COMMUNITY WORK ASSIGNMENT

Small businesses are privately owned corporation, partnership,

or sole proprietorship which has fewer employees and/or less annual
revenue than a regular-sized business or corporation. Businesses are
defined as "small" in terms of being able to apply for government support
and qualify for preferential tax policy varies depending on the country and
industry.

While small businesses can also be classified according to other methods,

such as annual revenues, shipments, sales, assets, or by annual gross or net
revenue or net profits, the number of employees is one of the most widely
used measures.

Small businesses in many countries include service or retail operations

such as convenience store, ,small grocery stores, bakeries or delicatessens,
hairdressers or tradespeople, restaurants, guest houses, photographers,
very small-scale manufacturing, and Internet-related businesses such
as web design and computer programming. Some professionals operate as
small businesses, such as lawyers, accountants, dentists and medical
doctors (although these professionals can also work for large organizations
or companies). Small businesses vary a great deal in terms of size,
revenues, and regulatory authorization, both within a country and from
country to country. Some small businesses, such as a home accounting
business, may only require a business license. On the other hand, other
small businesses, such as day cares, retirement homes and
restaurant serving liquor are more heavily regulated and may require
inspection and certification from various government authorities.
Concepts of small business, self-employment,
entrepreneurship, and start-up
The concepts of small business, self-employment, entrepreneurship and
start-up overlap but also carry important distinctions. These four concepts
are often conflated. Their key differences can be summarized as:

 Self-employment: an organization created primarily to provide income

to the founders, i.e. sole proprietor operations.
 Entrepreneurship: all new organizations.
 Start-up: a new organization created to grow (and have employees).
 Small business: an organization that is small (in employees or revenue)
and may or may not have the intention to grow.
Size definitions
The legal definition of "small business" varies by country and by industry.
In addition to the number of employees, methods used to classify small
companies include annual sales (turnover), the value of assets and net
profit (balance sheet), alone or as a combination of factors.

 In India all the manufacturing and service enterprises having

investment "Not more than Rs 10 crore" and Annual Turnover "not
more than Rs. 50 crore" come under this category.
The different parameters we may use to measure the size of the business

 There are various parameters we can use to determine the size of a

business. So when we want to know if it is a small business or a
medium size business, we can use the following parameters.
1. Number of employees working in the firm or organisation.
2. The amount of capital that is invested in the business.
3. The output the business generates. This can be in terms of
volume (quantity) or in terms of value (profits).
4. Power consumed by the business for its manufacturing
activities can also be a parameter.
Characteristics of Small Scale Industries
 Ownership: They have a single owner. So it is also known as a sole
proprietorship.
 Management: All the management works are controlled by the
owner.
 Limited Reach: They have restricted area of operation. So they may
be a local shop or an industry located in one area.
 Labour Intensive: Their dependency on technology is very little
because they are dependent on labours and manpower.
 Flexibility: Because they are small, they are open and flexible to
sudden changes, unlike large industries.
 Resources: They utilize local and immediately available resources.
They do better utilization of natural resources and limited wastage.

Nature of Small Business

The nature of small businesses can be classified as follows:

1. Shoestring Budget
A sole proprietor or a small group of people operate small businesses. These
businesses often run on ‘shoestring budget’ meaning that small businesses
function on a very tight budget.

2. Labour intensive
Small businesses are mostly labour intensive. Various types of small business
largely rely on labour for their functioning. The primary nature of small
businesses is more involvement of physical work rather than intellectual
work. The lack of machinery makes the employees manage their operations
manually.

3. Community-based
Small businesses are started with the motive of satisfying the needs
and demands of a local area or community. These businesses
demographically target few areas of concentration and are hence
community-based.
4. Indigenous technology
Due to small businesses being community focused and labour oriented they
often thrive upon native methods of operations. In India, there are many
businesses in the rural sector that still use out dated technology. This might
give uniqueness to the products but hinders the development of the business.

Sources of funding
Small businesses use various sources available for start-up capital

 Self-financing by the owner through cash savings, equity loan on his or

her home, and or other assets
 Loans or financial gifts from friends or relatives
 Grants from private foundations, government, or other sources
 Private stock issue
 Forming partnership
 Angel Investors
 Loans from banks, credit unions, or other financial institutions
 SME Finance, including collateral-based lending and venture capital,
given sufficiently sound business venture plan

Owning a small business has its advantages and disadvantages. Each

entrepreneur must weigh the pros and the cons carefully and decide
whether or not the risk is worth the reward.

Advantages of Small-Business Ownership

 Independence. Entrepreneurs are their own bosses. They make the
decisions. They choose whom to do business with and what work they
will do. They decide what hours to work, as well as what to pay and
whether to take vacations
 Financial gain. Entrepreneurship offers a greater possibility of
achieving significant financial rewards than working for someone
else.
 Control. It enables one to be involved in the total operation of the
business, from concept to design to creation, from sales to business
operations to customer response
 Prestige. It offers the status of being the person in charge. Some
entrepreneurs are attracted to the idea of being the boss. In addition,
though, there is the prestige and pride of ownership.
  Equity. It gives an individual the opportunity to build equity, which
can be kept, sold, or passed on to the next generation.
 Opportunity. Entrepreneurship creates an opportunity for a person
to make a contribution. Most new entrepreneurs help the local
economy. A few—through their innovations—contribute to society as
a whole.

