Advantaes and Disadvantages of Small vs. Large Firms

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Topic: ADVANTAES AND DISADVANTAGES OF SMALL VS. LARGE FIRMS

1. Size and financial Requirements
2. Economies of Scale
3. Strategies for Growth
4. Management and Control
5. Lack of Record Keeping
6. Working Capital Deficiencies
7. Poor Management Skills
8. Regulations and Legislations

1. Lack of Record Keeping
Businesses should keep track of their records and documents for the following reasons: * To ensure payments were made to the suppliers for materials. * To monitor and control movement of stocks.

* To record payments from customers.
* To note those who did not pay (debtors).
* To prepare financial reports in order to make wise and accurate decisions. * Payment of tax to the government.

2. Working Capital Deficiencies

Working capital is very important in a business to ensure its daily operations. For example a firm should not have too much money tied up in its stocks this would affect the liquidity. Some techniques to prevent deficiencies of working capital:

I. Use of a cash flow forecast on a monthly basis.
II. Budget enough startup capital to last a few months to ensure that the business does not fail. III. Monitor the credit to customers so they do not become large debtors. IV. Have a good relationship with the bank so that you can access short term loans in emergencies.

3. Poor Management Skills

A business leader should have the following skills:

I. Leadership skills
II. Cash handling and cash management skills
III. Planning and coordinating skills
IV. Decision making skills
V. Communication skills
VI. Marketing , promotion and selling skills

4. Regulations and Legislation

This involves laws and regulations that must be abided by regardless of the size of firm. These laws include health and safety at work, minimum wages, and consumer protection.

5. Size and Financial Requirements

Generally speaking small...
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