Page 29 - Business Principles and Management

Unit 1

periods may create job shortages, layoffs, and reduced incomes. Some people can-
not find employment because of inadequate skills or reductions in the supply of
jobs caused by business failures or relocation of companies to other states and
other countries. When incomes drop, it becomes more difficult to buy homes, to
send children to college, and to save for retirement. Increasing costs for medical
care, insurance, gasoline, and electricity put pressures on many people, especially
those with low or fixed incomes. Although the United States is a prosperous na-
tion, many people live in poverty. In recent years, over 10 percent of all American
families had incomes below the poverty level of about $18,000 for a family of
four. Among the results of poverty are poor housing conditions, inadequate nutri-
tion, and lack of access to health care and quality education. You will learn more
about these and similar problems in later chapters. The health and well-being of
both a country’s businesses and its citizens are important to its long-term success.

CHECKPOINT

What does gross domestic product (GDP) measure?

Business Ownership

The successful growth of business in the United States has resulted from many
factors. Two reasons for business growth are the strong desire by individuals to
Many small businesses are one- own their own businesses and the ease with which a business can be started.
person or family operations Someone who starts, manages, and owns a business is called an entrepreneur.
with few employees. Can you
name some examples in your POPULARITY OF SMALL BUSINESS
community?
It is the tradition of this country to encourage individuals to become entrepreneurs.
Few government controls, for example, prevent a person from launching a new
business. Almost anyone who wishes to
do so may start a business. Some require
almost no money to start and can be op-
erated on a part-time basis. As a result,
many new businesses spring up each year.
These new businesses may have physical
facilities, such as a store in a mall or a
small rented space used for manufactur-
ing or service activities. On the other
hand, new business owners may work
from home offices or even operate busi-
nesses that exist only on the Internet.
Small business is a term used to de-
scribe companies that are operated by
one or a few individuals. Small businesses
have always been an important part of
our economy. By far the largest number
PHOTO: © CORBIS. States are considered small, and about
of businesses operating in the United

half of all employed people work for
small businesses. In a recent economic

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