Small Business Manual by Sam Vaknin

Small Business Manual by Sam Vaknin

Small Businesses - Big Obstacles
By: Dr. Sam Vaknin
Everyone is talking about small businesses. In 1993, when
it was allowed in Developing countries, more than 90,000
new firms were registered by individuals. Now, less than
three years later, official figures show that only 40,000 of
them still pay their dues and present annual financial
statements. These firms are called "active" - but this is a
misrepresentation. Only a very small fraction really does
business and produces income.
Why this reversal? Why were people so enthusiastic to
register companies - and then became too desperate to
operate them?
Small business is more than a fashion or a buzzword. In
the USA, only small businesses create new jobs. The big
dinosaur firms (the "blue-chips") create negative
employment - they fire people. This trend has a glitzy
name: downsizing.
In Israel many small businesses became world class
exporters and big companies in world terms. The same
goes, to a lesser extent, in Britain and in Germany.
Virtually every Western country has a "Small Business
Administration" (SBA).
These agencies provide many valuable services to small
businesses:

They help them organize funding for all their needs:
infrastructure, capital goods (machinery and equipment),
land, working capital, licence and patent fees and charges,
etc.
The SBAs have access to government funds, to local
venture capital funds, to international and multilateral
investment sources, to the local banking community and
to private investors. They act as capital brokers at a
fraction of the costs that private brokers and organized
markets charge.
They assist the entrepreneur in the preparation of business
plans, feasibility studies, application forms, questionnaires
- and any other thing which the new start-up venture
might need to raise funds to finance its operations.
This saves the new business a lot of money. The costs of
preparing such documents in the private sector amount to
thousands of DM per document.
They reduce bureaucracy. They mediate between the
small business and the various tentacles of the
government. They become the ONLY address which the
new business should approach, a "One Stop Shop".
But why do new (usually small) businesses need special
treatment and encouragement at all? And if they do need
it - what are the best ways to provide them with this help?
A new business goes through phases in the business cycle
(very similar to the stages of human life).

Small Business Manual by Sam Vaknin