In this article, we will take a look at how to start a business. Business can be divided into three parts, small scale, medium scale, and large scale business.
Small Scale Business
Small scale business is privately owned, or it is sole proprietorship business – it is termed as small scale business according to the country in which they operate. E.g., India defines a small-scale business that does not have a huge amount of revenue as a large scale business and cannot apply for government support and qualify for preferential tax policies.
Methods according to which the small scale business can be classified:
- Shipment
- Sale
- Assets
- Annual Revenue
- Annual Net Profit
In most of the countries around the globe, the small scale business includes hairdressers, carpenters, painters, restaurants, grocery stores, etc. Start-ups are also defined as small scale business by many countries around the globe as they do not hire a huge number of employee’s, and also start-ups do not have huge amounts of revenue as compared to the large scale industries; on the other hand, there are some professionals who operate as small scale business, like, chartered accountants, lawyers, dentists, family doctors – there is also some small scale business which requires constant regulation by the government of that particular country, like, daycare, old age homes, etc.
The startup, small scale business, entrepreneurship, and self-employment are generally being confused with one another as they overlap each other. The sole proprietor consists solely of the owner, whereas on the other hand, small scale businesses employ some amount of workers, and some of the small scale businesses do not operate with the objective of growth.
In contrast to small scale business, startups operate with the sole objective of growth by offering their services or by offering something distinctive from others. Entrepreneurs of start-ups operate with the sole objective of growth – to achieve the objective, an entrepreneur sets up the plan and executes it accordingly, Bangalore is the hub of start-ups, and there’s no doubt why it has emerged as one of the most advanced cities in India.
Size Of Small Scale Business In Different Countries
- In India, a business whose investment is not more than 10 crores and whose annual revenue is not more than 50 crores are defined as a small scale business. To start a business (small scale), the investment need not be more than 10 crores.
- The European Union defines small scale business as less than fifty employees and whose turnover is below £10 million.
- In Australia, a small-scale business is one which employees less than fifteen employees or not more than fifteen employees.
Advantages Of A Small Scale Business
Small scale business relatively requires less amount of investment to get going, to start a business (small-scale) and individual does not need to approach investors for funding – small-scale business can be operated with a little amount of funds and employees. The owner of a small-scale business can promote his product with the help of online marketing and social media – it requires less amount of investment, or it can be said that in some cases, it does not require any investment.
Small-scale businesses are quite flexible as they can adapt to the changes very quickly compared to medium or large-scale businesses.
One of the biggest advantages of operating or starting a business (small-scale) is that the owner of the business is in personal contact with most of the customers, whereas on the other hand, owners of the medium and large scale businesses do not get in touch with the customers personally – to start a business (small scale) an individual simply needs an idea and will power to carry on the operation.
In a small scale business, the owner has the right to make his own decision whenever he wants to do so – the owner needs no to report to the supervisor or manager; in a nutshell, there is a lot of flexibility in small scale business when it comes to decision making.
Whenever there are some immediate changes that need to be made in order to meet some objectives, then small scale businesses do not face problems like reporting to senior officials – instant decision making can prevent losses.
Disadvantages Of Small Scale Business
The main reason for a business going bankrupt is the lack of planning and execution – a business needs a team that plans and executes when needed. Small scale business is also very dicey as most small scale businesses do not have a plan for a long time run, whereas, on the other hand, medium and large scale business have a full proof plan for the future of their business. Additional management skills are needed for a business to keep it going, which lacks in the small scale business.
Large Scale Business
A large scale business may have several partners, unlike the small scale business; in order to own a large scale company, a person will have to buy 51% of the company’s shares. A person holding 51% shares of a company is an indirect owner of the company.
In India, a large scale business is the one that has an investment of more than 10 crores and has an annual turnover of more than 50 crores.
In order to start a business (large scale), the business needs to be registered in the books of government, which is one of the most important criteria of setting up a large scale business – if the business is not registered, the business will not be recognized by the government.
Some of the large scale businesses in India are Reliance, TATA, Adani Group, etc.
Advantages Of A Large Scale Business
The biggest advantage of a large scale business is that it operates with proper planning and execution, and the risk of bankruptcy is less. In order to start a business (large scale), the owner needs to set up a core team of management that plans and executes the plans accordingly when needed.
One of the biggest reasons for a business going bankrupt is the lack of proper planning and execution of the plan rather than the economic factors.
Another advantage of a large scale business is that they create opportunities for small scale industries to evolve and flourish; there are also many large scale businesses that generate funds for research and development of new technologies.
