Chapter 5 - Chapter 5 Options for Organizing Small and...

Chapter 5: Options for Organizing Small and Large Businesses
-90% of firms with employees have fewer than 20 people on staff.
-98% have fewer than 100 employees
-More than 20 million people in the united states earn business income without
employees
-almost 1/2 the sales in the US are made by small business
-Small businesses generate 60-80% of new jobs over the last decade
-Launching pad for entrepreneurs and prevalence of minorities
WHAT IS SMALL BUSINESS?
1. The Small Business Administration defines a small business to be a firm that is
independently owned and operated and is not dominant in the field
a. Manufacturing business: fewer than 500 workers
b. Wholesalers: Fewer than 100 workers
c. Retailers: less than $6 million in annual sales
d. Agricultural business: less than $750,000
2. Small Businesses size ranged from $500,000 to $25 million in sales from 100 to
1500 employees
MAJOR INDUSTRIES DOMINATED BY SMALL BUSINESS
1. Construction 90%
2. Agricultural Services 88%
3. Services 56%
CONTRIBUTIONS OF SMALL BUSINESSES
1. Creating New Jobs
2. Creating New Industries
3. Innovation
SMALL BUSINESS FAILURE
1. 1 in 3 businesses closes permanently within two years
2. 50% of businesses fail after four years.
3. More than 60% of business fail within six years
4. By the 10-year mark, 82% of all small businesses have closed permanently
REASONS WHY SMALL BUSINESSES FAIL
1. Management shortcomings
2.