Disadvantages of Small-Business Ownership

 Time Commitm ent. When someone opens a small business, it’s
likely, at least in the beginning, that they will have few employees.
This leaves all of the duties and responsibilities to the owner. Small-
business owners report working more than eighty hours a week
handling everything from purchasing to banking to advertising. This
time commitment can place a strain on family and friends and add to
the stress of launching a new business venture.
 Risk: Even if the business has been structured to minimize the risk
and liability to the owner, risk can’t be completely eliminated.
Beyond financial risk, entrepreneurs need to consider the risk from
product liability, employee disagreements, and regulatory
requirements
 Uncertainty: Even though the business may be successful at the
start, external factors such as downturns in the economy, new
competitors entering the marketplace, or shifts in consumer demand
may stall the businesses growth.
 Financial commitment. Even the smallest of business ventures
requires a certain amount of capital to start. For many people
starting small businesses, their initial source of funding is personal
savings, investments, or retirement funds. Committing these types of
funds to a business venture makes them unavailable for personal or
family needs. In most cases where a small business receives start-up
funding through a loan, the entrepreneur must secure the loan by
pledging personal assets, such as a home. Risking the equity in one’s
home is a financial commitment not all entrepreneurs are willing to
make.

In spite of the potential disadvantages, most small-business owners are

pleased with their decision to start a business.
 SOLE PROPRIETORSHIP
A sole proprietorship, also known as a sole tradership, individual
entrepreneurship or proprietorship is a type of enterprise owned and
run by one person and in which there is no legal distinction between the
owner and the business entity. A sole trader does not necessarily work
"alone"—it is possible for the sole trader to employ other people
The sole trader receives all profits (subject to taxation specific to the
business) and has unlimited responsibility for all losses and debts. Every
asset of the business is owned by the proprietor and all debts of the
business are the proprietor's. It is a "sole" proprietorship in contrast
with partnership (which has at least two owners).
A sole proprietor may use a trade name or business name other than their
or its legal name. They may have to legally trademark their business name
if it differs from their own legal name, the process varying depending upon
country of residence.
Pros
 Less paperwork
 No need to obtain an employer identification number (EIN) from the IRS
 Quick and easy setup compared to other business structures
 Low fees and costs
 Pass-through tax advantage
 Easier banking

Cons
 Unlimited liability goes from business to owner
 Difficulty in raising capital
 REPORT
1. Name of the Organization – SUSHI- The Creative Studio; Owned
by: Shivangi Sagar

2. Business start date – 24 December, 2019

3. Website if available – No website till date

4. Paytm/g pay/ other – All are available

5. Any branches – NO

6. Products/Services offered – Handmade: Key chains, Masks (for

all), Rakhis, Cushion Covers, Wall Hangers, Pouches, etc.

7. Owner’s Qualifications – Bachelor’s Degree in Textile

Design (NIFT); Pursuing Master’s in Design (LPU)

8. Brief Description of the business –

SUSHI- The Creative Studio is a Sole Proprietorship firm. Their

motive is to uplift handmade, & customized products. They believe
in delivering love to their customers by their handmade products.

9. Price Range – Rs.50/- to Rs.1000/-

10. Target Community/Segment – Women & Teenagers; People

in Middle Class

11. Income – Rs.10,000/- per month i.e. Rs.1,20,000/- annually

12. Competitors – Vista Handmades, Pure Cloth & The Hand

painted Essentials

13. Products/Services offered by competitors – Masks, Key

chains, Small paintings.
Problems faced by SUSHI – The Creative Studio
1. Finance
The inadequacy of funds to funnel in the operations of a small
business proves to be a major hindrance to the development of the
small business. Small businesses lack the creditworthiness needed
in the capital market. Small businesses have a poor
creditworthiness.

2. Raw material

For the production purposes, the businesses need raw materials.

To get some output, they need to give some input. The quality of
the raw material completely depends upon the quality of input. But
due to a tight budget, these businesses are unable to get a good
quality raw material for their production.

Bargaining power is non-existent because of the small quantity of

purchase. Another issue linked here is the shortage of storage
facility, because of the shortage of storage facility the production
needs to be quick and the sale good. This puts a heavy strain on
these small businesses to sell their stock as quickly as possible.

3. Managerial skills

The operations of small businesses are carried out by a limited

number of employees. This means that a single person usually
manages the operations. The pressure on this manger is immense
to satisfy the demands of production. Also, the manager might lack
managerial skills required to operate a unit.

4. Skilled labour

Due to a shortage of funds, small businesses are unable to hire the

proper candidate for the job. Also, they are not in a position to give
high wages to the employees. This results in the drop in
productivity per employee and rate of labour are high. This proves
to be a major obstruction in the operations of productions.

5. Marketing

Marketing is one of the most important links to sell whatever the

business plan to or has produced. Without marketing these
businesses will not be able to achieve their goal of sales they
planned. Direct marketing is not possible due to the lack of
necessary infrastructure.

The shortage of finance does not let the business hire a good
middleman. These middlemen exploit these businesses by paying
low prices and delaying payments.

Areas of Improvement

1. Keep Financial Score

Few small businesses have an accurate idea of the daily, weekly, and
monthly numbers and financial trends taking place within the organization.
It's vital that you spend the necessary time keeping current on cash flow. If
you lack the financial skills, hire an accountant, but still stay very much in
the loop.

2. Monitor Trends
No business operates in a vacuum. Events and changes in the global
landscape have an effect on your business. Stay current on trends and
issues happening in your industry and local community. Even things that
don't seem relevant on the surface might have an impact on what you do,
so consider all possibilities.

3. Sharpen Your Selling Skills

A high-return area for business improvement is the sales function. Whether
you're a one-person operation or managing a sales team, you must focus on
sales improvement. To start, clarify your business mission. When you
determine areas where you excel and who needs what you do, you will
have a greater sense of vision and purpose.

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