Non-Employer, Micro or Small Business. Which One Are You?
The Small Business Administration (SBA) of the United States, defines small business as having less than 500 employees. In the U.S. small business is not defined by annual sales.
A micro business is defined as one with less than five employees. They generally need less than $35,000 in working capital loans. Other companies fit somewhere in between.
Majority of the business owners who contract with me for help fall into a different category. They are considered non-employer businesses and total more than 24 million in this country. Add that number to the number of U.S. businesses with less than 20 employees, together they represent 98% of all small businesses.
The majority of the non-employer businesses are home-based. With today’s technology, they can run a business from the back of a car. They don’t need offices, proprietary software or scads of technology. They can work with a laptop, printer and a cell phone. Perhaps they rent storage space to store paperwork.
Determining which category your business belongs to is not important. What is important is revenue. The amount of money a company takes in from selling its products or services.
The national average in revenue for non-employer businesses is $47,000. However, there has been an uptick in one-person businesses with more than $1 million in annual revenues. They focus on sales and not necessarily growth. There is a difference.
If a small business can increase sales without increasing fixed costs, profit margins increase. Which means, the single employee owner makes more money.
Size of a business has never been a target of mine when I launched four startups. The target I aim for is reaching $1 million in annual sales in the shortest amount of time without increasing unnecessary expenses.
Darlene Ziebell brings over 40 years of experience in business consulting and entrepreneurship. Her methods are based on a unique blend of large enterprise strategies and the battle scars she acquired in four businesses including startups, mergers, ESOP, acquisitions and partnerships. One of her many endeavors was a business management consulting firm with a client base representing 20% of the Fortune 1000. She is an advisor to business owners training them on successful growth strategies through her Empowering Entrepreneurs methodology. Research her new book, A Dozen Avalanches Threaten Small Business, for more information.