The Legal Requirements in the Establishment and the Management of the Small Businesses

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Small businesses are privately owned by one person or a few people, with few employees. The businesses often have a low volume of sales and incomes. The main difference between the small businesses and the larger ones mainly lies in the number of employees they have. Small businesses are those that have fewer than two hundred employees according to the US Small Business Administration. In terms of profits, small businesses are those that produce less than two hundred pounds annually. The definition of small businesses varies from country to country. In Europe, the businesses are described as having less than fifteen employees. Sales turnover also acts as a factor in distinguishing between small businesses and large businesses.

Small businesses are straightforward to set up since limited capital is required. There are also numerous other advantages of small businesses over their large counterparts. First, the proprietor can make all the decisions concerning the business without consulting any other party. Secondly, there is no legal requirement for audit as is the case for large businesses. Finally, there is no public disclosure of records, unless in cases where the business is registered for VAT. On the contrary, small businesses have their disadvantages (Bridge, 2003). The businesses have unlimited liability, including the personal assets of the proprietor.

One of the challenges that face small businesses is marketing. Proprietors must make sure they market their businesses every day to create a good income for the business. Some common marketing methods which can be employed by the proprietors include; posting of the business address on the yellow pages, radio broadcasting advertising, use of roadside billboards, email, and internet marketing (Burns, 2007). Television marketing is expensive for small businesses since it is normally used to create awareness for company products or services in larger organizations.

Some companies provide internet marketing at affordable prices to small businesses. Companies such as Google and yahoo are the two best options for marketing small businesses (Handy, 2002). Coming up with a business web page is quite cheap and it can provide enough exposure of the business to more customers.

Yahoo recently introduced free website building for small businesses that need to market their businesses online. The yahoo website building is very cheap and targets proprietors who seek to find inexpensive online marketing. To help in coming up with web-based pages for small businesses, yahoo has introduced a site builder which is a java based to ensure that no programming knowledge is required by their customers to come up with the web pages.

The site builder allows for offline management since small business managers have the freedom to improve and modify their site without being connected to the internet. The site builder is also designed to develop several page sites versus individually linked pages to help small businesses in advertising their products and services to the customers (Stacey, 2003).

Apart from being a website builder, yahoo provides several varieties of small business services. Services such as email hosting and e-commerce stores to small advertising buy help in improving the communication channel of small businesses. Faster communication services ensure that small businesses can provide efficient services to their consumers (Stokes and Wilson, 2006).

Small business marketing, therefore, forms a very important part of small business success. Proprietors need to draft marketing plans for their businesses. The role of the business plan is to clearly state the purpose of your business, what it does and what it does not do. Business plans should not necessarily be about marketing, it can include other business decisions of locations, staffing, and financing (MacMurtry, 2003).

A marketing plan is of great importance to businesses. It gives the small business managers or the proprietor something to rally behind in terms of the business vision. It is important to share the business visions with the employees so that they are aware of the business destination (Godler, 2009). Sharing the business plan ensures that the employees feel motivated to carry out their duties to the benefit of the organization. Small businesses without plans are bound to fail and an inaccurate plan is far better than no plan at all.

A marketing plan builds a strong foundation for small businesses which desire to increase their profits. As more customers are reached through marketing, the sales are increased giving rise to higher revenues which provides more marketing support. The profits are generated from the increased sales by the existing business customers and the creation of new markets (Huff, 2006).

Drafting marketing plans for small businesses help the proprietor to form objectives and to produce measurable results. The business plan also outlines ways of improving the business by winning the existing and potential customers’ views toward the business image. Any compromise on the business image will lead to negative attitudes of the customers towards the business ventures (Mandelbrot and Hudson, 2005).

The crucial part of marketing is to know the business customer and differentiate who is who among the customers. Customer information leads to strong marketing decisions, including decisions that hinder product development, media advertising collection, and the creation of marketing adverts (Conrad, 2005).

