LARGE V SMALL BUSINESS

• Both large and small businesses should be interested in break-even. For example, when an entrepreneur starts a small business, an initial objective might be to break even in the first year of trading. This means that the entrepreneur would have to compare total revenue at the end of the year with total costs. If they are the same then the business will have achieved its objective. Many small business owners may not be aware of the mathematical interpretations of break-even but they are likely to fully understand the concept. Larger businesses, with their specialists in finance, may use break-even analysis more formally. For example, they may calculate the break-even point of a particular business venture or a new product.
• Businesses of all sizes have to monitor their cash flow carefully. Both large and small businesses will collapse if they run out of cash. Sometimes large businesses cause small businesses cash flow problems. This is because they may 'bully' small businesses by delaying payment for the goods or services they have brought from them. Since they are larger and more powerful, it is difficult for smaller businesses to demand payment. In some countries, governments have taken measures to limit this practice.
• Sole traders and other small businesses are limited in their choices of finance. For example, long-term sources may be mortgages and perhaps the introduction of some personal capital. public and private limited companies can usually obtain finance from many different sources. In addition, because of their size and added security, they can often demand lower interest rates from lenders.
• There is no reason as to why businesses of all sizes should use lean production in there operations. However, it could be argued that larger businesses are more likely to adopt lean production methods. This may be because they have lots more to gain since they produce much larger levels of output. Also, some lean production methods may not be suitable for small operators. For example, if a business only employs one other worker, team working and quality circles are not really appropriate.
• It might be argued that larger businesses are more likely to use new technology in their operations. This may be because larger businesses produce more output and the fixed costs of using new technology can be spread over more units of output so the average cost is lower. However, there will be no exceptions to this. For example, many dentists operating as sole traders or partnerships use very up-to-date technology when repairing or replacing patients' teeth. Also, small businesses might get access to new technology by leasing it rather than purchasing it outright
• Small businesses rarely need a formal organisation. This is because the workforce is small and everyone will know what the others are doing. They will all be accountable to the same person - probably the owner. However, large businesses that employ thousands of people, need a formal organisation. Without it, the business would be difficult to control. communications may break down, mistakes might occur and staff may become confused about their roles
• Quality will be an important issue for most businesses whether they are large or small. Most business owners will appreciate the benefits of offering quality goods and services and even small businesses can gain ISO certification. However, it might be argued that large businesses are more likely to adopt quality control procedures such as TQM because of their high cost
• both small and large businesses are likely to recruit new workers and both are likely to use a variety of methods of employment. Small businesses may use informal methods, such as asking an existing employee if they can recommend anyone for a new vacancy. Many small business owners are unlikely to use job descriptions and job specifications. However, as businesses grow, there is a need for more formal methods of recruitment and selection. in large organisations there is likely to be a separate department (human resources) that takes responsibility for this important task
• Firms of all sizes should avoid all types of discrimination. However, some small firms might be exempt from certian details in discrimination laws. For example, a business that employs just one single employee cannot have a gender balance. If only one employee is needed and a female is employed, the business could not be accused of having a gender imbalance in its workforce - even though 100 per cent of its employees were female. However, a business that employs 500 people, all of which were female, could be accused of have a gender imbalance
• Businesses of all sizes are likely to offer training of some description. It is unreasonable to expect a new recruit to start work with no training. However, the amount and quality of training is likely to vary considerably. It might be argued that larger firms can offer better quality training because they have more resources. There will be exceptions. For example, a very experienced worker in a small business may provide a very rich mentoring experience to a young recruit. Finally, large businesses will have to provide formal training to all employees if they employ very large numbers of workers. Failure to do so could result in 'chaos'
• The objectives of a large business and small business may differ. Many small businesses may be content to stay small. The people that owns them may just want to make enough money to support their families and lifestyles. They may want to avoid the responsibility that may come with growth. For example, small businesses may also be more interested in some of the non-financial objectives, such as personal satisfaction and independence. Large businesses may also aim to grow even larger and try to maximise profits for their owners. However, most businesses will aim to make some profit - whether they are large or small.
• Business types such as; social enterprise, cooperative business, franchise, sole trader and partnerships are most likely to operate as small businesses. However, some franchisers and social enterprises may be large in some cases depending on their international presence