Chapter 6

1.      What is a small business? 

A small business is any independently owned and operated business that is not dominant in its competitive area and does not employ more than 500 people.

2.      How important is small business to the U.S. economy? 

A small business is vital to the U.S. economy.  More than 99% of all U.S. firms are classified as small businesses and they employ 50% of private workers.

3.      What are some of the advantages of small-business ownership? 

Advantages of small-business ownership are independence, costs are low, flexibility is easy, focus is also flexible and also they can develop a good reputation for quality and service.

4.      Why do small businesses have a high failure rate? 

Small businesses have a high failure rate because of choosing the wrong business to start, burdens put on by the government, insufficient funds and competition with larger companies are just a few reasons.

5.      What is a business plan and why is it important? 

A business plan is a precise statement of the rationale for the business and a step-by-step explanation of how it will achieve its goals.  It is important because it is a guide of how to conduct your business and make sure it goes smoothly.

6.      What demographic trends will have the most impact on small business in the future? 

The demographic trends that will have the most impact on small business in the future will be the boomer demographic, the echo boomers and the immigrants.

7.      Why would a big business "act small?" 

A big business would act small because they are trying to capitalize on small-business success in introducing innovative new products and to improve their bottom line.