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Characteristics Of Small Business Definition
A literature review of 23 papers, which have been published from 1958 to 2002, revealed an inconsistency regarding both characterization and definition of small business. The variety of definition used in these papers unable to set an agreeable format for small business definition. The current article objective is to suggest some guidelines that can help reduce the level of ambiguity. The method to reach that objective is through the analysis of five significant parameters that have been used by different scholars to define small business. Each of these parameters is being characterized and analyze in order to clarify the existing status and for suggesting the less ambiguous alternative for using that parameter.
First, the business must be independent: For that matter, a subsidiary or a branch can’t be considering as independent business.
Second, the business is not dominant in the industry it’s operating in: Part of ‘Monopolistic Competition’ definition can be used to characterize the parameter – There are many sellers and they believe that their actions will not materially affect their competitors.
Third, firm size (number of employees): This parameter is obviously the most popular among scholars for defining small business; nonetheless its use varies dramatically. If you’re in U.S. then an employer of up to 500 employees will still be consider as small business, contrary to U.S. in Europe most countries use the limit of 50 employees to define business as small. Taking into account that across the world ninety percent of the operating businesses are employing less then 20 employees, it seems that 50 employees is a more suitable limit. Moreover, business with more than 50 employees is employing operational and managerial techniques, which become more and more similar to those of large businesses. Characterize the upper limit brings us half way; in order for us to go all the way, lower limit should be characterize as well. A rule of thumb in that regard is that business with less then five-to-ten employees don’t even have the minimum operational and managerial structure, which can be treated as small business, any business with less then five employees is inadequate for any analysis, and should be named micro-business.
Fourth, firm age: The use of firm age by scholars meant to characterize the minimal period of time needed for a business in order to form some operational and managerial backbone, otherwise, there was a risk that data collected for statistical analysis wont be suitable. Biggadike (1979), supported by Miller and Camp (1985), conclude that a new venture needs in average eight years for achieving profitability. The barrier of eight years should be analyzed depending on several factors, such as the industry that the firm operates in or the initial capital raise for starting the new venture. Moreover, Biggadike based his definition on the basis of the period needed to generate profitability, which is only one among numerous measures of performance. Taking all into account, a conservative estimation will be that business can be still considering as new if the period from establishment is two-to-five years.
Fifth, annual revenue: What can be considering as acceptable annual revenue for small business? In order to be able to characterize this parameter, a preliminary step of defining the industry that the business relates to must be taken. There is a substantial difference regarding the revenue in different industries. For example – Annual sales of five million dollars generate by a car dealer must be treated entirely different then when this same revenue produces by any type of consulting firm. The source of revenue is of great importance; revenue from selling goods can’t be treated as revenue from selling knowledge or labor. Subject to that remark, and for the vast majority of small businesses that operates in either manufacturing or trade (retail, wholesale) industries, annual revenue of ten million dollars can be used as proximity for characterize the upper limit. This annual revenue correlate with the upper limit of 50 employees used as characteristic for firm size.
Small Business Change Management
Change is an ever-present component of small business ownership. The ability for small business owners to effectively manage change lays the groundwork for growth and helps build the foundation for the development of a positive corporate culture. What can small business owners do to make themselves better change leaders? What are the most important factors to consider when managing change?
Have a Plan and Take Small Steps
Change is something that your small business is sure to experience. A great way to prepare yourself to manage change as a small business owner is to develop a change plan. Take a look at all facets of your business and write a simple list of strategies that take into account possible changes in each functional area. “Build a big plan with small steps. A ‘big’ plan isn’t an enormous impenetrable document, it is the summation of big ideas necessary to build belief and overcome inertia…it functions as an overlay across the business to keep initiatives in balance” says Philip Stanley, Founder at Minutecoach in the U.K. “For the owners, small steps mitigate risk and allow fluidity of movement. If the pace of change gets a little aggressive or laggardly, you can jiggle your blocks into a new pattern.”
Communication
One of the most important components of change management is effective communication. Terri Maurer, Planning and Strategies Consultant and Owner of The Maurer Consulting Group in Cleveland Ohio believes that “communication is the key to a smooth passage of change in any organization. Getting as many people as possible into the change process, even if it involves no more than gathering input from staff through management, will do much to move the process forward.” She also mentions that keeping your team “appraised of what is going on and why” should facilitate a smooth transition. “Utilize as many channels of communications as possible: face to face meetings, company memos, e-mail, newsletters, company intranet, etc.”
Vijay Shah, Engineer and Operation Manager at Bauer Controls in Detroit, developed the following list of change management best practices:
Communication: Every change requires communicating the goal to all who are involved. And listening to the all who are involved Humility – Understanding the constraint of your resources and making sure you do all in your power to accommodate. Democratic dictatorship – As someone said, “The Roman empire was not created by committee”, you need to communicate/listen but then take quick decision. It may not satisfy everyone but it will allow you to move forward knowing that you communicated with humility. More Change Management Ideas
I will leave you with a few more ideas on change management derived from “The Biggest Mistakes in Managing Change” (Carol Kinsey Goman, Ph.D.):
Appreciate and acknowledge the importance of people in any change initiative. “Organizations don’t change. People do — or they don’t.” Whenever possible, include your employees in any change discussions and recognize that each person may react to a specific change differently. Let people know the reasons for change and include them in any change planning conversations. Treat change as a “mental, emotional and physical process” as opposed to another business “event”. Acknowledge the fact that change may be a very emotional process for your team. Direct, honest communication is the best policy. Don’t attempt to “protect” your employees by withholding facts about any pending changes or trying to spin doctor the details. Also be aware of communicating change in a timely fashion – people are smart and will figure out pretty quickly that something is up. If you create an information vacuum by ignoring the need to communicate changes quickly, your team will fill the vacuum with their own interpretation of the changes are taking place. Believe in the potential of your group and their ability to embrace change and flourish. “Trust in the innate intelligence, capability, and creativity of your employees — and people will astound you.”
Business School In A Box – What They Don’t Teach You At Harvard
Here are some things to consider about when choosing a business school (in or not in a box):
How updated is their curriculum in terms of preparing you to deal with the current business trends so instead of reacting to the market you can strategize and prepare for it? To better understand how important this is, please take a look at the info below. Here are some of the major changes in the offline TV world:
-Only 18% of all TV ads generate a positive return on investment (ROI). A whopping 82% only lose advertisers money.
-90% of homes that have a TIVO or DVR (digital video recorder) skip all the commercials
By the end of next year, if current trends continue, digital video recorder (DVR) users will be fast-forwarding through $6.6 billion worth of TV commercials. That’s well above this year’s $2.4 billion “skipping” rate.
-TV ad budgets are shrinking. Every year, Proctor & Gamble-the world’s largest advertiser – shifts increasing percentages of its $4 billion advertising budget away from TV. Many other companies area following suit and the trend is accelerating.
The few stats given above can be quite eye-opening and can all be verified if you want to by doing a little research on the Internet. This brings us to the one of many dangerous Consumer Trend that have become more and more apparent, especially in recent years. Don’t take my word for it, here’s what some of the world authorities on the topic have to say.
“Attention has become the scarce resource of the information economy.” -Wired Magazine
“Human Attention might be one of the most restrictive limitations to the promise of internet” -Rand Corporation
These are just some of the trends that are currently going on in the business world. I hope you now have a better idea of what to look for in business school in a box.