What Do the Best Small Businesses Do?
Best small businesses are not significantly different from the big ones. It's all about size. The basic rules are the same. Let's review some of these similarities:
Best small businesses are well planned
If you had $1.000.000 to invest, how carefully would you choose the enterprise or project that will receive your money? Very carefully right?
Why this should differ in a smaller business? There's no reason to vary the way of thinking. Even more if your own personal funds are at risk.
Economic laws apply for big and small businesses, supply and demand exists no matter how big or small you are. So, you have to consider this in your small business too.
A small business have a lot of work to do too so you'll need a team as in a big business. Maybe the basic team is you and your wife but probably you'll need more help, for instance: for tax and accountancy matters.
Small businesses have a marketing strategy as well as the big players. The difference is the budget to spend in publicity. But unavoidably both have to be well known by their costumers.
The organization is an aspect that small businesses take seriously even when the partners are just two people. It's not only to consider the incorporation's aspects but to consider responsibilities, goals and tasks.
To manage financial aspects is of course a basic task of any company whether is big or small. Therefore, small businesses often hire people to do this job or outsource these services.
Best small businesses look for best practices
A best practice is simply the process to use other companies' ideas and strategies (legally of course) to improve your own business' procedures.
If you want to improve your packing procedure for instance, you should look for other companies inside and outside your industry to learn what they are doing well, learn and apply that knowledge according to your enterprise.
As I said before: the main difference between small and big businesses are just size. The rules are the same.
What it takes to be a business entrepreneur?
Being a business entrepreneur and financial planning maybe doesn't have a direct relationship at first sight but think twice if you want to reach your goals and dreams.
If you have read our sections related to personal finance training (opens a new window) and personal finance management (opens a new window), then you already know that once you have analyzed your financial situation and have established your goals then you probably have realized that if you want to reach your goals as soon as possible you should:
- Decrease your expenses. This is important and really helps but sometimes isn't enough. Or
- Increase your income. This is why we will be talking about entrepreneurship in this section.
First we're going to review the definition of entrepreneur and the most common characteristics entrepreneurs have. Click on these links, I'll be waiting...
Ready? Ok, now you'll see the sacrifices you'll probably make being an entrepreneur and the advantages entrepreneurs have. Don't worry, advantages surpass sacrifices but you have to see it for yourself, just click on these articles and learn. I'll be waiting here...
Good! In the next articles you'll learn about the principal role entrepreneurs play, some general steps to become an entrepreneur and I'm going to share with you a guide to build a sound business plan. Don't miss these articles because if you pay attention you could starting your business sooner than you think.
What is the role of the entrepreneur in the economy?
The role of the entrepreneur in the economy is positive. Although, the motivations of entrepreneurs varies according to its economic development.
That is one of the findings of the Global Entrepreneurship Monitor (GEM) Report. GEM's research program is an annual assessment of the national level of entrepreneurial activity and started as a partnership between London Business School and Babson College. 43 countries participated in the GEM project.
There is wide agreement on the importance of entrepreneurship for economic development. Entrepreneurs drive innovation, they speed up structural changes in the economy and some high-impact entrepreneurs in particular make an outsized contribution to job creation.
Entrepreneurial activity drivers
The GEM's report mentions two key drivers of entrepreneurial activity:
Necessity-driven which is high particularly at low levels of economic development, as the economy may not be able to sustain a high enough number of jobs in high-productivity sectors.
In other words if you were in a country with low economic development probably you'll begin an entrepreneurial activity because there are no jobs and you need money.
Opportunity-driven that appears as an economy develops; productive sectors grow and supply more employment opportunities.
Therefore if you live in a developed country an entrepreneurial activity isn't a need and therefore is driven by identified opportunities.
Role of the entrepreneur according to a country's economy
In factor-driven economies (i.e. Bolivia, Colombia, Egypt) as industrial activity starts to develop, often around the extraction of natural resources, people migrates from the agricultural sector producing an oversupply of labor and forcing people to create self-employment opportunities in order to make a living.
In efficiency-driven economies (i.e. Argentina, Brazil, Chile) there is a pursuit of higher productivity through economies of scale. That means that if you have a company your earnings increases if it produces more and keep the fixed costs invariable. Government policies help this development and give way to an emerging small-scale manufacturing sector
In innovation-driven economies (i.e. Germany, Spain, United States) there are improvements in variety and sophistication to please your demand. This development is associated with increasing research and development and knowledge intensity. Therefore this opens the way for the development of innovative, opportunity seeking entrepreneurial activity that is not afraid to challenge established incumbents in the economy.
As you have seen the role of the entrepreneur is very important to any economy because without consider the level of economic development or the entrepreneur's motivations, the entrepreneurial activity boosts the economy growth.