, and operation strategy as your overall business agenda.
The popularity of the existing brand franchise business you chose makes a faster return of investment because you
do not need to build up on public awareness. You will not have any problems on how to work your way around the
franchise as well because you are using a proven business system that reels in huge profits.
Franchise Business Vs. Ordinary Business
Risk
According to study, franchise businesses are far less risky as compared to ordinary businesses regarding investment.
The main reason for this is the proven management strategies being implemented in a franchise business. Most
small businesses go into bankruptcy because of poor management. The managerial knowledge is just one of the
aspects imparted to the business owner as he leases a franchise.
Better Deals and Savings
When you carry the name of a famous brand, you will get better deals from suppliers. In some cases, the franchise
company purchases supplies in bulk from their suppliers and distribute it to their franchisees with the same savings
they get. As compared to small business owners, some suppliers will tend to give them higher prices even when they
buy bulks of supplies, simply because they are not famous enough.
Public Awareness
Let’s face it, as customers, we are bound to choose the well-known brands and often disregard the not-so-famous
brands. This actually applies to everyone. Say for example you are traveling to a new place and you came across two
food chains, one is named Barnyard Joe’s Burgers and the other one is Burger King, which one would you choose?
The answer is obvious, right?
What Do You Need In Starting A Franchise Business?
Initial Fee
The most obvious part of franchising is the payment of fees to the franchise company. Often called the up-front entry
fee, this is the initial amount of money to be paid as the business owner signs the franchise agreement contract. This
fee includes the right to carry the franchise business name, the franchise business know-how, and the length of lease
time which is usually stated in years. When the contract is nearing its expiry date, the business owner will have the
right to renew it.
Ongoing Fees

4. Aside from the up-front initial fee, the business owner is also required to pay royalty fees on an ongoing basis as
stated on the contract. These fees are calculated either from percentage of total sales or from a permanent fixed
amount. The royalty fees depends on the franchise company’s governing rules of contract. As long as the business
owner is under the contract, the franchise company is entitled to extend their services and support to his franchise
business.
Advertising Fees
As a franchise business owner, you need not worry about advertising because the franchise company takes care of
national and regional promotions. As a part of their franchise business community, you can totally benefit from these
advertisements. All you have to do is pay for periodic advertising fees required by the franchise company.
Location Of the Business
The above mentioned fees are just 50% of the overall expenses you are going to make. The other 50% involves
looking for a perfect location for your business and furnishings. The franchise company can help you look for a
suitable location for your franchise business as part of their extended services. Often times, the contract states that
you should consume your personal money for the 40% of the total expenses on the location and furnishings, the other
60% can be from bank loans you acquire.
Restrictions
Trade Secrets
As a franchisee, you are entrusted with the franchise company’s trade secrets and business strategies. You are
bound not to redistribute this knowledge in any form or kind. This is one of the agreements stated in the contract you
signed.
Restrictive Covenants
As a business owner, you are also restricted to gain another franchise name that is directly competitive to your
already existing business franchise. Say for example you are already leasing a burger food chain franchise; you
cannot get another franchise business with similar business nature.
We have already explored the ins and outs of a franchise business and by now you have learned so much from it. We
also found out that it has more advantages than disadvantages. So, do you think franchise business is right for you?
How to Keep Business Costs Down
It is important for every business to minimize costs and maximize profits in order to remain successful. In
order to do this, it is important to implement a budget and this tool should be the principal mechanism for
controlling the business costs.
A budget will allow you to understand exactly where you currently stand from a fiscal point of view, will allow you to
anticipate the needs for the future and will help you track actual expenses in order to adjust as necessary. A budget is
comprised of several components and each one needs to be analyzed, tracked and reported accurately in order to
stay on task and maximize earning potential. There are two basic sections to a budget, the forecasted budget and the
actual expenditures.
Planning a Budget
The first part of creating a budget is to look at the company as a whole and break up the financial picture into
separate categories starting off with the broad categories of income and expenses and breaking each of those down
into more detailed categories. Each section is a financial forecast using anticipated revenues and expenses to come
up with a complete financial picture. It is important to use a strategic plan as well as an operational plan to come up
with the various categories needed.