Literature review

Jeanette Maw McMurtry in the book “big business marketing for small business budgets” asserts that adhering to traditional marketing methods of distributing goods and services to consumers for them to take the goods or leave them, hurts the business revenue production. Most of the small businesses that do not do thorough marketing for their products often struggle to remain competitive in the business environment. Proprietors should live in the modern world of business because it is the customers that have taken c charge of the marketing process rather than the business owners.

She further asserts that the customers to the small businesses define the products they want and where to get them. Customers to a business no longer respond to the traditional mass marketing of products and refer to be treated as valued individuals to the businesses. The sole proprietors should ensure they provide the customers with the best affordable prices possible and provide a variety of choices.

According to Jeanette, the reason why most small businesses fail is due to egocentrism. Proprietors give more effort to building strategies and creative campaigns based on what is good for them or what will best prolong their employment and result in better employment evaluation. When proprietors rely on the factors as the possible ways of influencing marketing, then the businesses have little chance of generating desired profits and revenues thus it fails in their objectives,

Other mistakes done by marketing managers are by trying to multi-task duties that do not march the current business resources and circumstances. Marketing plans need to be realistic for them to be implemented effectively. In small businesses, the marketing team should include the proprietor and a few supporting members of the business after which the team sets out the objectives to be achieved shortly or in the long run.

Huff Priscilla in the book “make your business survive and thrive” asserts that small business managers must identify and know their target customers. Proprietors should review the financing of their market research and get the current feedback from reliable customers especially if the business is launching new offers and consider revising the current offerings.

Small business managers should make the idea of updating the industry’s current trends a habit and find out the media’s perception of the business. Once the proprietors have known the current business specifics, they can begin to search for useful information that will generate resources for their products and services.

Huff also suggests that proprietors have creative marketing principles in their minds. In marketing, competition is stiff and proprietors need to do be unique in their marketing strategies. The marketing team should do something that no one else will do or do what had not been done, try new methods of service delivery, offer discounts, put their advertisements in alternative publications that charge less for business advertising, and try methods used by other big successful industries.

Market assessment

The customer’s selection of goods and services depends on several factors rather than the assessment of market demand and supply position. In assessing the market, businesses should consider the quality of their products and services.

When assessing the market, the proprietor has to prepare details on the product demand. The product demand has to be available and in many cases, it is based on the size of the customers being targeted, i.e., local customers or customers at the national/international level. The demand market assessment should also involve the target groups of consumers, their tastes, and possible preferences related to the small businesses’ products.

The proprietors must study the supply position (Schank, 2005). The quantity of all goods supplied to the markets by the various businesses should help the proprietors to make wise decisions on the number of their products that should be supplied to the market. In most instances, losses arise when market supply is not assessed especially in businesses that deal with perishable goods.

To market goods, business ventures require individuals that supply the goods to the markets. Suppliers are very important to a business organization. The success of small businesses depends upon the smooth and continuous flow of products to the market in reasonable quantities. Proprietors should know that supply can really cause losses to the business and thus affect marketing (Holstein, 2007). Supply shortages of goods in the market can adversely affect the small businesses’ sales, profits and make customers have bad views on the business. Marketing in small businesses requires that the proprietors monitor the price trends of their products. To curb this problem, the proprietors should negotiate terms and conditions with their goods’ suppliers to the market.

The use of market intermediaries can also help in marketing small businesses. These are independent business organizations that help small businesses to promote and supply their goods and services to the final consumers. Intermediaries are of two types: wholesalers and retailers.

Every business organization is set up for the successful generation of profits. In marketing, proprietors must be consumer-oriented for them to be successful and ensure that the consumer’s needs are satisfied to the best of their expectations better than the competitors. The proprietor’s marketing decisions affect the marketing strategies of competitors as well as the customer’s responses in the marketplace.

