Sustainable and efficient management of small enterprises plays a special role in overcoming the consequences of the global economic crisis. The dynamic development of small business has a positive effect both on the development of the country's economy as a whole, and on the material well-being of citizens.
Entrepreneurship is an essential element in the structure of a modern market economy. This concept means independent activity, which is carried out in order to obtain regular profits, while risking their own assets.
The business entity must be officially registered with state bodies. Activities can be carried out in areas such as the sale of goods, the provision of services or the performance of work not prohibited by law.
Business Conditions
The transition to a model of free market relations required a revision of the economic system in which the monopoly on property belonged solely to the state. With this approach, opportunities for the development of creativity and initiative were constrained. Therefore, one of the important conditions for the life support of entrepreneurship is private property.
To maintain healthy market relations, such important conditions as a favorable tax climate, economic stability, and a loyal social policy are also necessary. An important role is also played by working intellectual property protection systems and flexible market mechanisms.
Common symptoms
Signs of entrepreneurship are:
- Independence and autonomy of an economic entity. A person, becoming an entrepreneur or occupying a managerial position in an organization, independently deals with the solution of all production issues, the solution of which will determine the profitability of the business.
- Personal interest and responsibility. These signs of entrepreneurship are similar to those previously listed, with the difference that, in addition to striving for personal gain, an entrepreneur takes into account the interests of the team, the company, and sometimes the country as a whole, if it is a global business.
- Creative approach, innovation, original presentation of the product are also the main signs of entrepreneurship. A true businessman is always in a creative search. The desire to be the first and best in his niche makes him be one step ahead of competing firms. Such personal qualities as the ability to make non-standard decisions, quickly respond to the current situation, and be able to benefit where others do not see it are welcomed.
- Equally important are such signs of entrepreneurship as financial and business risks. It is they who make us maintain the dynamics and pace, exclude possible stagnation against the background of the constantly soaring spirit of rivalry. A newly formed business should be exactly new, qualitatively different from competitors.
- The principle of legalized activity. Doing business without registration in the prescribed manner is prohibited by law. In addition, there are such areas whose activities must necessarily be accompanied by licensing.
Private business
The concept of "entrepreneur" appeared in the XVIII century, and today it is an integral and fundamental unit of the market. In its scale, private business is divided into small, medium and large.
In accordance with domestic and world practice, one of the main indicators, which is taken as the basis of differentiation in the category of small or medium-sized businesses, is the number of employees. Secondary criteria include the amount of authorized capital, the size of assets, and the volume of turnover.
Small business
According to the legislation, the main features of small business are the average number of employees, which directly depends on the chosen activity for the reporting period, annual turnover, and also the size of assets. Moreover, the average number of employees should not exceed:
- for industrial entities - 100 people;
- for agriculture - 60 people;
- for wholesale trade - 50 people;
- for retail trade - 30 people;
- for other species - 50 people.
Small businesses are understood to mean the activities of individuals without the formation of a legal entity. By entities that use simplified taxation, they mean organizations with a maximum number of up to 15 people.
Small Business Benefits
Organizations with signs of small businesses have the following advantages of conducting the selected type of activity:
- The ability to quickly adapt to the created local economic conditions.
- Efficiency and independence, as well as flexibility in making and implementing decisions.
- Small expenses for organizing and running a business, as well as for initial capital.
- The ability to quickly respond to changes in market demand and market conditions.
Disadvantages of small business
At the same time, entrepreneurial activity has a number of disadvantages that may arise under the influence of external or internal reasons:
- A high degree of volatility in the market causes a higher level of risk.
- Mistakes are made in management caused by a lack of experience or a weak competence of the head.
- Dependence on larger companies, banks, the state as a whole.
- The difficult search for auxiliary borrowed resources in financial institutions that prefer to lend to big business.
- Difficulties and caution in concluding agreements on mutual cooperation with counterparties.
Governmental support
Small organizations with signs of business entities have the right to count on support from the state, which consists in applying the following measures:
- Creating a legislative framework to support small and medium-sized businesses.
- The opportunity to use state credit funds, material and technical base, information and scientific and technical resources on preferential terms.
- Elimination of the bureaucratic approach to registration, licensing and certification for organizations with signs of entrepreneurship, as well as simplification of the submission of accounting and statistical reports.
- Providing support in the implementation of foreign economic activity.
- Support in the field of education, retraining and professional development
The successful functioning of enterprises and organizations that are characterized by signs of entrepreneurship in the small sector can lead to the formation and maintenance of the middle class of the population of the state, which, in turn, leads to an increase in the socio-economic level of development of the country.