5. A strategic plan will consider the overall goals and activities in a company for long term results. An operational plan
breaks down the strategic plan into shorter term goals. Using those two as a basis will allow you to determine the
resource needs of the company. It will also allow you to use the anticipated results to determine the potential revenues
in the company. These factors will be the starting point of the budget.
There should be an overall company budget that looks at the big picture but this budget can also be broken down into
departmental budgets as well as project budgets. The more minute the details are, the better able the company will
be to stay on track within each category. For example, if there is a company budget forecasting $1M in revenue that
may be broken into $100K for the sales department and further broken down to $10K for a particular project. During
the course of the project, you can gauge the effectiveness of the budget by comparing the actual revenues against the
forecast. This process works for both income and expenses.
Tracking the Effectiveness of a Budget
The second part of a budget includes the actual finances in the company compared to the forecasted finances. It is
important for each department to track and report accurately the income and expenses as it pertains to each project.
This can then be compared to the forecast to analyze the budget’s effectiveness. If the actual expenses and income
are in line with the budget then you did a good job in the planning stages. However, there are always unexpected
costs or problems that may come up within a particular area. If this occurs, the budget is important to help adjust
where needed to maintain the overall financial goals.
For example, a project is anticipated to cost $1,000.00 and bring in revenues of $2,000.00 for a gross profit of
$1,000.00. But because of problems that may have occurred or additional resources needed to complete the project,
the actual costs increased. It may be necessary to adjust the budget in other areas to account for the loss of profit.
Non critical areas of the budget can be reduced in order to maintain the overall finances of the company. The bottom
line will not be affected but an individual line item in the budget will need to be modified. Or, the processes that
comprise the project can be analyzed for creative solutions to mitigate any loss.
Using a Budget to Reduce Business Costs
Regular and continual analysis of the budget will help keep a company on track to meet their financial objectives.
There are various methods that can be employed to do this. If a significant discrepancy occurs between forecasted
and actual expenses, the processes within the project can be examined. There may be ways to streamline processes
or make it more efficient. There may be ways to cut costs on equipment or other resources. Or, if there is no way to
manage the cost on a particular project, it may be necessary to adjust the budget accordingly. However, if caught
early enough the overall financial objectives can still be met by cutting in other areas.
At the end of the fiscal year, analysis of the budget versus the actual expenses will give management an idea of how
well they are able to anticipate their business climate. The prior year budget can then be used to create the next
year’s budget, taking into consideration any adjustments that were needed during the course of the prior year as well
as future goals. Overages in particular line items can be analyzed to come up with an effective strategy to reduce
costs.
If, for example, the amount used in advertising exceeded the anticipated amount, this can be an area of concentration
for improvement. Ideas can be sought, analyzed and implemented to find more effective advertising means or less
expensive advertising. Brainstorming with department experts in this area can result in a decreased cost for the item
with an increased effectiveness.
Using a budget successfully can help reduce business costs. It will allow business executives to see where the
company is as a whole, on a departmental level and a project level to gauge how sound the financial forecast is. If a
particular project is out of line with the budget it can be caught early enough to affect change. It is a tool that should
be used as a primary source of control within a company to anticipate and track the fiscal goals.

6. Is Business planning Important?
One of the most common reasons a new business fails is due to lack of research and planning. It is
imperative for all businesses to have a solid, well thought out business plan. A business plan is the map to
the overall goals of the company with detailed processes on how those goals will be accomplished. Those
who have a great idea for a business may have the potential for a solid business strategy but may not have
the skills to complete a thorough business plan. This can be highly detrimental to a start up company. So, it
is important to learn the skills needed to complete the research and documentation of a business plan before
embarking on your new endeavor. But, how do you get the skills needed?
One of the best ways to learn how to complete a business plan is to take a course in small business management.
Not only will this give you the skills needed to create a business plan but will also allow you the opportunity to put to
practical use additional skills to put your plan into action. This will give you the advantage of taking your business to
the next level and ensuring you have all the tools to make it a profitable and successful venture.
