Definition of a Small Business


Definition of a Small Business

A small business can be defined differently depending on a number of factors, including the audience, whom you ask, revenue flow, and the existing serviced population. A small business can range in size from 1 to more than 200 people or from more than a $100,000 to millions in revenue. If you are working in the world of enterprise and your standard prospect or customer is more than a few thousand people, a 200-person firm is a small business. On the other hand, if all your customers are 5- to 10-person firms, a 200-person firm would definitely be considered large in comparison. Take for example this recent California legislation that defines a micro business: "In 2001, AB 1084 established the definition of a micro business as a subset category of a small business. It's the state's intent that micro businesses are afforded the same entitlements and business participation benefits as a small business. A micro business is: A small business that, together with affiliates, has an average annual gross receipts of two million five hundred thousand dollars ($2,500,000) or less over the previous three years, or is a small business manufacturer with 25 or fewer employees." (State of California, 2004) Does this not immediately point out the wide range of opinions on what a small business is? This perception causes trouble when listening to vendors working on solving the needs of the "small" business niche. Take for example a software product; is this product crafted for the correct "S" (of SMBthe small and medium business) audience, or is the vendor taking an enterprise-level product and rebranding it for the small or micro firm niche? Does it matter? We will explore this after looking at two other subsets of small business.

Definition of a Micro Business (a Subset of Small)

The term micro business tends to better describe the smallest niche within the small business world. A micro business is, in general, fewer than 10 people and includes some unique needs to that space. The president of a micro business must be a master at managing, in addition to a master at each task required by the business. She must be good at defining process and following process, while also being reactive. Many businesses have their own personality, but a micro business is impacted by the personality of the president of the firm. The quirks and idiosyncrasies of the president or possibly the vice president quickly get incorporated into the world of a micro business. In addition to the general culture, the risk factors for a micro business can be significantly higher with regards to the loss of one of the key players. Vulnerabilities are a key factor to pay attention to when it comes to business continuity and stability for the micro business. Micro business is a key niche to keep in mind in today's economy and a field that is quickly starting to gain enterprise attention. There are even many new state programs, such as the new state program MicroWorks, which is one of a number of programs in Appalachia that offer a combination of small loans and extensive technical assistance to stimulate the growth of new and existing micro businesses.[1] Colorado also has a program called the Micro Business Development Corporation, which was formed to stimulate and support micro enterprise by creating economic opportunity and business growth by providing access to knowledge, resources, and business capital to underserved populations. Finally, the United States Small Business Association supports small and micro businesses around the USA.

[1] Baldwin, F (1999) A Factory without Walls: Microbusinesses in Appalachia Appalachia, SeptemberDecember 1999 retrieved May 25, 2005 from http://www.arc.gov/index.do?nodeId=1058.

The Sole Proprietary

The sole proprietary is the smallest company within the small business community. The president of a one-person business must not only have vision, such as a larger enterprise CEO, but he also must also know how to get things done. He must wear the hat of the salesperson, the marketing person, the information technology liaison, and the financial manager. He must be good at planning and often is a master of business alliances and partnerships. A sole proprietor must consider not only his business needs but also the vulnerabilities to his family relations and infrastructure. The sole proprietorship is a multisided diamond resting on the shoulders of one person.