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what-is-a-small-business? How to manage it?

by GBAF mag
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What is considered a small business? This can be an easy question to answer if you understand what a small company is. A small company has many characteristics that set it apart from other larger companies and also what most small businesses are all about. These characteristics are what we will discuss here:

A small business can run under any company structure. For most small businesses, the regular company size definition by employees is usually 500 employees or more. However, your specific industry may make a big difference on your size definition. Typically, you have to have at least between one hundred and five hundred employees and between one and fifty and one thousand employees. The number of employees and the size of your business will depend on several factors including the number of partners you have, the type of product or service you offer and the size of your business and your available space.

A few other things that can affect your company size standard are whether you are a retailer service station, grocery store, bank, franchises, cooperative, franchisee, public or private provider and if you are a sole proprietorship or a partnership. Many small businesses are classified by the size of their sales revenue. Some examples include franchises such as McDonald’s, KFC, Subway, Holiday Inn and others. Many retailers such as Dunkin Donuts and Wal-Mart classify their sales revenue as full-time equivalents. A small business size standard for these types of businesses would be five hundred to one thousand sales revenues.

The average annual receipts of small businesses is around forty million dollars. This does not include direct payroll deductions made by owners as part of their business. Direct employee contributions make up fifteen percent of this average annual receipts. What is considered a small business with less than a five-percent direct employee contribution will be classified as a small, medium or large business in most cases.

So what is considered a small business? According to the United States Small Business Administration the definition is a domestic concern that creates a significant financial value for its owners and users and has fewer than one hundred employees. A small, medium or large business is a firm or corporation that has sales revenues greater than a percent of its gross domestic product. Many other criteria are used in the United States Small Business Administration size definition. These include the number of employees, average annual sales, revenue and market value of the firms gross domestic product.

To determine what is considered a small business you need to consider what percentage of gross revenues are spent on overhead. A large percentage of revenues goes to rent, stocks, utilities and property. A small percentage is invested in inventory and a smaller percentage in capital assets. The total of what is considered a small business in average annual receipts.

In order to have a smaller business, many organizations follow size standards that are based on a certain number of employees and gross sales. There are several different organizations that set these standards. The Small Business Administration is one such government agency that sets the size standards for small businesses. The SSA also has created a series of guides and publications that describe the criteria used to evaluate small businesses.

If you are a new owner of a small business, you should understand the meaning of the terminology used to evaluate your company. The SSA offers a guide describing what is considered a small business in terms of its gross receipts and the maximum number of employees it has. You will find other helpful publications available at their website. The SSA publishes a number of guides describing what is considered a small business as well as several publications that explain the standards used by the SSA in determining what is not a small business.

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