A small business management course taken online at an accredited training facility is the ideal way to learn valuable
skills without sacrificing any time away from building your business. You can work at your own pace and study as
needed. The course is inexpensive and will not take a lot of time to complete. You can learn in tandem with building
your company and put to immediate use the skills you are learning. This method will give you the tools needed to
create an effective strategy to map out your business plan and out it into action.
An online training course in business management will teach you how to research business opportunities to determine
the feasibility of making your business a success. It will also give you the necessary knowledge to comply with the
legal and administrative requirements of owning a business and how to create a safe working environment. You will
be able to effectively come up with a business plan that will give you a strategy to deal with the daily operations of
your business that will allow you to make a success of it.
Additional skills that will be learned include how to effectively promote your business and how to monitor marketing
strategies. You will learn how top manage daily operations and finances to ensure the efficiency and soundness of the
company. Learning management skills to motivate and monitor employee productivity will allow you to get the most
from your human resources. Developing skills to help you assess work priorities will give you a good plan to address
daily operations. Constructing customer service policies will allow you to ensure you have positive customer relations,
retain existing clients and expand your customer base.
Without a sound business plan, many start ups and expansion businesses fail. A business plan gives you the
necessary road map to grow your business effectively. Having the skills to implement the plan will further advance
your enterprise. An online small business management course will give you the necessary tools and techniques to
develop and implement a business strategy while continuing to allow you to work on the day to day operations of your
business. You can get the necessary skill set to enhance your business and put your newly found knowledge into
immediate practice.
Is Your Workplace Safe? Occupational Health & Safety In Australia
Everyday employees head off to work, never thinking that they could get hurt there. Yet according to the
Australian government, each day the number of workplace deaths and accidents will exceed those that occur
on the roadways. In fact, every year workplace deaths will exceed dying from a disease. That’s a little
alarming isn’t it? So is your workplace safe?
Workplace safety is critical for the employees, but it’s also critical for a successful business of any size.
Understanding the Australian OH&S laws and the risks within your workplace will ultimately lead to a safer workplace.

7. And a safe workplace is a win-win for everyone. It will reduce the risk of employees suffering an injury or disease, and
it will save the business money.
An employer is required by law to provide a safe place to work. That safe workplace includes
Machinery that is safe to operate
Safety measures when dealing with substance
Information and training that is fine tuned to the workplace.
MSDS stations
Workplace inspections
It takes little time and it costs very little compared to the alternative of an employee that is injured or killed on the job.
Business that chooses not to comply with OH&S law can be prosecuted and fined, never mind the devastation of
knowing that proper training would likely have avoided the accident in the first place.
The OH&S Act and the codes and regulations contained in that act are in-depth, and vary from one situation to
another. Therefore there’s no way that we can incorporate the entire act in one short article. In Australia each state
and territory is responsible for creating their own laws pertaining to occupational health and safety, and it is also up to
them to ensure that business abides by these laws.
An employee does not want to get hurt at work, and for the most part employers don’t want to see their employees
injured. The trouble is without the right training a potential unsafe situation can occur. Without training an employee
may not even realize they are at risk. For example, let’s use the office worker who types all day long. For many years
no one recognized the potential for injury. After all how can you get hurt just sitting at a desk? Then suddenly carpel
tunnel injury rates began to escalate and suddenly office work was recognized as having the potential to cause injury.
The OH&S Code of Practice attempts to be proactive and eliminate the risk before an injury or disease occurs. The
regulations and codes detail the duties and responsibilities of the company to control the risks associated with a
hazard so as to reduce the risk of injury or illness.
These regulations are legal and enforceable but the hope is that a business won’t comply simply because they must
legally, but instead will comply because they value their employees and want to ensure that they are safe from a
human compassion perspective. The inspectors can come to any jobsite or place of employment any time they want.
They are allowed to record infractions and issue warnings or fines. They will also arrive on site if there has been an
injury or fatality. Inspectors are much more likely to work with you to create a safe work environment than fine a
business unless the business continuously has infractions.
