Many different forms of entrepreneurship can be found on the market. Some of them are distinguished by a large volume, while others serve a small number of clients. And most importantly, some types of commerce in themselves presuppose development to a certain size. Small, medium and large business – what it is, what are the features and differences of each of them, we will tell you here.
Definition of concepts
Entrepreneurship is any independent systematic commercial activity. This means that it is initially aimed at making a profit for the sale of its goods, services, the provision of property for use, and so on. Regardless of how the work is conducted, it must be registered in the manner prescribed by law.
The size of an enterprise determines many unique criteria for its operation. The state traditionally supports small firms by lowering taxes and other mandatory payments, while large firms impose many demands, since they bring huge income. Naturally, it is important for young entrepreneurs to understand the difference between all forms in order to conduct their business correctly.
Small business is by far the most common. It is easier to organize, even with little or no work experience. Gradually, the size can increase to medium, due to an increase in annual turnover and attracting more resources.
Only a company that covers several regions of the country or has entered the international level can be called a large enterprise. He always has a large number of end consumers, which means that demand exceeds supply.
Basic characteristics of entrepreneurship
Each of the forms presented above has its own unique features and characteristics. But some of them combine commerce as a whole:
- Any enterprise becomes a participant in market relations.
- Companies in their work are always faced with two main aspects: economic and legal. It is prohibited to conduct business without taking into account organizational and legal norms.
- The main function of any company is to participate in the economy of the country in which it is located, and to make the required innovations in order to constantly develop it. We are talking here about the use of new technologies , the search for alternative sources of energy, raw materials and other things.
Organizations are always dependent on changes in the market for their services and sales, they must adapt to them so that the work cycle does not stop.
What is small business: definition and features
Contrary to popular belief, small businesses include not only individual entrepreneurs, but also small companies with about 50 employees. The main features of this form are:
- Small area. This is not only about the area occupied by the office of the company, but also the area of customer service.
- Limited list of activities. Shops, travel agencies, small industries, dental or other small clinics, private educational institutions specializing in courses can work on this principle.
- The minimum set of checks. Supervisory authorities grant supervisory vacations to small companies, and when they end, the period for conducting inspection activities does not exceed 50 hours a year.
- The status does not need to be confirmed by special means. It is determined by the annual turnover, a certain number of employees and the share ratio to the authorized capital.
Medium business: definition and characteristics
Such firms differ in their coverage area. They usually include an entire network that is capable of serving a large customer audience. Strictly speaking, they do not even need to conduct their work in the territory of one city. Networkers can affect an entire region, but at the same time not enter the market of a neighboring region. Distinctive features can also be called:
- Slow adaptation to changing market conditions.
- Focus on improving the quality of goods or services to consumers.
- The staff is from 101 to 250 people, simultaneously serving the enterprise.
- The annual turnover is not less than 801 million rubles and not more than 2 billion.
As for the spheres of activity, this form of entrepreneurship is characteristic of network trading companies, construction firms, and large medical centers. In the global economy, it is medium-sized organizations that play the largest role, bringing about a third of all revenues to the state. At the same time, no tax breaks or other supportive measures are taken in relation to them.
Large companies are businesses that produce a substantial portion of all goods or services in their industry. Their volumes are noticeable in everything: the number of employees, the number of sales, the annual turnover. But most importantly, they do not work within the framework of one specific territorial market, but in several regions of the country or at the international level. The signs of such enterprises can be considered:
- Large staff of employees (at least 251 people).
- Annual income from 2 billion rubles.
- Strict adherence to order in relation to inventory.
- Large shopping areas.
The most popular representatives of a large entity can be considered such venerable giants as Apple, Bosch, Samsung, Coca Cola, BMW. Since they have to work in many countries at once, they must adhere to global legislation and take into account the norms of each specific market. In addition, the number of shareholders in a firm may include not only businessmen but also the state. This gives some indulgence in work, but at the same time imposes additional obligations.
Each of the presented forms of entrepreneurship has its own advantages and disadvantages. Let’s take them separately to get the full picture. Small business excellence is ensured by:
- Small initial capital. To open a company, it is enough to find funds, and then gradually increase the cash injections.
- Low maintenance costs and mandatory payments, including salaries and tax deductions.
- The ability to quickly respond to changes in the country’s economy and adapt to them without loss.
- Fast reimbursement of spent funds and profit. Depending on the field of activity of the company, this period can be from six months to one and a half years.
Small business in the future is able to become medium and large, which means to provide new jobs. At the same time, a smooth entry into the markets allows young businessmen to feel comfortable.
As for the average institution, its advantages can be considered:
- Creation of a large number of vacancies.
- High productivity and investment.
- Good profitability.
- Competitive stability.
At the same time, at this stage, entrepreneurs face a large number of difficulties, but we will talk about them a little later.
As for the merits of large firms, they are fundamentally different. To begin with, it is these organizations that ensure the economic stability of their industry and the entire country as a whole. They can also continually bring new technologies into the business and change the overall picture of commerce.
Cons and risks
As discussed earlier, any form of entrepreneurship has its drawbacks. It is almost impossible to avoid them, so the only thing that businessmen can do is accept them and arrange their work in such a way as not to feel negative sides. Small organizations have the following imperfections:
- High risk of failure, especially if the owner of the firm has no business experience.
- Low professional level of both employees and managers, which is why the organization cannot reach the proper level of development.
- Difficulties, if necessary, to conclude a loan agreement.
Summing up the main result, the main disadvantage is the manager’s inexperience and lack of useful connections. Having at least one thing, he can build a successful business without much difficulty.
The disadvantages of mid-sized companies include the highest level of competition and the need for complex organizational work. Obtaining permits, attracting serious funds – all this can be avoided by small firms, but not starting their active growth.
The disadvantages of big commerce are:
- Excessive focus on the economies of the countries in which the business is conducted.
- Narrow localization of economic relations.
- The inability to go outside the limits of a particular company.
If we compare all forms of entrepreneurship in terms of advantages and disadvantages, then the latter will still be in a more advantageous position, since its negative aspects are more than covered by huge incomes.