Page 18 - Business Studies

Business Studies for Secondary Schools

A small business has 5-49 employees Community development: Small businesses
and/or a capital investment of above support community development by keeping
TShs 5 million to 200 million. However, wealth within local areas and providing
if a business falls under more than one services tailored to local needs.
category, the level of capital invested into Product availability in remote areas:
a business will be the deciding factor. Small businesses can supply goods and
FOR ONLINE READING ONLY
Small-sized businesses may be owned by services not supplied directly by large
individuals, groups of individuals, family businesses in remote areas.
members, or the public with a common The sources of funds for small
interest in ensuring that pre-determined businesses
goals are achieved. Throughout this
textbook, small-sized businesses are Small businesses can access funds from
termed micro and small businesses. different sources depending on their
needs, financial position, or existing
Importance of small-sized businesses status. Several sources of funds for small
Small-sized businesses have the following businesses include loans from lenders,
importance: personal savings, deferred payments, and

Contribution to the economy: Small businesses funds from family and friends.
contribute to the country’s economic growth
by paying taxes and fees, which can be Loan
used to provide public goods. A loan is money borrowed from a lender/

Creates employment: Small businesses play bank with the agreement to repay it,
a crucial role in job creation by providing usually with interest over an agreed time.
employment opportunities to business Interest refers to the monetary cost of
owners and others. As such, they serve as borrowed money, mainly expressed as an
a solution to reducing unemployment rates annual percentage rate of the borrowed
in the country. amount. Entrepreneurs can use loans as
Foster equitable income distribution: Most sources of funds to start up their small
small businesses use locally available businesses.
resources and simple and affordable Advantages of loans
technology, thus facilitating the distribution There are different advantages to taking
of economic activities within the economy a loan. Among those advantages are as
and fostering equitable income distribution.
follows:
Supplier to large businesses: Most small
businesses supply materials to large Availability of funds: Loans allow business
businesses, thus making it easier and cheaper owners to access a lump sum of money to
to operate and fulfil their objectives. start or expand a business.

Student’s Book Form Two 12

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Business Studies Form 2.indd 12 03/10/2024 16:07
Business Studies Form 2.indd 12