There is plenty of material available to aid your business, and online is packed with resources that can help you
assess your business and make necessary changes. Some businesses have specific needs, but using a general
checklist can assess the health and safety of your workplace. Whether you are the owner of a business, or an
employee of that business, making sure the workplace is safe is a group effort that everyone should take to heart.
There are many checklists readily available online.
It is important that business owners communicate directly with their employees and enlist their services in making a
work environment safe. This includes allowing employees to participate in the planning, purchasing, and
implementation process.
If there is not already someone onsite that is trained in health and safety, it’s time you changed that. Large companies
will have an OH&S Coordinator that oversees the implementation of safe work practices. They also do training, and
handle workplace accident claims. It’s also common to have an OH&S committee that regularly examines the
workplace looking for hazards and suggesting ways to correct the hazard. Smaller companies may have a manager

8. or staff member that deal with occupational health and safety issues.
Regardless of how a business handles safety issues, it’s very important that each and every employee know the
health and safety risks in their workplace and report any hazards they see to the appropriate person.
When a business is buying equipment it’s important to find out if it meets or exceed the safety requirements for your
workplace. If you are purchasing used equipment this is especially important. You should obtain all manuals and
copies of all maintenance records. You should also make sure all the guards and protective equipment is still in place
on the equipment.
MSDS or Material Safety Data Sheets should be found in every workplace, even those that are strictly offices. You
might be surprised to learn that products such as white out are actually hazardous when not used correctly and
therefore have an MSDS sheet. Of course companies that use a variety of materials will have several MSDS sheets.
For those of you that don’t know what a Material Safety Data Sheet is, this is a sheet of paper that outlines all the
information about a specific chemical including its composition, how to handle it safely, at what levels it becomes
toxic, and how to handle an emergency with the specific chemical. Every workplace should have one or more MSDS
stations and every employee should know where these stations are. As well anytime a new chemical is brought into a
workplace each employee should review the MSDS sheet.
Every employee that will use a new piece of equipment should be properly trained on that equipment. A business
should not assume that from one employee to the next will provide adequate training. Always have a single person do
all the training on a specific piece of equipment.
It is important that the workplace provide the necessary training for a particular task or piece of equipment. Don’t
allow those that are not proper qualified to operate the equipment or do the task at hand. As well, it is important to
have someone designated to oversee the jobsite and make sure that the work is being conducted safely at all times.
Don’t assume a supervisor has the necessary skills to do this. Instead if the supervisor is going to be the person
responsible for overseeing workplace safety on the jobsite, make sure they are properly trained.
Looking after your employees is very important. If health and safety is not taken seriously in the workplace,
employees are much more at risk of injury or disease, or worse death. While injury shows almost instantly as a result
of an accident, disease can take years. For example, workers that developed mesothelimia were actually exposed to
asbestos 20 to 25 years prior.
Employees working in a healthy, safe environment are going to be much more productive so not only will the business
win with increased production, they will also win with reduced injuries and/or disease within their organization. A safe
and healthy work environment is good for everyone!
Promoting Your Small Business
Promoting and marketing your small business is one of the first important steps to increase revenue
especially when your company is struggling to compete against others in the field. There are many
opportunities online to help advertise to potential customers. The Internet allows you to promote to millions
of people with generally low cost techniques.
Newsletters
Newsletters are a great way to distribute information about your company to potential customers while providing them
with helpful information in regards to your industry. If your niche is in the healthcare industry, you can provide great
medical advice and tips to users straight to their email. Within the newsletter, you can provide your company’s
information and link to suggestively give the customer a reason to browse your web site for services.

9. Web Articles
As most people know, being at the top of search engines especially Google will bring in plenty of potential sales.
Google’s search engine spiders the Internet for the most relevant information in regards to a keyword search. Web
articles can be submitted to various depositories where Google’s engine will find the document. An article with
keyword rich information that describes a product or service you provide along with a link to your site will push your
site up the search engine rankings. Most submissions sites are free, so it is little cost to the business owner.
