Small businesses have grown in popularity with both physical and online stores. There are more than 30 million small businesses in the U.S. alone, and these businesses make up 99.9% of all businesses in the country. Men and women around the world are starting businesses in their home or on their computer, hoping to fulfill their dream of owning a business. But exactly what is a small business?
There are size standards in place to classify businesses. Within the United States, the Small Business Administration determines which businesses meet the qualifications of a small business. For some industries, these companies can have a maximum of 250 employees. The size standards differ across industries and incorporate the company’s earnings as well. There is no one definition for a small business, but the Small Business Administration released a Table of Small Business Size Standards to help classify businesses across industries.
Why does the small business classification matter?
There are certain protections in place for small businesses that meet the Small Business Administration’s classification rules. These protections can help small businesses stay viable in industries that are overrun by larger corporations. They can also promote small businesses who have fewer resources and employees.
Benefits of a small business
Thanks to the protections in place for small businesses, small business owners can enjoy a wide range of benefits. These benefits can help you better run your business and be successful in the long run.
- Small businesses often have an easier time obtaining loans or gaining access to credit. Rates are often lower for small businesses, providing the money they need to be successful and get off the ground.
- The Small Business Administration offers improved chances for small businesses to win government contracts.
- Small businesses can access tools to help them compete with larger businesses.
- The FTC offers help for small business owners to avoid scams, protect their network and data, and keep customer information safe.
In order to receive these benefits, your business must fall within the small business classification for your industry. The Small Business Administration also considers your bandwidth and capacity when delegating classifications. Some organizations may have a higher number of employees but limited resources. It is important to review all of the guidelines for the small business classification to get the most benefit from your company’s setup.
Stats for running a small business
Unfortunately, about one in twelve businesses close every year. Small businesses are at a greater risk of closing due to personal issues of the owner or key business leaders. The good news is that about half of all small businesses will survive for at least five years, and possibly longer. You want to ensure your business is among the ones that make it and become successful.
- Understand the costs of starting a business, even if it is small. The average startup requires about $10,000 in capital.
- If you are interested in running an online business, you may need significantly less initial capital.
- Realize that your salary won’t match a CEO. Most small business owners and executives reported paying themselves less than $100,000 each year.
- It is a rewarding experience. Despite struggles and financial strains, 70% of small business owners reported that they are happy with what they do.
Small businesses have created millions of jobs in the last decade. They contribute significantly to the world’s economy and provide unique and personalized services that large businesses are unable to offer. While the definition of a small business differs by industry, it is clear that these businesses are viable options for aspiring business owners.