2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Sustainable and efficient management of small businesses plays a special role on the path to overcoming the consequences of the global economic crisis. The dynamic development of small business has a positive effect both on the development of the country's economy as a whole and on the material well-being of citizens.
Entrepreneurship is an essential element in the structure of a modern market economy. This concept means independent activities that are carried out in order to obtain regular profits, while risking their own assets.
The business entity must be officially registered with government agencies. Activities can be carried out in such areas as the sale of goods, the provision of services or the performance of work not prohibited by law.
Conditions for entrepreneurship
The transition to a model of free market relations required a revision of the economic system in which the monopoly on property belonged solelythe state. With this approach, opportunities for the development of creativity and initiative were constrained. Therefore, one of the important conditions for the life support of entrepreneurship is private property.
To maintain he althy market relations, such important conditions as a favorable tax climate, economic stability, and loyal social policy are also necessary. Working intellectual property protection systems and flexible market mechanisms also play an important role.
Common signs
Signs of entrepreneurship are:
- Independence and autonomy of an economic entity. A person, becoming an entrepreneur or holding a leadership position in an organization, independently deals with the solution of all production issues, the solution of which will determine the profitability of the business.
- Self-interest and responsibility. These signs of entrepreneurship are similar to those previously listed, with the difference that, in addition to the desire to obtain personal gain, the entrepreneur takes into account the interests of the team, the company, and sometimes the country as a whole, if it is a global business.
- Creativity, innovation, original presentation of the product are also the main signs of entrepreneurship. A real businessman is always in creative search. The desire to be the first and best in its niche makes it one step ahead of competing firms. We welcome such personal qualities as the ability to make non-standard decisions, quicklyrespond to the current situation, be able to benefit where others do not see it.
- Such signs of entrepreneurship as financial and economic risks are also important. It is they who make us maintain momentum and pace, exclude possible stagnation against the backdrop of a constantly hovering spirit of rivalry. A newly formed business should be exactly new, qualitatively different from competitors.
- Principle of legalized activity. Doing business without registration in accordance with the established procedure is prohibited by law. In addition, there are areas whose activities must be accompanied by licensing.
Private business
The concept of "entrepreneur" appeared in the XVIII century, and today it is an integral and fundamental unit of the market. In terms of scale, private business is divided into small, medium and large.
In accordance with domestic and world practice, one of the main indicators that is taken as the basis for distinguishing between small and medium-sized businesses is the number of employees. It is customary to attribute the value of the authorized capital, the size of assets, and the volume of turnover to secondary criteria.
Small business
According to the law, the main features of small business is the average number of employees, which directly depends on the chosen activity for the reporting period, annual turnover, and the value of assets. At the same time, the average number of employeesmust exceed:
- for industrial entities - 100 people;
- for agriculture - 60 people;
- for wholesale - 50 people;
- for retail - 30 people;
- for other types - 50 people.
Small businesses are commonly understood as the activities of individuals without forming a legal entity. Under the entities that enjoy simplified taxation, they mean organizations with a maximum number of up to 15 people.
Small Business Benefits
Organizations that have the characteristics of small businesses have the following advantages of conducting the selected type of activity:
- The ability to quickly adapt to the created local business conditions.
- Efficiency and independence, as well as flexibility in making and implementing decisions.
- Small expenses for organizing and running a business, as well as for initial capital.
- Ability to quickly respond to changes in market demand and conditions.
Disadvantages of small businesses
At the same time, entrepreneurial activity has a number of disadvantages that may arise under the influence of external or internal causes:
- High degree of market volatility causes higher risk.
- Mistakes in management caused by lack of experience or weakthe competence of the manager.
- Dependence on larger companies, banks, the state as a whole.
- Difficulty finding ancillary loans from financial institutions that prefer to lend to big businesses.
- Difficulties and caution in concluding agreements for mutual cooperation with counterparties.
Government support
Small organizations that have the characteristics of business entities have the right to count on support from the state, which consists in the application of the following measures:
- Creating a legislative framework to support small and medium businesses.
- The opportunity to use state credit funds, material and technical base, information and scientific and technical resources on preferential terms.
- Removing the bureaucratic approach to registration, licensing and certification for organizations with signs of entrepreneurship, as well as simplifying the filing of accounting and statistical reports.
- Providing support in the implementation of foreign economic activity.
- Support for education, retraining and professional development
Successful functioning of enterprises and organizations that have signs of entrepreneurship in the small sector can lead to the formation and maintenance of the middle class of the population of the state, which, in turn, leads to an increase in the socio-economic level of development of the country.
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