Paid Advertisements
Certain companies like Google offer paid advertising to create a small, keyword ad when a user’s search matches
your ad. If your company is just beginning, search engines like Google or Yahoo will allow you to pay per clicks on the
ads. When the user searches a product, depending on the amount of money you are willing to pay, your ad can show
at the top of their results page.
Another type of paid advertising is having your logo displayed on sites through monthly payments. Many web sites
have page real estate devoted to online advertisements to paid subscribers.
Blogs
If you’re passionate about your business, a blog is a great way to discuss your product, issues, and advice while
promoting your business. Potential customers search for relevant information about products and services, and your
blog can have the answers they are searching. Providing great advice and answers is the new way to provide initial
customer service. By advising the customer through your blog, you can win the trust with the user by just
communicating through your blog.
Press Releases
Press releases are a similar article submission strategy, however, instead of discussing your product it directly
advises users about your business and its superior new services and unique products. They are a great way to
increase search engine ranking and to get the word out about your business and products.
When promoting your business, the online community is a wealth of simple advertisement advantages for small
businesses at affordable costs. The Internet has become a major resource for potential customers to search for
products, so take the time to make sure your business is competitive in rankings.
Small Business bankruptcy
The consequences of small business failure are usually bankruptcy. The sad part of this is that bankruptcy is
usually avoidable and most failures are due to poor management skills and a lack of understanding of the
fundamentals of setting up a small business.
Defining Small Business Failure
The definition of small business failure is when a business:
declares bankruptcy because it can no longer meet its financial commitments, or
closes down because it is insolvent and cannot trade profitably.
Closing a business for medical and personal reasons is not considered business failure as long as it is not associated
with financial problems.
What are the Consequences of Small Business Failure?
Not all small business failures end up in bankruptcy. Many negotiate deals with their creditors, e.g. 80 cents in the
dollar. Then the company and, in some cases personal, assets are sold off to cover the company’s debt. The type of
debt settlement plans you put in place will dictate whether you need to declare bankruptcy or not.

10. It is when creditors are not willing to accept a deal or have lost faith in your ability to pay they may sue and force you
into bankruptcy.
The biggest small business failure, apart from the financial side, is the failure of your dreams.
How do Small Businesses go Bankrupt?
Business management is thought to be the most common reason businesses fail, and more than 50% of new
businesses fail within the first 5 years. This combined with external influences makes it difficult to survive unless you
have good business planning behind you.
It is not just bad debts, stock that sells slowly, poor planning and lack of profits that will send a small business
bankrupt. These factors may contribute, but without building the essential foundations of your business from the
beginning, you can doom yourself to small business bankruptcy.
The small businesses that survive have several basic things in common:
good business plans
good financial structures and record keeping
good marketing strategies
good managerial skills
good understanding of their market
are flexible
Often we are so focused on sacking our bosses we do not look at the full logistics of going into business. It is a
mistake to go into business without a clear understanding of what or how to achieve your goals.
Avoid Small Business Bankruptcy
Did you know it was possible for most small businesses to avoid failure? Steps you can take include plugging any
gaps in your knowledge – complete management training, learn basic accounting skills and software packages; learn
small business basics like how to plan your business and marketing strategies. Give yourself the best chance to start
your business off the right way.
Most people work for themselves to achieve lifestyle balance and, if you are not careful, you will find yourself working
harder than ever. While in the first few years the reality is you will work harder and longer hours, but with good
strategic plans and marketing you will find yourself spending less time in your business. For example, if you a web
designer, your prices will be very competitive in the first few years. This gives you the opportunity to prove yourself
and to earn a reputation and build a portfolio. The more popular you become the more selective you become about
your clients and your prices can rise to reflect the demand for your work.
Here are some tips to create a stable small business that can help to avoid bankruptcy:
Do your planning. Do not neglect to continually revisit your business plan to ensure you maximise the
opportunities that arise in a changing marketplace. To avoid small business bankruptcy you need a flexible
attitude so that means flexible planning.
Be systematic. Put systems into place that makes running your business easy and less time consuming.