The following types of businesses come under the category of large scale business; they are:
- Iron and Steel Business
- Textile Business
- Automobile Manufacturing Business
- Information Technology
- Telecom
In recent years India opened itself to globalization, and it had a mixed effect on large-scale businesses operating in India. Some of the large scale business was able to cop up with the competition whereas on the other hand some of them were not able to do so, some of the large scale business found difficult to survive in the market, and therefore they seized their operation.
Heavy equipment manufacturing is something that requires a high amount of capital to be invested. To build equipment for humongous machines like tractors and excavators requires a high investment. Smelting metals also come under the large scale business as smelting metals need iron ore, and then it needs to be processed.
The smelter is usually located near the mine to reduce the shipping cost – this is called vertical integration. Smelting is very complicated as it also involves various regulations to protect the environment. Information Technology is also termed as a large-scale business as it requires a huge amount of investment and manpower.
Online Business
An online business can be termed both as a small scale business and large scale business. Online business or e-business includes the promotion, sharing, and exchange of products and services on an online platform. Online business differs from e-commerce as the online business does not only deals with all the transactions; it deals with sharing, promoting, buying, selling, marketing, and customer service on online platforms.
Many small scale business also promotes their products using online platforms in order to promote their product and to reach out to more and more number of people.
In today’s each and everyone can start or promote their product online as everything is just a touch away; online social media platforms like Instagram and Facebook have made it much easier for people to market and sell their products, social media platforms like WhatsApp have also introduced features where one can open a business account and carry on the transactions with the integrated wallet.
Advantages Of Online Business
One of the biggest advantages of online business is that it requires a minimum amount of investment as compared to medium scale businesses and large scale businesses.
It is easy to promote the product, and one can reach out to the masses with just a click – online business has no geographical restrictions one can spread its business to whichever country they want to without any intervention; on the other hand, when an individual has to set up his business somewhere abroad, he has to face a lot of difficulties regarding paperwork, restrictions, and guidelines of the country where the business is going to be established, etc.
Online Business is easy to set up as compared to traditional business as it requires less time and cost to set up.
Disadvantages Of Online Business
Online business comes with some disadvantages along with its advantages; one of the drawbacks of online business is the concern of security; if the hackers can go on to hack US Government’s sites which contain sensitive information, then I reckon your e-business site is no secure; also one might face trouble in online transactions when the server is down. The hackers can also access some of your sensitive information, like your card details and all of your personal information.
Online business also defenestrates personal touch – traditional market enable an entrepreneur to remain in personal touch with its customers, which is one of the essential parts of the growth of any business, whereas this is not the case with an online business. Online business lacks the personal touch, and that is one of the biggest drawbacks of online business.
Privacy Concerns
Online business has the biggest drawback, and it is regarding privacy. If the online business site is not secure, then hackers might access all the personal details of the customers visiting the website, and they might also steal the card details of the customers. There are some methods that can protect an online business; they are:
- Authentication
- Digital Signatures
- Two-Step Verification
- Data Integrity
- Access Control
Business From Home
Many people start a small business sitting at home for extra income; in India people start a business according to their skills; for example, if the person is skilled in painting, then he might sell his painting; if a person is skilled at tailoring, then he might open a tailoring shop in his home.
Starting your own business from home comes with minimum risk as it does not require a huge investment, and it is quite flexible. The owner also has the option of selling his product locally or internationally with the help of online platforms like Amazon and Flipkart.
Most of the people in India sell their home products such as sweets, customized jewelry, cosmetics, apparel, etc.; an individual can improve the quality of the product accordingly. The greatest advantage of starting a business from home is that the owner of the business is in personal touch with his customers because of which he gets to know his customers and improve upon his product accordingly.
Conclusion
Every type of business offers some advantages and disadvantages, but the core of a successful business is its planning and execution. Every bankrupt business has only one reason behind its failure, and it is – the lack of planning and execution.
Frequently Asked Questions
Q1. What is a small scale business?
Ans. Small scale business is a business which operates at a small or micro scale; these businesses make a one-time investment.
Q2. What is the best small scale business?
Ans. Organic farming can be the best small scale business.
Q3. What are the basic infrastructure required for a large scale business?
Ans. Basic infrastructure like banking, transport, insurance, communication, etc., is required for a large scale business.
Q4. What is a large scale business?
Ans. A large scale business is one that checks these three boxes:
- Use of machinery
- Employment of wage
- and, Application of regulatory measures