Sample Business Studies Paper on Small and Large Businesses

Businesses exist primarily to maximize profits. Establishing a successful business requires the owner to implement effective business models and strategies to eliminate the business environment’s challenges. Despite thriving towards profit maximization and sometimes operating within the same market, small and large businesses differ in that large businesses require a massive investment of capital to start compared to small business (Gray & Mabey, 2015). Therefore, small firms differ in size from larger ones and tend to have different financing agreements, legal structures, and market niches.

The size of a business is measured by its workforce size and the total revenue during a specified period. For instance, a company is considered large if it has over 500 workers and accumulates profits to a sum of USD 7 million annually. Alongside their size, businesses are categorized as either small or large based on their legal structures, which determine their management, liability for business debts, and taxation (Gray & Mabey, 2015). For instance, most small businesses start as sole proprietorships, which give the owners complete control over the firms. As such, owners of small businesses must pay income taxes for the profits they obtain on their income, whereas large companies remit corporate taxes.

Apart from their size and legal structures, small businesses differ from large ones in their market niches. While small businesses make profits through the sale of a single line product or service, large companies provide customers with various services and products (Gray & Mabey, 2015). Moreover, new small businesses ideally receive financing from bank loans and the owner’s savings compared to large businesses. In comparison, medium-sized and large corporations attract financing from outside sources like venture capital companies and investors (Gray & Mabey, 2015). Therefore, large and small businesses’ primary differences are their finances, legal structures, and market niche.

 

Reference

Gray, C., & Mabey, C. (2015). Management development: key differences between small and large businesses in Europe. International small business journal23(5), 467-485.