Lesson two

2.1       BUSINESS SIZE 

  1. Micro Business

These are businesses which are very small and require little capital to be started. 

Features of Micro Businesses

  • They require very little capital to be started.
  • They always employ services of their owners with the assistance from family members
  • They require very simple technology to operate
  • They may not need fixed premises to operate i.e. businessmen move with goods.
  • They may not need to be registered before they start but at times obtain operating license for example BODABODA cyclists, hawkers, roadside selling.
  1. Small scale businesses

These are businesses that operate from fixed premises and some have bigger than micro business e.g. retail shops. 

 Characteristics of small scale businesses 

  • They employ family labour
  • They require little capital to be started
  • Their sales are higher than that of micro businesses.
  • They use simple technology while operating for example bakeries, retail shops, milling factories etc.
  1. Medium size businesses

These are well established businesses which may employ up to one hundred people.  

Features of medium size businesses 

  • They are well established business with permanent premises.
  • They use advanced technology
  • They produce on a large scale
  • They require a lot of capital to be started.
  • They produce for local and foreign market. Examples include; big bakeries, milk processing, mattress manufacturing factories.
  1. Large scale businesses

These are businesses which operate on a large scale and employ more than one hundred people.  

Features of large scale businesses 

  • They employ more than one hundred people
  • They operate from well-established and permanent premises
  • They produce goods in large quantities
  • They require a lot of capital 
  • They produce for both local and foreign markets
  • They use advanced technology in their production process.
  • Examples include; Mukwano industries, roofing’s limited, Shumuk group of companies, Kakira sugar works etc.  


  • They are a source of income to their owners. This increases earnings of such people
  • The provide employment to people both paid and self-employment.
  • They produce goods and services which are needed by people, therefore providing them with a variety that enables them to make choice.
  • Businesses bring services or products near to the people for example trading businesses.
  • Businesses provide market for the people’s produce for example agri
  • – businesses buy fertilizers from industries.
  • Businesses contribute to the community social and economic development programs like road construction, water supply etc.
  • Businesses add value to the local produce and resource. This widens market for their produce for example manufacturing business.
  • They pay taxes to the government and this enables the government to execute or carry out its development programs.
  • They utilize the would be idle resources or harmful resources to the environment for example manufacturing businesses recycle bi – products and wastes into useful products.

2.3       Questions

a). Explain the objectives of encouraging business growth in your country

b). State the reasons why the government is encouraging people to set up businesses

  • To provide employment opportunities to enable people earn income. 
  • To provide market for people’s produce.
  • To add value on local produce.
  • To bring goods nearer to people.
  • To utilize the would be idle resources in the community.
  • To facilitate community development programs.
  • To increase government revenue.