Topic 01 Def and Cont 2 Essay

Submitted By kimsmith1990
Words: 1250
Pages: 5

Issues in Small Business
Management
Topic 2
Definitions and Contributions

What is a Small Business?

“Rigorously defining small business has always been difficult, even controversial.” d'Amboise, G. and M. Muldowney (1988). "Management Theory for Small Business:
Attempts and Requirements." Academy of Management Review 13(2): 228-240.

 Which definition?





Australia
Overseas
Regulatory (e.g. ASIC, ATO, ABS, etc)
Academic

What is a Small Business?
HISTORICALLY - AUSTRALIA
 Less than 100 full time employees
(Wiltshire Enquiry 1971, ABS)

 “20/100 rule”

(Beddall Inquiry 1990)

 Less than 100 full time employees
(ABS, Yellow Pages SB Index)

 SMEs upper limit - 200 full time employees

What is a Small Business?
QUANTITATIVELY - AUSTRALIA
Non Employing
Micro
Small

Medium
Large

Number of
Employees
Zero
1 – <5
< 15
5 – < 20
< 50
< 100
101 – < 200
200 or more

Revenue

Source

(ABS, 2007)
(ABS, 2007)
< $2million (ATO, 2007)
(C of A, 2009)
< $5million (ABS, 2007)
< $25million (ASIC, 2007)
Forsaith and Hall (2001)
(ABS, 2007)
(ABS, 2007)

Please Note: All business that are not Medium or Large are classified as Small

What is a Small Business?
 Is Quantitative enough?
 Three Firms – each with 14 FTEs
 A – owned and managed by June and John
 B – Franchise operation servicing washing machines  C – Managed by Winifred and is a subsidiary of
BHP Billiton
Different researches will calculate quite divergent answers for the number of small businesses – are they wrong?

What is a Small Business?
QUALITATIVELY
 Independently owned and managed
 Closely controlled by the owner managers, who contribute most, if not all, of the operating capital
 The principal decision making process rests with the owner manager
(Beddall Report 1990)

What is a Small Business?
 Using our three Firms again
 A – June and John – own savings plus bank loan
 B – Paid $115,000 to service customers in a predefined area
 C –BHP Billiton funded the subsidiary

What is a Small Business?

GROUNDED
 An approach utilised by researchers/advisers
 Commonly a combination of quantitative and qualitative.

 Osteryoung and Newman (1993)
 Not listed on stock exchange
 Personal guarantees for finance

Peacock p5

Number of Businesses
F/Y 2007
Non employing
1-19
Total Small
20-199
Total SMEs
200+
Operating at end of financial year

1,236,368
749,454
1,985,822
82,071
2,067,893
5,900
2,073,793

8165.0 Jun 2007 to Jun 2011 Counts of Australian Businesses, including Entries and Exits
Businesses by Employment Size Ranges

F/Y 2011
59.6% 1,306,023

61.2%

36.1%

739,311

34.7%

95.8% 2,045,335

95.9%

3.9%

81,006

3.8%

99.7% 2,126,341

99.7%

0.3%

6,071
2,132,412

0.3%

Important?
Contribution
•Economic
•Social

Creation of Value -

2010

Business type and employment size

Sales and service income
($m)

Small Businesses

824,506

34%

-2%

4,747

47%

-7%

128,509

31%

Medium Businesses

591,440

24%

+12%

2,339

23%

+5%

108,034

27%

Total SMEs

1,415,946

58%

+3%

7,086

70%

-3%

236,543

58%

Large Businesses

1,023,333

42%

+11%

2,970

30%

+11%

170,377

42%

Total selected businesses 2,439,279

% from 2008

% from 2008

Employment
(‘000)

10,056

Wages and salaries
($m)

406,920

Cat No. 8155.0 Australian Industry: Business Type and Size by ANZSIC Division; Australia; 2009-10
Please note: Above figures exclude data on certain industry classification – total employment as at June 2010 (cat 6202.0) was approx. 11,057,300

Creation of Value

In Australia
 “One of the key strategies … in Australia is to promote a dynamic entrepreneurial culture by improving the business environment for small and medium-sized enterprises (SMEs)
 …concludes that a very small percentage of
SMEs are responsible for most of the employment generation and innovation in the small-firm sector.”
Parker R, Small is not Necessarily Beautiful: An Evaluation of Policy Support for Small and Medium-sized Enterprises in Australia, Australian Journal of Political