Operating Functions Of A Small Business Commerce Essay

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A small business is a business that is privately owned and operated, with a small number of employees or by an individual and relatively low volume of sales and owner have only man who gets all profit. Small business is mostly low capital business or annually turnover is not more than 5.2million pounds and more than 50 employees. These businesses are increasing dramatically because due to economy downturn their job is insecure. Small businesses are vital in today's economy because many of the revenue obtained by the government are from small business taxes. In addition, since we are currently in a Global Financial Crisis which is affecting nearly everyone around the world, the existence of small businesses can stimulate the economy and hopefully improve the economies all around the world. Small businesses are important because it can provide more job opportunities for people and increase the economy of the country.

The aim of this assay is to describe the information of the small business. Describe the all activities of the small business like how we can manage better customer relationship. The disused the brief review of the competitors like how they effect on the small business and what they are doing for beat the small business and they want to made make better facilities and relation with the customers. This essay also shows the whole procedure of the small business like start up to frailer. It describes the every situation of the business like owner face the problem and management between demand and supply. So my essay shows the present scenario of my father's business and what he did for start up a business and how he is successfully running his business and in this I have describe the all activities of business, which are describe as follows:

Laxmi video palace is a cd (compact disc) store which is situated in the (raj) India. This store offer's large number of movies CD's & DVD's on rent. Laxmi video palace established in 2000 and has experienced a rapid growth because of it innovative ideas. In India first compact disc was launched in December 1987 as a music album. After 1987 popularity of cd's increases every decade, so my father Mr. Ambalal pahuja started a business of compact disc store in October 2000. Laxmi video palace is my father's small business. My father started this business because of high popularity CD's and DVD's among customers.


My father is only owner of the business and a solo trader is an individual who runs a business and he is fully liable to pay all debts, all profits and losses accrue to the owner. Being solo trader my father has lots of advantages like solo trader can set up his business very easily and he is the only one who make the all decision and keep all the profits of business. In a small business, solo traders have no requirement to check his accounts regularly. Solo traders also have profit to pay low income tax.

On the other hand solo traders (my father) have few disadvantages because in business we have to pay all unlimited liabilities, including personal assets outside of the business. In my father's business there are no additional funds possible because there are no equity investors. In my father's business there is few problem creates by third parties, which affect on profit because these third parties are competitors and they are trying their best to beat us. They are also solo trader and they have fully freedom to make competitive environment in the market. In my business my father is on positive side as a solo trader because he is running his business successfully from 9 years.


In the video store mu father offers product as CD's and DVD's. This business is very profitable for my father because we sale these CD's and DVD's to customer as well as rent it. So, it gives profit more than it cost. We also offers combo pack for those who are student and living in rented house. In combo pack we give them a set which include television, CD player and movies CD's, it combo pack help every person to get full entertainment at low price.

These kinds of offers help us to gain more profit compare to give CD's on rent. So in my store we offers to customer's large number of products or items like CD's, DVD's, television, cd players and music system. These all products are one time investment products and gives profit more than there cost. We offers these products to customer on rent, after few months products earn their cost price, after that product only gain profit for us. For these products we have to take licence because without licence we cannot do business we cannot sale CD's. This is one of yearly expense which we have to give every year. We have to resister our business in government authorisation because without registration we cannot make any sale. We have to registered our business in the anti piracy squad because it is a legal squad to check for the piracy business and take strong against it. As compare to competitors we are doing more legally business because competitors are only doing registration in the government and they are not taking licence, so customers have more trust on my father's shop as compare to competitors.


Marketing is very essential for every successful business because marketing helps in promotion of business and marketing always increase the sale of business. This marketing theory helps in business to expand in business activity or boost sale. This is another expense of business because in marketing we are making use of an advertisement, brochures, flyers and printed materiel etc. In my business my father is doing all this marketing sources for popularity and sales because without marketing no one know about the shop and no one can understand like what kind of business we are making. Marketing is a big expense for a business but it helps to gain more profit and growth of sales.

For marketing my father is doing advertisement like he gives advertisement on television and in newspaper because these sources help him to show the facilities of the shop and product of the store. Flyers (single sheet, printed one side, no folds) we are distributes flyers every shop or in every home as a leaflet. It help customer to know more information about the shop. My father always use banner in every function in Udaipur, it attracts to customer. Brochers are generally folder commonly A4 size folds, it's mostly use for permanent information. Which help customer to take it and enough information about the store like what product we have and our contact details.

Marketing is very must thing for our business because our competitors are also doing some marketing efforts like competitors are using home delivery of CD's and DVD's it help customer to time saving and they are also using some online CD library so it helps customer to find CD's easily. This facility attracts customer and make the competitive environment in the market. In this facility competitors are beat us in the market because we do not have any kind of online and home delivery facility. In a small business we have limited customer base and all depends on the owners marketing skill so in my business we have little bit problem in marketing because we don't have any new technology facility compare with competitors. So I'll suggest to my father to use new technology facility and use the 4 I (innovation, identification, interactive, informal information) in the business which help him to beat the competitors.


Finance is the backbone of the every business because with insufficient fund business can't grow. In my father's business finance is must thing because with insufficient fund we cannot retain sufficient stock for customers. In the begning my father started business with low capital because that time he did not have any kind of funding source but after few years, after gaining some profit he decided to take loan from bank.

