THE NATURE OF

SMALL BUSINESS
Small Business
Small Business-under the market share approach,
small business may be defined as one of which is
independently owned and operated and which is
not dominant in its field of operation.
independently owned- means ownership is by a
private individual, a partnership or a corporation.
not dominant- indicates that a small business
does not control a sizable share of its market
Small Business
Small Business-under the total assets
approach as one having total assets that
fall within a certain bracket.
Magna Carta for Small Business
Enterprise (RA 6977)-indicates that the
firm must have total assets valued
above P 1.5 million to P 15 million to be
considered small business.
Microenterprise- total assets valued at P
1.5 million and below
 Kinds of Business According to Size

Public Enterprises Private Enterprises

Ex. Landbank of the Philippines Ex. Globe Telecom

Micro Cottage Small Medium Large

Business Business Business Business Business
 TYPES OF SMALL BUSINESS
1. Manufacturing
2. Service
3. Wholesaling
4. Retailing
5. General construction firms
 TYPES OF SMALL BUSINESS
1. Manufacturing- is one involved in the
conversion of raw materials to products
needed by society.
Ex: bakeries, tricycle sidecar assembly
shops, bagoong manufacturers, restaurants
 TYPES OF SMALL BUSINESS
2. Service businesses are those that provide
service in one way or another.
Classification:
a. Business services- provide service to other
business. Ex. Accounting firms, janitorial
services firms, security service firms,
collection agencies
b. Personal services-provide service to person.
Ex. Tutoring services, massage parlors,
voice lesson
Classification of service business:
c. Repair service- provide repair services to
owners of various machinery and
appliances. Ex. Auto repair shops, watch
repairs shops, plumbing services
d. Entertainment and recreation- includes
movie houses, resorts, billiard pool centers
e. Hotels and motels
f. Education services-include Montessori
schools for children, high school,
correspondence school
 TYPES OF SMALL BUSINESS
3. wholesaling-refers to activities of persons or
establishments which sell to retailers and other
merchants, and/or t industrial, institutional,
and commercial users, but who do not sell in
large amounts to final consumers.
4. retailing- covers all activities involved in the
sale of goods and/or services to the final
consumers.
5. General construction firms are those engaged
in the construction of buildings whether private
individuals or firms, or for the government
 CHARACTERISTICS OF SMALL BUSINESS
1. Independent management- The owner
is also the manager
2. Small capital requirement
3. Mostly local operation
 ECONOMIC IMPORTANCE OF SMALL BUSINESS
1. Providers of economic opportunities for
entrepreneurs
2. Providers of products and services to
consumers
3. Suppliers of products and services to other
businesses
4. Distributors of products and services of other
businesses
5. Supporters of government
6. Providers of employment
 ECONOMIC IMPORTANCE OF SMALL BUSINESS
1. Providers of economic opportunities for
entrepreneurs
2. Providers of products and services to
consumers
3. Suppliers of products and services to other
businesses
4. Distributors of products and services of other
businesses
5. Supporters of government
6. Providers of employment
 ADVANTAGE OF OPERATING A SMALL
BUSINESS
1. Be an employee
2. Be a professional
3. Be a small business operator