Problems and Priorities for Small-Business
Small businesses are diverse. Owners assess business problems based on their unique set of circumstances and business characteristics. Chapter 2 of Small Business Problems & Priorities presents problem ranking by groups within selected classifications of small businesses and their owners. The selected business classifications picked for the survey represent the most widely used classifications and a few that are unique. The classifications include: size, industry, sales change, primary customer, population density, years of ownership, gender, and legal structure.

Employee Size of Business
Employee size of business is one of the most notable differentiating characteristics of small firms. The two areas that show the most variation in rank are those related to cost and employees. Cost-related problems disproportionally affect smaller businesses more than larger ones due to economies of scale. Smaller businesses lack the purchasing power of larger businesses and are less able to absorb unexpected changes in business costs. For example, “Energy Costs, Except Electricity” and “Electricity (rates)” are much more of a burden for the smallest compared to the largest, small businesses. Small firms often have “excess capacity” because they are new and their sales have not matured, raising energy cost per dollar of sale.

The “Cost of Supplies/Inventories” is an example of economies of scale where smaller businesses do not have the purchasing power of their larger counterpart and it is reflected in their assessment of the problem. Owners with no employees rank it 10th and those with 50-99 employees rank it 29th.