When we talk about a small business, many people in India think it is a small manufacturing unit or a small retail store. But one thing that many people need to seriously understand is that not all small businesses are traditional manufacturing or kirana stores. There are many small businesses that are professional. They are different from traditional businesses.
Though they are similar in some aspects like the owners are very particular about their business, they work hard and spend a lot of time in the business. There are many major differences between how a professional small business works and how a traditional small business works. Their working styles are different, their approach is different, the way they operate their business is different, their systems and procedures are different, etc. Here we will look at them in detail.
| Professional Small Business | Traditional Small Business | |
| People working in the organization | Owners and employees are generally knowledge intensive and professionally qualified. They include technocrats, doctors, engineers, architects, MBAs, scientists, accountants, lawyers, etc. | Owners and employees need not be professionally qualified. Specific skills or qualifications are generally not required to set up and run a traditional business |
| Business Goal | Goal of business is to be economically viable and not defined purely on profit maximization. Goals extend beyond profit maximization | Goal of business is to make a lot of money. Taxes, employees’ salaries, employee facilities reduce the money made by business owner. So, they try to avoid these things |
| How they do business | Professionals run the business in a systematic manner, adopting new concepts and technologies mostly from literature or based on their professional degree | Run in a systematic way that is taught by their elders. They are street smart |
| Rule and law abiding | For whatever reasons, they distrust or avoid following many laws | |
| By and large money flows through a banking system | Most of the money doesn’t go through the bank | |
| Decentralization of power of authority. Power is based on knowledge or expertise | Centralization of authority. Power is based on ownership and capital invested | |
| Employee oriented and believe that employees are their most important asset | Give more importance to capital and connections. Don’t believe employees are their most important asset | |
| Customer service is better | Customer service at times is neglected | |
| How they hire the employees | Choose employees who fit in the job profile. No emotional concerns or sentiments while hiring – mostly they hire on merit basis | They prefer to hire a person who is known to them like family member or relative who may/may not have necessary skills to do the job |
| Career growth of the employees | There is a chance for employees to grow in their expertise and in their career | Typically no meaningful job roles exist in traditional businesses. So no scope for employees to grow in their job |
From the above, it is very clear that there is a need to differentiate between traditional small businesses and professional small businesses. They are very different from each other.
India is adding a lot of college graduates every year. It is not possible for big businesses to get jobs to all of them and traditional small businesses are not suitable.
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