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All businesses start small, some become big over a period of  time, some remain small  and others close down. While a small business is more vulnerable to changes in the business environment, small businesses enjoy certain benefits and have certain advantages compared to big businesses.

Governments worldwide recognize that small businesses are a major contributor to the  economy and offer certain tax benefits to small businesses. They may be totally exempt from paying taxes or have to pay taxes at a lower rate. At times, this acts as a disincentive and some businessmen prefer to start several small businesses with a low individual turnover to benefit from tax loopholes.

Most big companies are bureaucracies and decision making is often a slow process. This makes it difficult for the company to respond quickly to changes in the environment. The management /owners are often unaware of  the actual performace of  the employees, and a lot of time and company money is spent on non-productive meetings and office politics. In contrast, in most well run small businesses, decisions are taken quickly considering the best interests of  the company.