'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.'

Large businesses to not generally have as many troubles as small businesses with starting up. This is because in a large business there are usually one or more owners (partners), this makes the start-up capital a lot easier to manage and saves loan hassles. The cost to start up a small business is one of the main weaknesses for businesses.

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. Keeping the business making a profit can be difficult, especially when starting out. Keeping up to date with industry changes is very time consuming and can be costly.

Although there are a lot of weaknesses for small business there are also a lot of strengths. The main strength for a small business is its size. Their size gives them a lot more flexibility. This means the business is able to adapt better to change and innovations, surviving better then a large business in a competitive market. 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.