Introduction to Business - Starting a Small Business

A small business is owned by only one or only several people. It also has a smaller capital if compared to bigger businesses and has a limited amount of customers. Food stalls are an example of a small business. Most of the small businesses are of service industry because it requires lesser capital. They serve as distributors and suppliers of products for bigger businesses.

Niche market refers to a very specific or unique markets. For example, Starbucks has its own unique way of running a coffee business. Small businesses can respond quickly to changes in the market because they are less bureaucratic.

There are 3 types of legal ownership:

Sole traders are businesses that only has one owner. They are the sole proprietor and has full control of the business and its legal paperwork is simple and the cost is low. They se their own goals and objectives without anyone holding them back jet because they do not agree with it. However, the owner is personally responsible for all the debts of the business.

Partnership is a business that has at least 2 or more owners or partners in a company. Businesses like these are able to get capitals easier due to the fact that they have more owners and banks are more willing to lend them money. Legal paperwork is simple and cost is low just like sole traders. The disadvantage for this type of business is that all the owners are personally responsible for the business' debts and owners of the company may argue because they may not have the sam motives or goals in running that business.

Corporation is also known as a company and it can have an infinite amount of owners (or shareholders) in total but a minimum of 2 owners. These companies are recognised as a person. Therefore, the company can buy, sell and own assets just like how a person is able too. It is also treated separately from its owners and is not personally responsible for the debts of the company.

A corporation is divided into 2 which is a private company and a public-listed company. Private companies cannot sell their shares via the share market and can only be sold privately. This way, raising a capital is harder for private companies whereas public-listed company's shares can be bought and sold by anyone in the public. We can become an owner of a certain public-listed company as long as the person buys its shares at the share market. 

REFLECTION

After this lesson, I have finally understood what public-listed company means. I always hear this word from my mother, especially whenever she introduces herself to other people and was asked where my mother works and she would always reply "I work in a public-listed company" before she states the name of the company. I was curious what it was but not to the point of asking her about it.

I now also know how hard for owners of private companies to find buyers for their shares. They must have a wide network of people in order to get people to buy their shares to build a bigger company.