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Small business. A firm, managed in a personalized way by its owners or part-owners, which has only a small share of its market and is not sufficiently large to have access to the stock exchange in raising capital. Given that small firms typically have little recourse to institutional sources of finance other than the commercial banks and rely heavily upon the personal savings of the proprietors, their families and friends, the long-term growth in taxation on income and wealth is believed by some economists to have inhibited the growth of the small-firm sector. A number of other inhibiting factors were also identified by the bolton committee and this committee and the subsequent wilson committee recommended a number of measures to promote small business many of which, including tax reliefs and a credit guarantee scheme, have been implemented. The onset of slower economic growth from the early 1970s has been associated with a reversal of the secular decline in the share of small firms in output and employment. Various estimates put the number of small firms in the U.K. at between 1,400,000 and well over 2 million.

Smith, Adam (1723-90)

Most small businesses are sole proprietorships and partnerships, but the vast majority of Britain’s active 300,000 private companies are small firms enterprise; establishment.

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