Small Business Management and Entrepreneurship.

Small business is one which independently owned and operated and which is not dominant in the field of operation (Small Business Administration 1998). According to CED (Committee for Economic Development), a small business is one which meets at least two of the following four criteria:

• Independent management (usually by firm's owners),
• Capitalization by an individual or a small group;
• Local operations (excepting markets);
•  A small size relative to its largest competitors.

The small size and independent ownership are the key distinguishing features of small business.

Entrepreneurship, as a concept, has little to do with the size of an organization in which it is enacted.  It refers, instead to value creations in an environment of risk, and may occur even in a large organization.  Typically though entrepreneurship behavior is associated with the start-up phase of a small business or with significant strategic changes in an existing company.

Hartten (1997) contrasts entrepreneurship as "the process of identifying opportunities for which marketable needs exist, and assuming the risk of creating an organization to satisfy them", while small business management as "the on-going process of owning and operating an established business".

Some authors use entrepreneurship and small business management inter-changeably; sometime the boundary seems a fuzzy one.  Though there is overlap between them, there are also enough differences to be studied separately.  But you cannot study one without the other.

Tomas W. Zimmerer and Norman M. Scarborough describe the following to be vital  for the management of small business:

Small Business Strategic Management Procedure:

• Use a short planning,
• Be informal,
• Encourage the participation of employees,
• Do not begin with setting objectives,
• Focus on strategic thinking.

Straegic Management Process:

• Develop clear Vision and translate it into a meaningful Mission Statement,
• Define the firm`s core competencies and the market segment,
• Assess the firm`s strengths and weaknesses,
• Investigate environment opportunities and threats,
• Identify key factors for success in the business,
• Analyse the competition,
• Create firm`s goals and objectives,
• Formulate strategic options,
• Translate strategic plan into action plans,
• Establish accurate controls.

In addition to the above, the management of small business should write down in clear terms the following:-

Target importance, cost leadership, product differentiation; focus areas, etc. to be a successful small business.

Questions:-

• Define small business and entrepreneurship bringing out the difference between them.
• What are the strategic management processes of small business?