Risks of Small Business Ownership

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Assignment #1
Chapter 1 page 20
1. How would you define Small Business?
a. A small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. 2. Name a company that seems large but might be classified as a small because it has relatively little impact on its industry. b. As the book states, Mining and Manufacturing are have mass employment however they are considered to be small business. 3. Large businesses depend on small business. Why?

c. While small businesses may not generate as much money as large corporations, they are a critical component of and major contributor to the strength of local economies. Small businesses present new employment opportunities and serve as the building blocks of the United States' largest corporations. 4. Define outsourcing, and describe its impact on small business. d. Outsourcing is any segment of a business in which its owner does not have special skills can be put up for sale, eliminated, or sent out for someone else to do. The effect it has on small business is twofold. First, many people who lose their jobs with large businesses start small businesses of their own. Second, these new businesses often do the work that large businesses no longer perform themselves – temporary employment, cleaning services, and independent contracting, for example. 5. Why are small businesses more likely than large businesses to be innovative? e. The research and development departments of most large businesses tend to concentrate on the improvement of the products their companies already make. This practice makes sense for the companies trying to profit from their large investment in plant and equipment. If a company tried to invent something that would be different from what they are good at could cause problems. 6. Explain the term creative destructions.

f. The replacement of existing products, processes,...
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