own as "mom and pop") business. In fact, the long-range success of a family concern is often limited by members taking communication for granted, in patterns that follow the family system itself. In such a case exchanging expectations up front and in writing, with each responsibility prioritized according to level of importance, becomes particularly fruitful (Bork, 1986, pp. 45-49).
Organization may be delineated according to three basic functions: production, distribution, and facilitation. Production, whether of goods or services, is the backbone of the business. It includes purchasing and stock control where inventory is present. Distribution functions include sales, advertising and sales promotion, and pricing. Selling goods, keeping sales records, replenishing stock, setting up product displays, staying informed of competitors' efforts, and calculating markups and discounts would fall under this heading. Facilitating functions include accounting and finance, and credit and collections. Maintaining income and expenses, preparing tax returns, maintaining cash flow, approving credit applications, and seeking payment of delinquent accounts all are included within this category (Baumback, 1985, pp. 332-333).
Choosing the best legal structure for a small business is another element crucial to its success. Structure influences the owner's ability to be competitive, make decisions and raise capital. Three legal structures used by small businesses are sole proprietorship, partnership and corporation. Several factors affect an entrepreneur's decision regarding structure: his or her knowledge about the type of business; areas of the venture in which assistance is likely needed; amount of capital desired; predicted future cash flow; risk factor; desire to limit or carry liability should the business fail; and tax liabilities.
More than 75 percent of businesses are sole proprietorships, meaning they are owned and managed ...