Since the competitive environment of the small businesses determines whether a business will make a profit or not, the proprietors must ensure they continually assess their competitors marketing strategies. To stay up in the competition, a business should ensure that its products are technologically advanced. In addition, price reductions, product promotions, and other competitive variations must be considered by small businesses.

All marketing managers are required to develop efficient strategies for challenging their competitors. However, there are no universal marketing strategies applicable to all businesses. Each business should consider its size and its position financially compared to those of its competitors. Large businesses may use certain strategies that the small businesses cannot manage to apply (Marshall, 2009).

Small businesses in their course to market their products must keep in their mind that any marketing strategy must be based on the businesses’ resources, objectives, and the expected margin of profit increase. The proprietors must make informed choices relating to the product, pricing, supply, and advertising in a way as to give the business an upper hand in competition over its competitors.

The international competition in the business environment has drastically increased. With the increased competition, rapid changes in technology have become a secret weapon competitors use in competing (Straus, 2008). Technological advance has been used as a strategy of producing goods and services more efficiently than the competitors.

Business environment

The secret behind the success of many businesses is the efficient utilization of the business resources, available resources the business can mobilize. All these factors involve the assessment of the business strengths and weaknesses according to the environmental threats and opportunities and ensuring that there is a credible measure put in place to exploit the opportunities (Sloane, 2007). Businesses that fail to exploit the environment are said to have failed.

Scanning the environment gives the proprietor of the small businesses a clear idea about the existing environment. Failure to scan the environment would mean that the business cannot know the changes in the environment relating to the customer’s likes and dislikes, competitors’ moves, latest innovations, and the latest policy developments.

Analyzing the environment will reveal to the proprietor the areas of analysis, diversification as well as to measure the face of the problems. In the process of analyzing the environment, the proprietor can identify the threats and opportunities of the environment. After identifying the threats and the weaknesses, the proprietor is required to exploit the environmental opportunities and to find possible solutions to the threats.

In the course of small business marketing, the marketing managers are required to analyze the socio-cultural factors of their customers. Critical and detailed analysis of the socio-cultural factor involves close study of the lifestyles, beliefs, and customs that can affect the business products (Turner, 2006). This analysis of the socio-cultural behaviors of customers will help the proprietor know whether the products of the business will satisfy the needs of the customers.

Politics also play a major factor in determining the marketing power of small businesses. For small businesses to prosper, a good conducive political environment is necessary. The laws that regulate market factors are framed and formulated by the government therefore; the government policies have to be considered while making business decisions (Schneider, 2007) Governments that provide good environments for the growth of small businesses provide great opportunities for the growth of the small businesses. The government must aim at improving the infrastructural facilities to encourage the growth of new business ventures.

In matters relating to the law, the proprietors of the small businesses should find out the legal requirements in the establishment of the small businesses, and the management of small businesses. The type of organization to be formed, the welfare of its employees, and safety are all regal matters. Simple contracts entered into with suppliers of goods, and financers need to be legally recorded.


Relevant readings

Godler, J et al (2009). Small business management: an entrepreneurial emphasis. McGraw- Hill, New York.

Handy, C. (2002). The Elephant and the Flea: New Thinking for a New World. London, Arrow Books.

Holstein, B (2007). The ultimate small business marketing toolkit: All the tips. McGraw-Hill Professional, New York.

Huff, P (2006). Make your business survive and thrive. John Wiley and Sons, London.

MacMurtry, M (2003). Big business marketing for small businesses. McGraw- Hill, New York.


Small businesses need a well conducive environment for them to grow. I have realized that to thrive in the business environment, one has to critically analyze the environment and fully understand its weaknesses and strengths. Exploiting environmental opportunities is the reason behind the success of many businesses.

I have also learned that analyzing the customer’s likes and dislikes in the business environment can improve the sales of small businesses. Customers’ likes and dislikes determine how the goods are distributed to the markets. About the likes and dislikes of the goods, there might be some socio-cultural factors that make the consumers behave in a certain way towards some goods. It is the proprietors’ responsibility to find out these behaviors so that the best services and goods are provided to the customers.