Systems will make it easy for you to keep track of what happens in your business. It also makes it easier for
someone to step in and run it if ever needs be.
Keep records. Document everything to do with your business. It could become marketable intellectual
property one day and it saves you a lot of time at the end of the financial year.

11. Hire good people. Having excellent people in a happy, well-adjusted workplace can be the difference
between failure and success. Investing in the right people can help your small business avoid bankruptcy and
build better relationships with your customers.
Stand out from the rest. What can you do that makes you stand out from your competitors? How good is your
customer service? Why should people choose your business? What makes you better?
This is a simplistic view, but these are the basic principles behind any new business. Arm yourself with knowledge
and take on the business world without fear of failure or bankruptcy.
Small Businesses Provide Unique Advantages
In our society, we’re often told that bigger is better. From sport utility vehicles to huge housing developments
to getting a job at a “large and reliable??? firm to secure our financial footing, it’s really ingrained into part of
what we do. In the business world however, there are a number of distinct advantages derived from being
small. Today, more than ever, niche markets and specialized small business can provide competitive
advantages the “big boys??? could never achieve.
To properly quantify what makes a small business, it’s often a sole proprietor with a company that has five or fewer
employees, although slightly larger businesses with 20-50 employees are often lumped into this category as well.
Despite it’s small physical size, many small businesses cater to big clients that outsource a particular aspect of their
operations. Small businesses can often provide a specialized service or products and command a wealth of
knowledge and experience when it comes to what they do. In this way they maintain an advantage over their larger
counterparts. Small businesses can provide services at a lower cost and equal or better quality compared with in-
house staff who could have other responsibilities as well.
In terms of management, small businesses can also provide distinct benefits. A small business can operate with a flat
management structure, so that customers can contact project managers and have key business decisions made
without unnecessary delays. Larger firms often have multiple levels of management and approval must be received
from each particular level before being able to move forward, which bogs down the process.
This also provides a small business with a much greater sense of versatility. Many times business environment
changes demand a rapid response and adjustment. Many employees of small businesses have a broad range of
skills and experience rather than specialists in one particular area. So, if a database programmer needs to do some
computer repair, he’s equipped with those skills as well, and someone else at the firm can take over his other duties
temporarily. This allows a small business to operate much more efficiently and has more of a capacity to respond to
change then a larger firm.
With a proper business plan and implementation, anyone can start their own small business and be successful. If you
think you might not be able to compete with larger establishments, find a niche that you can call your own and
consider how to make the many advantages of being small work for you.
Why People Start Their Own Small Business
Why people do anything can be a mystery and why they do difficult things is certainly hard to fathom. I mean
let’s face it, the vast majority of small business operations fail. They go bust. Yet every year along comes
another line of hopeful, would-be entrepreneurs. The odds are against them succeeding but that doesn’t stop
them.
So why do they do it? Why do people start their own small business? Well there are a number of reasons which
include a desire to be independent, to be your own boss, to escape a lousy job, to make a fortune and to tackle a

12. challenge. Let’s examine those reasons in detail.
I Want Freedom
Then there are those people who want freedom when it comes to their job. They want to work their own hours. There
are a lot of people in this situation. They hate being tied down, being restricted. They don’t want to clock-on and off
exactly when told. They hate having to ask permission before they can do anything and they are not afraid of working
long hours. With their own small business, they can make the decisions. They may be the wrong decisions but at least
they get to make them. They are not answerable to anyone. They become their own boss.
I Want More Money
Making large amounts of money is a strong incentive for people starting their own small business. In a company job
there may be bonuses if things go well but most people are stuck on their set salary. What if they have a good idea for
making the company more efficient? Will they get rewarded for this? Will the company do very well out of their idea
but not the worker who helped the company? In your own small business, there need not be any fixed wage. If you
work harder or longer or smarter you can reap the rewards. You get paid according to your skill and dedication.
Now surveys show that many people running their own small business make less than they did working for someone
else. But in theory at least, you can increase your income. All you have to do is work harder or longer and as you are
not afraid of hard work, you will have to make more money. So naturally some people start their own small business.
