What Is a Small Business?

How do you distinguish a small business from a large one? Are sales the key indicators? What about market share or number of employees? The Small Business Administration (SBA), the federal agency most directly involved with this sector of the economy, considers a small business to be a firm that is independently owned and operated and is not dominant in its field. The SBA also considers annual sales and number of employees to identify small businesses for specific industries.

·         Most manufacturing businesses are considered small if they employ fewer than 500 workers.

·         To be considered small, wholesalers must employ no more than 100 workers.

·         Most kinds of retailers and other services can generate up to $5 million in annual sales and still be considered a small business.

·         An agricultural business is generally considered small if its sales are no more than $500,000 a year.

The SBA has established size standards for specific industries. These standards, which range from $500,000 to $25 million in sales and from 100 to 1,500 for employees, are available at the SBA’s “Size Standards” Web page, http://www.sba.gov/size.

An excellent example of small business-and its founder-owner- can be found in a 97-year-old former Lutheran church in Maynard, Massachusetts. Ron Labbe’s 3D is the world’s only one-stop shop for all things 3-D glasses. When Polaroid dropped the product, Labbe moved quickly, buying the remaining inventory of 750,000 pairs at 2.5 cents each. Today, they’re hot sellers at 25 cents apiece.

Since government agencies offer a number of benefits designed to help small businesses compete successfully with large firms, operators of small businesses are interested in determining whether their companies meet the standards for small-business designation. If it qualifies, a company may be eligible for government loans or for government purchasing programs that encourage proposals from smaller suppliers.

Most Businesses Are Small Business

Although many people associate the term business with corporate goliaths like ExxonMobil, Ford, PepsiCo, Wal-Mart, and Microsoft, nine of 10 firms with employees have fewer than 20 people on staff, and 98 percent have fewer than 100 employees. The vast majority of U.S. businesses have no pay-roll at all: Over 14 million people in the U.S. are earning business income without any employees. Almost half the sales in the U.S. are made by small businesses.

Small business is also the launching pad for entrepreneurs from every sector of the diverse U.S. economy. One third of the nation’s 17 million small businesses are owned by women. Hispanic-owned businesses account for 4 percent of all U.S. businesses with fewer than 100 employees. African Americans own another 3.6 percent, and Asian Americans 3.5 percent.

Small Business Or A Large Business

If you have ever thought of operating your own business, you are not alone. In fact, on any given day in the U.S., more people are trying to start new businesses than are getting married or having children. However, before entering the world of contemporary business, an entrepreneur needs to understand its framework.

Like the owners of eBay drop-offs, every business owner must choose a form of legal ownership that best meets the company’s needs. Several variables affects the choice of the best way to organize your business:

·         How easily can you set up this type of organization?

·         How much financial liability can you afford to accept?

·         What financial resources do you have?

·         What strengths and weaknesses do you see in other businesses in the industry of your choice?

·         What are your own strength and weaknesses?

I began this blog by focusing on small-business ownership, including the advantages and disadvantages of small-business ventures. We will also look at the services provided by the U.S. government’s Small Business Administration. The role of women and minorities in small business is discussed in detail, as well as global opportunities for small-business owners. I will then provide an overview of the three forms of private business ownership-sole proprietorships, partnerships, and corporations. Next, we explore the structures and operations typical of larger companies and review the trends in business with a fresh look at mergers, acquisitions, and joint ventures.