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'Small businesses play as important a role as large businesses in the Australian economy. However they are very different in the way they operate and in their chances of succeeding.'

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Introduction

'Small businesses play as important a role as large businesses in the Australian economy. However they are very different in the way they operate and in their chances of succeeding.' A.) What role do they play in Australia? B.) Outline the strengths and weaknesses of small businesses. Small businesses play a very important role in Australia's economy. In 2001 research proved that 96% of all business enterprises were made up by small businesses. Small businesses provide a lot of people with employment, and encourage business growth. While small businesses do play a large part in the Australian economy, it is harder for small businesses to survive as opposed to large businesses. In the first two years 48.5% of small businesses fail and in the first five years 73.5% fail hence small businesses are very different in the way the operate and in their chances of succeeding. ...read more.

Middle

A lot of the weaknesses for small businesses come from setting up difficulties. It can be very hard to establish a stable place in the market. Start up costs can be very high which generally means people have to take out a loan and if the business does not become very profitable it can be hard for the owners to cover their loans as well as costs from the store. Competition can be very strong; as small businesses do not usually have the money to advertise a lot and big businesses have the advantage of advertising. Finding the right staff can also be a problem as two of the rules for success for small businesses are to find and keep regular customers and to keep accurate records, which can be very hard if the owner cannot find friendly and reliable staff. ...read more.

Conclusion

The more flexible and innovative the business is the more likely they are to attract customers. As mentioned before it is important to have the right staff because if the customer's needs are being met it is more likely the business will be successful. According to the Department Of Small Business, 'The essential strength of a small business is its adaptability and flexibility, it's capacity to react quickly to market changes and conditions, to provide personalized services and to cater for small niche markets. It is very important for small businesses to use the resources and knowledge of the environment, which they operate to try and be successful. This includes areas such as social, economic, ecological etc. Finding a niche in the market can be very helpful in setting up a successful business and having a competitive advantage. ...read more.

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