I Like a Challenge
When people who want to climb a towering mountain are asked why, some reply, “Because it’s there.??? In other
words, some people simply like a challenge. The fact that the task is difficult doesn’t put them off but rather fires them
up. They like they job of achieving something, of winning against the odds. Starting your own small business is a
challenge. Making something out of nothing can be tough. That’s the situation which appeals to some people.
I Want Job Satisfaction
You can’t put a price on that inner glow you get when you achieve something worthwhile. Some people start their own
business because they want that inner glow. They want to start a small business from scratch and watch it grow. They
want to tackle the problems and obstacles – and usually there are many of these – and come out a winner. Being able
to look back over time and see how that small acorn you planted all those years ago has grown into a mighty tree
appeals to many people. Your business has grown. This gives a lot of personal satisfaction and is the driving force
behind some people starting their own small business.
And it’s not just one glowing feeling after many years. Every day as sales are made or jobs completed or new projects
won, you can experience that same inner glow.
No Restrictions
Many jobs require qualifications and experience. Starting your own small business may need neither. You need an
idea and a burning ambition to succeed. Of course you may need training and possibly start-up capital but there are
no limits as you might usually find in working for a company. If you want to start your own business, lack of
qualifications and lack of experience need not stop you from having a go.
Do Something Worthwhile
Not everyone in the world is out for themselves. There are some people who enjoy helping others. They may wish to
put back into society after having been rewarded during their life. This is what motivates some people to start their
own small business. They can offer employment to others and they can run a business which does some good for the
planet.

13. Inventors
Some people invent things – a new way of doing an everyday chore, a device to make a task more efficient or safer
or maybe just a game or software package. Some of these inventors want to maximize their profit. They have a
brilliant idea and they start their own small business to promote and sell their idea.
Summary
Wanting to be your own boss is probably the main reason why people start their own small business. But whatever the
reason and whatever the type of small business, there will always be people who want to make a start on their own
venture, their very own small business.
ends
The Pitfalls of Micro and Small Businesses
Owning a business is a dream of many people. There are certain advantages that, on the surface, seem ideal.
You get to be your own boss and directly affect the course of the business. You get to set your own hours
and work at your own pace. You get to see the results of your efforts and enjoy the tangible benefits of
financial success. However, some people underestimate what it takes to make a small business successful
and see only the positive benefits. They may not be aware of or be prepared for some of the common pitfalls
associated with small businesses.
You do get to affect the course of the business. However, without the proper planning and research this path may not
be lucrative and add stress to someone trying to start a business. You are your own boss and can set your own hours.
But if you do not put enough time and effort into the business it will fail. You get to enjoy the tangible benefits of
financial success but that is only if there is a success. Likewise, you may have to suffer the setbacks of financial
failures that may affect your personal finances.
Contributing Factors to Small Business Failure
Running a business is hard work and often those who successfully run a small business will tell you they put in longer
and harder hours than they ever did when working for someone else. The fruits of your labor can be highly rewarding
but do not make the mistake of thinking it will come without sacrifice and effort. One of the primary contributing factors
of small business failure is lack of planning. A business plan is an essential tool to ensure that the objectives of the
company are clearly stated and all aspects are thoroughly researched. Creating a business plan that addresses all
aspects of the business plan is a starting point to mapping out how the business will be run.
To promote your business you have to have an advertising and marketing strategy. If people are unaware of your
business, they can not utilize it. Therefore, researching possible marketing means and their associated costs is
essential. You will need to explore various methods and assess its usefulness for the most cost effective way to let
others know of your company and to entice the consumer to use your company. Lacking a solid advertising and
marketing strategy can reduce potential customers and affect your success significantly. The marketing and
advertising plan is one component of a business plan that should be thoroughly researched and implemented.
Customer service policies and procedures are also necessary to ensure positive customer relations. Repeat business
and word of mouth are highly effective tools to help grow a company so it is imperative you come up with a way to
ensure your customers are satisfied. Look at competitors and see what tools are used to ensure customers have a
good experience when dealing with your company. This plan should include initial consultation, daily business
practices and problem resolution. Without a thorough customer service procedure in place, customers may not have
the confidence in your company for repeat business and the success of the company will suffer.