Source of funding theory help business to expand sale and attract the customers. For my father's business in the begning he did not have enough money to start a good business but after the few years, according to this theory my father has few options and takes loan from bank to expand his business. According to this theory, my father has internal source of finance for the business start up because he has a small business so internal source is the best option for my father because in this option my father can use saving and re mortgage. So these are the best option for my father because saving, profit and re mortgage are best option for small business with this internal source we can expand our business without interest and tax and effective use of our own profit or saving.

Family or friend is another right option for my father because family member can help in every situation of business and they always give money without any interest. So this kind help from family or friend helped my father to expand his business after few profitable year when he gain some profit he repaid the all debts to his friend or family member. So this kind of internal funding helps my father to expand his business and gain more profit and more attraction of customer. On the other hand after use the internal source of found he decided to choose external source of finance because of good customer response and popularity of store in the market led him to expand his business more and add some more products. So he decided to take loan from bank because only bank loan can give him a collective money which he can repay in instalment with a small amount of interest moreover it also expose him to many type subsidiaries which government offers to promote business and thus help in flow of business.

Bank loan is the crucial decision for my father because as market situation competitors were growing there business very aggressively and they were using very effective tricks to attract to customer. So in this situation my father decides to take loan from bank and expand product level in the business. This band loan take early by competitors so they were made good profit from customers to compare to him. So this is the one of the advantage of competitors in his business market.


Networking plays a very important role in every small business because without networking, an owner cannot meet the customers directly. Networking includes building and maintaining contacts and relationship with other people. It helps owner to review his business. For networking, my father mostly make use of social network because family and friends support in promotion and all family members helps to expand the network of business. According to theory, I will suggest my father to use professional network because it will help him to make better contacts with customers through business activities. This professional networking helps him to directly meet with customers and can receive better suggestions from customers. This professional networking will also help him to make effective connections with customers, employees and superiors (wholesalers) because connection between them will help him to explore the business and with good network he can make effective communication between owner and customer. According to Jarillo (1998), the network is a product of determined entrepreneur bent on obtaining the most efficient organization arrangement to complete in his or her chosen market. I assume that my father is little weak in the networking area but I will suggest him to do something new like professional networking which help him to make better network between him and customers.


Now-a-days CD's and DVD's are very popular in the market, so my father faces lots of competition. Due to harsh competition, competitors make every possible effort to suppress my father's business. As my father has strong hold in the market, customers are satisfied and happy with the facilities and response. Competitors are doing their best in promoting their products and also attracting the customers with some lucrative offers. My father has large collection of CD's and DVD's as compared to competitors. Better product both in quantity and quality keeps my father more competitive in the market.

Competitors are also using price penetration strategy by keeping their price relatively low and seeking less profit margins. Immense competition also make some seller's to sell pirated CD's which is comparatively cheaper but this kind of business is illegal but helps to retain low end customers which are more price sensitive. Nevertheless, we operate our business by taking all the legal implications into consideration and believe in winning the trust by better products and services.

Laxmi video best in ability to provide quality and fast services at lower cost compare to any competitor. This positioning of the business provides protection against the power of suppliers by creating more flexibility to cope with increasing coast. So his store is one of the best stores in the market but continually increasing competitors making competitive environment. Competitors doing hard effort to promoting their store they are investing high amount in advertisement. As compare to father's shop they using high quality video on television and they are using some attractive offers like buy one get one free, buy two get 50% on third CD. So competitors are doing their high level compition effort to beat fathers business but it is very old business in the market and he has great reputation between customers. So these competitors' efforts only affect the bit on sale or profit but this competition makes a good environment between competitors and us.


Not all small business end in failures but some of the business fails in the end because of product or services obsolete. In the market situation owner not able to maintain their services, in this situation customers attracts with another shop. This can be reason for failure. On the other hand in my shop my father is managing good combination between goods and services, so he is still manage their business with customer satisfaction. Bankrupt is another reason of failure of business because some business take extra loan from the bank again not being able to pay on time or they do not have enough assets to pay their liabilities. Maximum profit taking from the business by owner is reason for failure because most of owner take maximum amount from the sale and invest small amount of profit in the business, so this small amount of investment in business another reason of failure. Lack of understanding of marketing and poor selling skill, death, ill health, family relationship problem, economy downturn and past performance are the main reason for failure of business and unpredictable cause like flood, fire and terrorist attack another reason for failure because it all cause may be not insured by the owner. So these are the main causes of failure of small business but for my father's business, he still managing image and doing his best for his successful business.


Finally I can conclude that small business plays vital role in owner's life because small business has lots of advantages and disadvantages. As I have discussed all the activities for successful small business such as marketing of business help owner to give product information to customers, so its help owner to in expands his business. Marketing mainly help in boost sale and advertisement helps to attract customers. For funding sources family source helps in boost in product line means, family gives money without any interest so it finance helps in build the high product line. Bank loan funding source help small business to expand the size of the business and it also help in pay the liabilities of the business. Bank loan is the external source of fund for the business and it help in build the capital and loan give support to owner to take best attractive offers and expand in facilities of customer, it makes fully customer satisfaction because with liquid money owner can create best innovation in his small business.

On the other hand solo trader is the one who take all the profits of small business and have all the liabilities to pay his loan. Solo trader is an owner of the small business and he successfully runs his business with his effective personality. Sometimes an owner not be able to run business successfully because many small businesses fail to reach their full potential, or go bust, simply because the small business owner spends too much time working in the business, and too little time working on the business and there is few another reason of business failure like unpredictable cause (flood, fire, terrorist), lack of understanding of marketing, accounting, financial, death. Ill health and personal and family problem are the main reason of failure of small business. However owner can compete with larger competitors using clever marketing techniques.