Recent Trends in Business

Many changes in the way businesses operate have occurred over the past 50 years. Some of the most interesting are the increased use of computers; the increase in busi­ness ownership, especially of franchises; the increasing number of businesses owned by women and minorities; and the growing number of home-based businesses.

Computers in Business: Although computers have been used by businesses for many years, until recently only large companies could afford to own them. The 1980s saw a breakthrough in computer development when personal computers were introduced. They require little maintenance and can be operated by office personnel with a mini­mum of training. Because of their widespread use, mass-produced programs have been developed that can keep track of inventory and sales, keep payroll records, and even generate checks. Today, a business can hardly afford not to have its own computer.

Small Business Trends: Every year, increasing numbers of Americans go into business for themselves. They are called entrepreneurs. In the 1960s, there were about 8 million indi­vidually owned companies; in 1999, about 17 million Americans owned their own busi­nesses. For the person who wants to be his/her own boss, American capitalism provides the exciting (though risky) opportunity to try it.

Many people who want to become entrepreneurs do so by purchasing a franchise. A company that has developed a successful business may decide to license other compa­nies to operate similar businesses under the same name. That license is called a franchise. The original company is known as the franchisor, and the licensed companies are franchisees. Each franchisee pays the franchisor for the right to use the franchise name and ideas. The franchisor assists its franchisees in selecting a site for the business, pur­chasing equipment, and learning how to operate the business. Advertising is done on a national basis. The franchisor controls the products sold, so consumers know the prod­uct will be the same whether they buy it in New York or California.

In the U.S., there are more than 500,000 franchised businesses with sales exceeding $700 billion annually. That is more than one-third of all retail sales in the U.S. Although the most well-known franchises are fast-food businesses, franchises are available in many industries, such as real estate brokerages, video rental stores, automotive parts stores, and travel and employment agencies. Why do so many people choose to buy franchises? A franchise is the least risky way to go into business for oneself. The fran­chise's national reputation, advertising, training program, and business experience give the franchisee a big advantage over independent businesses.

Woman and Minority Business Ownership: The growing trend toward business ownership by women and minorities is partly due to the influence of the civil rights and women's movements, which have encouraged these groups to go into fields offering greater op­portunity for advancement. In 1999, about 9 million women owned businesses, while members of minority groups owned another 2 million.

Home-based Businesses: Home-based business and people doing their employers' work from home is also on the rise. This has been brought about largely by the expanded use of personal computers and their ability to connect with other computers to obtain in­formation and relay data to a central business. There are now 4 million people operat­ing their businesses out of their home, and it is estimated that that number will increase rapidly during the first decade of the twenty-first century.

Check your comprehension.

Name three recent developments in small-business ownership.

American capitalism has proved to be one of the most productive economic systems in history. In a capitalistic system, people try to produce better goods and services be­cause there are financial rewards for doing so. In addition, the freedom of choice that capitalism provides appeals to the independent American character. With few excep­tions, no outside power tells an entrepreneur how much to charge for goods or services, and people are free to decide how they will earn and spend their income. The American economy is based upon the belief that every individual knows what is best for himself and must take responsibility for his decisions. Risks exist, but so do opportunities for advancement. Most Americans gladly accept both.

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