14. A business is only as strong as its employees and you must have personnel who are qualified and dedicated to reach
your goals. In addition, you must be able to skillfully manage the employees to ensure they are properly motivated,
know the company objectives and productively work toward them. Lack of management skills is a common pitfall
small business owners come across that can adversely affect the outcome of the business goals.
Probably the most common of the pitfalls small or micro businesses face is the lack of or mismanagement of financial
procedures. A company’s financial structure should be determined at start up and proper reporting and management
procedures should be in place. This includes creating budgets and analyzing data. It also includes ensuring finances
are dealt with correctly. Without a solid financial plan a business will fail. So, if these skills are lacking it is important to
research it or hire someone qualified to ensure the daily financial operations are properly addressed.
To combat the pitfalls of small and micro businesses a proper business plan should address:
The goals of the company
A marketing strategy
Customer service policies and procedures
Daily operation procedures
Human resource policies and requirements
Financial planning
Lack of qualifications and lack of planning are the two biggest mistakes small business owners make that affect the
outcome of the business. Therefore, it is imperative to research and implement a proper business plan that includes
operational strategies. If a solid business plan is thoroughly researched and used to implement the daily operations of
the company, chances of success are much greater. Without one, it is common to fall into the problems that are
associated with small and micro businesses. Owning a business can be a highly rewarding experience for many
reasons. However, often the lack of planning may cause the business to fail instead of being the success you dream
of.
Getting Your Work Priorities In Order
Starting or running a business is a huge task that demands many personal qualities in addition to knowledge
of business practices and the industry you happen to be in. However, here is one element that combines both
your personal qualities and your knowledge of business practices. Getting your work priorities in order is
essential if you want to develop strong workplace relationships and take your business forward.
Work priorities are effectively the elements of the workplace that define your focus. This is both within your business
and related to your employees. It is incredibly important to set up a work priorities structure within each department
and then interrelate them to apply to the business as a whole in order to ensure that every single person working
towards them knows his or her place and can keep an eye on the ultimate goals.
The importance of communication cannot be stressed enough where getting your work priorities in order are
concerned because many companies have failed in the past as a result of poorly organised work priorities or separate
goals and focuses for each department. Everyone needs to pull together to ensure that work priorities are ultimately
met and the following common ways in which you can ensure this happens are outlined below:
Planning Work Schedules – Work schedules are extremely important in processing and establishing your work
priorities. After all, priorities are based on the basic functions the workplace hosts every day. Schedules can
keep your production or output at a steady level and ensure that all targets and deadlines are met 100% of the
time if implemented carefully.

15. Work Performance Feedback – Work performance feedback works to fulfil several essential areas within every
business. It makes sure that you are getting the best from your staff via regular assessments and it also puts
the need for communication between all levels of your business in place. As such, it will ensure that there is a
bond between the management and staff if carried out correctly. If your staff are not working to the best of their
ability then you can also identify weak links and put measures in place to help them.
Development – Development is an ongoing work priority in itself because every good business will continually
offer their staff opportunities to develop. Many people apply for jobs actually look for that now so they now that
they have the opportunity to better themselves.
Team Building – Team building exercises should also enable you to get your priorities in order because it is at
safe forums like that at which employees feel safe and supported enough to speak their minds and offer
suggestions as to how the business could improve. As such, it can help you identify work priorities as your
business evolves and grows, as well as encouraging strong relationships at all levels of your business.
As you can see, communication is of the utmost importance in all of the above, but they also have an overriding
advantage that can help to pull your work priorities together – strong workplace relationships. Implementing work
priorities can indeed help to develop strong workplace relationships and can ultimately benefit from them. After all,
having a management hierarchy in place is all well and good but if management and staff are pulling in opposite
directions then the very basis of your ability to function as a business is under threat.
Strong workplace relationships encourage people to pull together and work towards common goals and work
priorities. As a result, getting your work priorities in order is a lot simpler a task with a strong workforce to implement
them.