In matters relating to the law, any business agreements made in the business environment should be made according to the existing laws. Recording the agreements ensures that any disputes that might arise in the future are solved easily without interfering with the quality time of the business running.

The success of many businesses depends on government policies. The government must ensure it improves the infrastructural facilities such as roads to make easy access to various markets and consumers. Politics plays a very important role in determining the destiny of small businesses.


This assignment has helped me in realizing that online advertising is possible. Companies such as Yahoo and Google provide affordable advertising services to their customers who need advertising services. The yahoo company has gone further by designing the site builder. The site builder enables proprietors of small businesses to make their web pages without formal knowledge of programming.

It is important to note that small businesses run on low capital and at leisure time. Small businesses are more suitable to market in case the proprietor wants to use online marketing. Changes in the business marketing places such as the web pages ensure that the proprietors of the small businesses adapt to change to compete effectively with the competitors.

It is of great hope that this study will be useful to other students and even those already employed by various organizations. Small businesses guarantee financial independence to the proprietors if it is well managed and provides employment to other people. Being your boss is a pride to most people. In addition, several people desire to make their own choices within factors imposed by economic and environmental factors.

Finally, small businesses fail because they want to compete directly with big organizations. Small businesses can avoid this kind of competition and still manage to generate profit. It has been argued that big businesses will destroy the smaller businesses in the recent future when it comes to price battles, but the smaller businesses can still survive if they manage their businesses well. When stiff competition is posed by the larger companies, ensure you focus on creativity. Focus on something quite different from what other companies offer or in the case of marketing ensure you use different advertising channels. In small businesses, focus on the quality of goods and services which most of the big companies don’t offer. This is a weak point that most business organizations and this is where you should take advantage to make maximum profits. The small business advantages discussed in this paper will help any people who want to start small businesses and it is a guarantee that if good management is followed then you will succeed in your small enterprise.


Bridge, S et al. (2003). Understanding Enterprise, Entrepreneurship and Small Business. London: Palgrave

Burns, P. (2007). Entrepreneurship and Small Business. London, Palgrave.

Conrad et al, (2005). Guerilla marketing for consultants: breakthrough tactics for winning profitable clients. John Wiley and sons, London.

Godler, J et al (2009). Small business management: an entrepreneurial emphasis. McGraw- Hill, New York.

Handy, C. (2002). The Elephant and the Flea: New Thinking for a New World. London, Arrow Books.

Holstein, B (2007). The ultimate small business marketing toolkit: All the tips. McGraw-Hill professional, New York.

Huff, P (2006). Make your business survive and thrive. John Wiley and sons, London.

MacMurtry, M (2003). Big business marketing for small businesses. McGraw- Hill, New York.

Mandelbrot, B. B. and Hudson, R. L. (2005). The Misbehaviour of Markets: a Fractal View of Risk, Ruin and Reward, London, Profile Books Ltd.

Marshall, T (2009). Small business internet marketing: ideas and solutions for advertising small businesses online. Create space, London.

Stacey, R. (2003) Strategic Management and Organisational Dynamics: the Challenge of Complexity. London: Pearson Education Ltd.

Schenk, F (2005). Small business marketing for dummies. For dummies, New York.

Schneider E (2007). How smart small businesses grow: The five keys to marketing. Author house, London.

Sharma, KP (2007). Entrepreneurship. FK publications, Washington DC.

Sloane, R (2007). 121 marketing ideas to grow your small business. Academy press, New York.

Stokes, D. and Wilson, N. (2006) Small Business Management & Entrepreneurship, London, Thomson Learning.

Straus, S (2008). The small business bible: Everything you need to succeed in your small business. John Wiley and sons, London.

Turner, L (2006). The unofficial guide to marketing your small business. John Wiley and sons, London.

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