Nearly two and a half million small businesses are begun each year. The number of jobs created by small businesses is expanding, while employment generated by large corporations is shrinking (Comiskey, 1985, p. 17). This paper will examine issues faced within this increasingly vital sector of the U.S. economy, including organization, structure, financing, partnerships, purchase, inventory, location and advertising.
Decisions of organization pertain to assignment of tasks to employees. The owner of a one-person operation need only allocate his/her own time effectively; as size grows, so does complexity of organization. Responsibilities are divided among individuals according to their abilities. For example, the owner of a market might hire a sales manager who would oversee several clerks working the cash register. A separate individual could be in charge of purchasing and in that capacity would control inventory, possibly with the aid of one or two stock clerks. This is known as functional departmentation (Baumback, 1985, pp. 331-334). It is typically used in the smallest business. As the single market described above expands to a chain of five stores, it may be organized by territory or a combination of territory and function. A manufacturing concern might be organized by product.
Job descriptions and organization charts are helpful in clarifying the delineations among various positions. The job description will prevent miscommunications or unmet expectations by both owner/manager and employee. Organization charts will spell out in visual form the responsibility of various positions and/or departments, as well as making clear the accountability of one person to another. When the expectations held by a manager of employees are not made clear, or are changing without explanation, low morale and high turnover may result.
These processes of clarifying expectations are often neglected in the family-operated (better kn...