Business Industry, Business Sector
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A business industry is a comprehensive collection of businesses of different scales, engaged in varied commercial activities for earning a profit. Particular business industries may be classified by the main activity that the businesses are involved in. The size of a business is typically defined by the number of employees and the volume of annual sales.
A small business is one that is independently owned and managed. In the US, a business is classified as “small†if it employs less than 50 people and “large†if the number of employees is more than 100. In the European Union, the defining numbers stand at 100 and 250, respectively.
Table of Contents
Business Industry: The History of Small Businesses
Small businesses and merchants evolved during the nineteenth century, with the growth of cities across the world. Most small businesses were engaged with agriculture and related activities. The complexity and scale of small businesses increased during the twentieth century. With the Industrial Revolution, the contribution of small businesses to the economy declined. While it became difficult for small businesses to acquire funds to operate, large businesses thrived and the world witnessed the growth of multinational corporations.
Business Industry: The Demand and Supply Drivers for Small Businesses
The demand for products and services of a small business is impacted by:
- Size and per capital income of the population
- Cost of substitutes
- Quality of products
- Customization of products
- Brand value of the business
- Advertising efforts and reach
The supply drivers of a small business include:
- Cost of production
- Technology used
- Nature of products and services (seasonal products)
- Market share of the business
Business Industry: Major Small Business Players
Countries that encourage small businesses include New Zealand, the US, Canada, Australia, Singapore and the UK. According to 2007 data from the Federation of Small Business, UK, the nation has over 4.7 million small businesses, with over 500,000 people starting their own business each year. According to a survey on employment published by Statistics Canada in 2007, approximately 48% of the private sector labor force (over 5 million people) is employed by small businesses. The industry accounted for about 23% of the nation’s GDP in 2006. In Australia, the employment figure for small businesses was around 3.8 million in 2006.
Small businesses play an instrumental role in the development of the world economy. This sector began reemerging during the 2008 global recession, with various large organizations facing massive downsizing.
