Running a small business has its own advantages. While a small business may offer limited profitability, it is much easier to handle the operations of a small business in comparison to a large scale organization.
Activities of a small business can be carried out with limited number of employees. Let us discuss some other advantages of owning and running a small business.
Advantages Of Owning A Small Business
- Minimum Infrastructure
Activities of a small business can be managed with limited infrastructure. It is not necessary for a small business to carry out its operations from a big office. Many startup firms prefer to carry home based businesses.
This helps in saving the costs associated with office rent, office maintenance, etc. Moreover, a small business can be managed with limited number of computer systems, internet and telephone connections. This helps in reducing the overhead expenses of the business.
- Less Accounting Complexities
A small business may have limited number of business transactions in comparison to a large scale organization. Therefore, it becomes much easier for the business owner to handle the accounting activities.
In some cases, a small business owner may prefer to prepare and maintain financial statements without the involvement of an accountant. This helps in reducing the cost associated with accountant’s salary.
A small business owner enjoys complete freedom in the management of day to day business activities. Further, a small business owner can take critical business decisions without following a predefined hierarchy/approval process as applicable in the case of large scale organizations. However, it is important to note that the business owner has to bear all the risks arising from such business decisions.
Even though profitability of a small business may not be as high as that of a large company, small business owner can enjoy the limited amount of profits earned by the business. Since growth may not be an overall objective of a small business, amount of profits earned by the business can be utilized by the business owner for personal purposes.
However, it is important to note that any amount of loss can have a substantial impact on functioning of the business. Continuous losses can sometimes result in a situation of business closure.
- Less Regulatory Compliance
A small business may be exempted from various compliance and statutory requirements. Further, a small business can also enjoy financial support and guidance from various government bodies. In many cases, the requirement to file income tax returns and financial statements with government and state authorities may arise only after achieving a particular level of business turnover.
- Improved Relationships With External Parties
A small business may have limited number of customers and vendors. It is quite possible that the business owner may have to interact with these parties on a daily basis. Daily interaction can help in improving the business relationship and level of trust between the business owner and outside parties.
A small business owner can give personal attention to the issues and grievances raised by various parties. Personal involvement of the business owner can help in strengthening the relationships with various parties.