What, exactly, is a small business?

According to Forbes, 99.9 percent of all businesses in the United States are small businesses. There are about 33.2 million small businesses. Of those, 27.1 million have a single owner and no employees. Small businesses collectively employ almost half of U.S. workers. Another 16 percent of small businesses employ one to 19 people each.

Small business is collectively big business.

The definition of a small business varies depending on the specific industry. The U.S. Small Business Administration (SBA) defines a small business as an independently owned for-profit enterprise that employs 500 or fewer persons. But there are exceptions for what constitutes a small business in specific industries.

Size standards define the largest size a business can be to participate in government contracting programs and compete for contracts reserved or set aside for small businesses. Size standards vary by industry and are based on the number of employees or amount of annual receipts the business has. A purely professional services-focused business will have lower revenue limits, while a products-focused one will have higher limits. Businesses that provide such consumer services as hotel rooms usually fall somewhere in between those two types.

More information about industry revenue and size classifications is available from the SBA at www.sba.gov or North American Industry Classification System website at www.naics.com.

In addition to meeting numerical standards, your business must:

Be a for-profit business of any legal structure.

Be independently owned and operated.

Not be nationally dominant in its field.

Located and operated in the United States or its territories.

Small business is a growth industry. According to the SBA,  about 1.1 million new small businesses opened between March 2021 and March 2022. That means 180,528 more small businesses opened within this time frame than closed.

Small businesses aren’t always small they way you might believe. But if your business qualifies as small, you could find a variety of federal and possibly state and local opportunities set aside just for you.

By one estimate, 20 percent of all new businesses fail in the first year, an additional 10 percent in the second year and a cumulative 50 percent by the third year. Since so many people work for small businesses, it’s in the interest of government agencies to support new businesses.

Starting and running a small business is hard work. So why go there?

The best reason to start a small business might be you get to do something love. And if you provide a product or service better, faster or cheaper than a big business, it could be financially rewarding.

You get to support your community and actively participate in its growth and success.

You make the decisions and set the rules.

So what is small business? It’s really big business, just in a smaller, more convenient package.