CH.5.1 (Business) pg.157-

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Most Business Are Small Business
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Although many people associate the term business with corporatr goliaths like ExxonMobil, Ford, PepsiCo, Pfizer, Microsoft, and Wal-Mart, nine of 10 firms, with employees have fewer than 20 people on staff, and 98 percent have fewer than 100 employees. The vast mojority of U.S businesses income without any employees. Almost half the sales in the U.S are made by small businesses. Small business is also the launching pad for entrepreneurs from every sector of the diverse U.S economy. One third of the nation’s 17 million small businesses are owned by women. Hispanic- owned businesss account for 4 percent of all U.S business with fewer than 100 employees. African Amercians own another 3.6 percent, and Asian Americans 3.5 percent.
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What Is Small Business
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How do you distinguish a small business from a large one? What about market share or number of employees? The Small Business Administration (SBA), the federal agency most directly involved with this sector of the economy, considers a small business to be a firm that is indepndently owned and operated to identify samll businesses for specific industries. -Most manufacturing business are considered small if they employ fewer than 500 workers. -To be considered small, wholesalers must employ no more than 100 workers. -Most kinds of retilers and other services can generate up to $5 million in annual sales ans still be considered a small business The SBA has estblished size standards for specific industries. These standards, which range from $500,000 to $25 million in sales and from 100 to 1,500 for employees, are available at the SBA’s.
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EX.
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An excelent example of a small business- and its founder-owner-can be found in 97-year-old former Lutheran church in Maynard, Massaschusetts. Ron Labbe’s Studio 3D is the world’s only one-stop shop for all things 3-D. His biggest seller is 3-D glasses. When Polaroid dropped the product, Labbe moved quickly, buying th remaining inventory of 750,000 pairs at 2.5 cents each. Today, they’re hot sellers at 25 cents apiece. Since government agenices offer a number of benefits designed to help small businesses compete successfully with larger firms, operations of small business are interested in determining whether thier compamies meet the standards for small-business designation. If it qualifes,a company may be eligible for qovernment loans or for government purchasing programs that encourage proposals from smaller
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Typical Small Business Ventures
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For decades, small businesses have competed against some of the world’s largest oranizations, as well as multitudes of other small companies. One of these fearless competitors is Dublin, California-based Sanrise Group, started by David Schneider to help businesses store the explosion of Internet data and solve today’s data-storage chaos. Imitating Dell’s original model of selling built-to-order PCs directly to customers, Sanrise designs preconfigured data-storage equipment to match specific business customer needs and ships it worldwide within 30 days. Not only does the equipment match customer’s needs, but it also saves them 30 to 40 percent in stroage costs, while letting them avovid the months often involved between order and delivery and setup.
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EX
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To continue to serve its 600- plus customers and compete with larger, better financed rivals, Sanrise raised a whopping $115 million from several major outside investors. Revenues are soaring, too, and are expected to reach $100 million soon. The past 15 years have seen a steady erosion of small business in many industries as larger firms have bought out small independent businesses and replaced them with larger operation. Drugstore retailers have been tremendously affected, as thousands of small neighborhood pharmacies has replaced by retail giants like Walgreen’s, CVS, and Rite Aid. The number of independent pharmacies has plummeted 30 percent over the past ten years. But as table 5.1 reveals, the businesses least likely to be gobbled up and consolidated into larger firms are those that sell services, not things; rely in consumer trust and proximity; and keep their overhead costs low.
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EX.
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For centuries, most nonfarming small business have been concentrated in retailing and the serve industries. As figure 5.1 indicates, small business provide the majority of jobs in the construction,agriculture services, whosale trade, serices, and retail trade industries. Small serve business can be as high-touch as a country inn or hair stylist, or as high-tech as Sanrise Group. Retailing is another important industry for today’s small businessperson. General merchandising giants like Sears, Target, and Walmart may br the best-known retailing firms, but small privately owned retail stores far outnumber them. Small business retailing because of the ability to start a firm with limited funds, rent a store rather than build a custom facility, create a Web sit, and use family members to staff the new business.

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