Why Small Business?
The history of this small business venture dates back to 1953. The small business was foremostly created to replace Reconstruction Finance Corporation which is an independent US government agency who dealt in primary objectives in the face of economic depression. The small business hence originally started in the US.
The courage of risking and starting a venture is a dream which even the common man aspires to. In order to make this a reality the small business is a type of venture that will suit his requirements and give him the satisfaction of doing a business. Along with the success, small business has many added advantages as well.
1. Independence –
Being the business owner, the owner is the only boss here. Hence, he can operate by taking his own decisions which are crucial to the business’s success.
2. Lifestyle –
With owning a small business, lifestyle is in self-charge. The owner is free to decide when and where to work, how to spend the time.
3. Financial Rewards –
Small business ventures are not as exposed to external threats as the big business ventures are exposed to. Also, the owner is single who is the boss leading the business thus all the profits and the gains are consumed by the owner solely.
4. Learning Opportunities –
The business owner participates in every facet of the business, he is constantly engaged in opportunities which help them to learn and understand various business functions.
5. Creative Freedom and Personal Satisfaction –
For efficient work, freedom and doing what is personally satisfying is the utmost rewarding. The owner of this business has the freedom to create his own business by which they will be personally satisfied by using his own ideas and own methodology.
What is a Small Business?
Small businesses are the private corporates, partnerships, or sole proprietorship which work with few employees and lesser annual revenue. The businesses are defined as small in the aspect of size and from the aspect of governmental support. The small businesses qualify for preferential tax policy, the tax policy is dependent on the country and the type of industry.
Examples for small business include – service or retail operation like convenience stores, small groceries outlets, bakeries, hair salons, carpenters, electricians, guest houses, photographers, small scale manufacturers, Web Designers.
Other professionals also work in small business sectors like doctors working in small clinics, lawyers and accountants who work in their chambers. These all are examples of small business.
Types of Small Business
Even while we look outside, we see different types of small business which dwells in our vicinity itself. In our daily interactions, we come across various types of small businesses.
Services Provided by Small Businesses
Business
Bookkeeping, accounting, taxes
Consulting; marketing/market research, career, management
Social media administration and management
Tax preparation
Public relations
IT & Internet
Development; front end, games, apps, etc.
Freelance IT services
Podcasting
Search engine optimization consultant
Website design and/or maintenance
Food and Hospitality
Bed and Breakfast
Catering
Event planning
Event space rentals
Physical Labour with Limited or Easy-to-learn Skills
Handyman
House cleaning
Landscape maintenance
Moving and hauling
Specialized Skills (some require licenses, certifications or other credentials)
Bartending for private parties and events
Car repair
Copy or content writing
Graphics design
In-home beauty services
Interior decorating
Massage therapist
Music lessons
Personal chef
Personal trainer
Dog grooming
Photography
Private lifeguard
Nutritionist/Weight-loss coach
Real estate
Sewing and alterations
Sports coach
Translator
Tutoring
Videotaping and editing
Miscellaneous
Blogging
Child or senior care
Dry cleaning
E-commerce
Genealogy research
Life coaching
Organizing; home or office
Travel planner
Virtual administrative assistant
FAQs on Small Business: Meaning and Nature
1. What is the meaning of a small business as per the CBSE Class 11 syllabus for 2025-26?
A small business is an enterprise that operates on a smaller scale compared to large corporations, with limited capital investment and workforce. According to the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, they are defined based on their investment in plant, machinery, or equipment. These businesses are typically managed by their owners and play a crucial role in the economy by generating employment and catering to localised needs.
2. What are the main characteristics that define the nature of a small business?
The nature of a small business is defined by several key characteristics:
- Personal Character: Often owned and managed by a single person or a few partners, reflecting their personal vision and management style.
- Labour Intensive: They tend to rely more on manual labour rather than large-scale automated machinery, which helps in creating jobs.
- Limited Reach: Their operations are generally localised, serving a specific neighbourhood, town, or a niche market.
- Flexibility and Adaptability: With a smaller management structure, they can quickly adapt to changes in customer preferences and market conditions.
- Limited Capital: They are established and operated with a relatively small amount of financial investment.
3. What are some common examples of small businesses found in India?
In India, small businesses are very diverse and integral to daily life. Common examples include:
- Local 'kirana' or grocery stores.
- Handicraft workshops producing items like pottery, textiles, or wooden toys.
- Small-scale food processing units making products like pickles, papad, or bakery items.
- Independent restaurants, cafes, and street food stalls.
- Boutiques and tailoring shops.
- Repair and maintenance services for electronics or vehicles.
4. Why are small businesses considered crucial for a developing economy like India?
Small businesses are crucial for India's economy because they are the backbone of employment generation, especially in rural and semi-urban areas where large corporate jobs are scarce. They promote balanced regional development by preventing the concentration of industries in big cities. Furthermore, they nurture an entrepreneurial spirit, encourage the use of local resources, and contribute significantly to national income and exports with lower capital investment.
5. How does the 'labour-intensive' nature of small businesses benefit the economy over 'capital-intensive' large industries?
The labour-intensive nature of small businesses is a major advantage in a populous country like India. It means they create more jobs for every unit of capital invested. While large capital-intensive industries drive massive production, small businesses directly address the critical issue of unemployment. This leads to a more equitable distribution of income and helps in skill development across a larger segment of the workforce, fostering inclusive growth.
6. What is the primary difference between a small business and a startup?
While both can be small, their core objectives are different. A small business, like a local bakery or a retail store, typically aims for stable, long-term profitability within an existing, proven market. In contrast, a startup is designed for rapid growth and scalability. It often introduces an innovative product, service, or technology to disrupt or create a new market. A startup's primary goal is to grow big quickly, whereas a small business's goal is to remain a successful and sustainable entity.
7. Despite their flexibility, what major challenges do small businesses typically face in India?
Small businesses in India face several significant challenges that can hinder their growth. The primary hurdles include:
- Access to Finance: Difficulty in securing adequate and timely credit from banks and formal financial institutions.
- Stiff Competition: Facing intense competition from both large domestic corporations and multinational companies with vast resources.
- Outdated Technology: Inability to afford or implement modern technology, which affects their productivity and product quality.
- Marketing Hurdles: Lacking the financial resources and expertise to effectively market their products to a wider audience.
- Lack of Managerial Skills: Owners often handle all aspects of the business and may lack professional skills in strategic planning, finance, or human resources.
