Guide to Small Business
What Is the Small Business Association?
The Small Business Association (SBA) is an agency established in 1953 by the U.S. government that provides various types of assistance to American small businesses. The SBA helps small businesses by providing access to capital and low-cost training, providing government contracts to qualified small businesses, and advocating for small businesses by reviewing legislation.
During the COVID-19 pandemic, the SBA launched the PPP program, which provided forgivable SBA loans to thousands of small businesses whose operations were impacted by the pandemic.
What is a product life cycle?
A product life cycle is the amount of time a product goes from being introduced into the market until it's taken off the shelves. Understanding a product’s life cycle helps businesses make decisions regarding a product’s pricing and promotion, as well as whether to expand or cut a product. There are four general stages of a product’s life cycle: introduction, growth, maturity, and decline. Business owners track each of these stages carefully in order to find opportunities to gain competitive advantage over their peers.
What is the gig economy?
The term gig economy is used to describe a labor market in which temporary or part-time jobs are commonplace. In a gig economy, companies tend to hire independent contractors and freelancers rather than full-time employees. While the positions available in a gig economy can provide workers with more flexibility than full-time, salaried roles, many commentators claim the transient, generally lower-paying jobs in a gig economy can hurt a worker’s longevity and overall satisfaction.
What is the Walmart effect?
The Walmart effect refers to the loss in revenue and foot traffic that can hit smaller businesses once a Walmart opens in their area. A retailer the size of Walmart has the ability to dictate the price it pays to wholesalers at a magnitude which smaller companies cannot. As a result, Walmart is able to sell merchandise at a much lower price than its competitors in the area. When a Walmart opens the lower prices, and wider selection of merchandise draws customers away from smaller, local businesses.
A sole proprietorship is an unincorporated business that has just one owner who pays personal income tax on profits earned from the business. Sole proprietorships are relatively simple to establish, making them popular with small business owners and contractors.
Small and Mid-size Enterprise (SME)
A “small and mid-size enterprise (SME)” is a business whose operations don’t exceed a certain level, either in revenue or employees. Different countries and industries have different criteria for what is considered a small, medium, or large business. The European Union (EU), for example, defines a small-sized enterprise as a company with fewer than 50 employees and a medium-sized enterprise as one with less than 250 employees. Though small on their own, SMEs make up the majority of economic activity in the U.S.
Business Process Outsourcing (BPO)
Business process outsourcing (BPO) or “outsourcing” refers to the process of subcontracting various business-related operations to third-party vendors rather than handling such operations in-house. Both small and large businesses utilize BPO in order to cut costs or expedite various processes. Back office BPO happens when a company subcontracts services such as accounting, payment processing, IT services, human resources, regulatory compliance, and quality assurance whereas front office BPO outsources customer-related services such as tech support, sales, and marketing.
A long tail business strategy is one which seeks to sell low volumes of hard-to-find items to many customers, rather than high volumes of items with a much wider customer base. The strategy, coined in 2004 by writer Chris Anderson, leans on Anderson’s research showing that though more popular goods achieve a higher volume of sales through mass-market channels, “long tail” goods generally have low distribution and production costs, yet are readily available for sale. A long tail business strategy subscribes to the belief that consumers will move away from mainstream markets.