The Definition of Small Business
What is Small Business? Everybody think of it as a small home-run operation such as EBay trading, or gift-basket party thrown for coworkers. Maybe. Rembrandt van Rijn was a small businessman employing about a dozen of his journeymen painters, students, and household workers. Duke of Naxos financing the Cyprus war for Sultan Selim II and his exquisite wine supplies from that island, (Remember Otello? He was the Venetian Supreme Commander-in-Chief protecting Cyprus from Turks.) He lost his battles… Joseph, the Duke of Naxos, was a small businessman, too. Bill Gates started out in his Dad’s garage as a small businessman, and that was a long time ago. He’s not small, anymore.
So, what is then Small Business, anyway? The definition is not simple since 99.9% of all workforce in this country are employed by so-called small businesses. And how small you need to be to be called a small business? Registered as incorporated and unincorporated, partnership, or one-man operation, agency, firm, office or shop with up to 500 employees and sometimes even more will still be considered a small business. Which is why I subdivided them all into 3 categories: OPO, SSB, BSB. OPO – One Person Operation, SSB – Small Small Business with less than 20 employees, BSB – Big Small Business, that is the one with more than 20 employees. You still have to be a private enterprise, not related to a big Wall-Street-traded corporation, though!
In 2009, there were 27.5 million businesses in the United States, according to SBA Office of Advocacy estimates.The latest available Census data show that there were 6.0 million firms with employees in 2007 and 21.4 million without employees in 2008. Small firms with fewer than 500 employees represent 99.9 percent of the total ( employers and nonemployers), as the most recent data show there were about 18,311 large businesses in 2007.
Source: SBA Office of Advocacy estimates based on data from the U.S. Dept. of Commerce, Census Bureau, and trends from the U.S. Dept. of Labor, Bureau of Labour Statistics, Business Employment Dynamics.
The Great State of Georgia 2007 stats: 86% of all SB in GA employ less than 20 employees – I name them SSB (small small business), those with between 20 and 500 and sometimes up to 1500 employees I will name – BSB (big small business). Therefore in 2007 in GA were 86% of SSB and about 14% of BSB.
5 times more than the number of all small SB employers in GA are one-person operations. I name them OPO, and assume these are what an average SB aspirant regards as a typical SB. Not so, as we see now.
Rate OPO to SSB:
1 time (equal number) in hospitality, food services, manufacturing and wholesale trade. Not popular with individuals – needs lots of capital and labor!
3 times in retail trade, healthcare, finance and insurance
4 times in professional and technical services
5 times in construction
8 times in transportation, real estate, admin support, educational services, and misc. services
12 times in arts and entertainment
Where do enterprising individuals in Georgia usually open their OPO shops? GA SBA stats for 2006-2007 gives the max in construction trades (110), most popular OPO are closely followed by professioinal services (92), admin support (79), and real estate (76), with misc. services covering the rest (115) – numbers are given in thousands of registered businesses.
What about Small Business taxes?
Of the 15.5 million individuals whose primary occupation was self-employment (OPO), the median personal marginal federal tax rate was 10 percent in 2008. Only 4.1 percent of the self-employed were in the marginal tax bracket of 33 percent or more.
Source: U.S. Dept. of Commerce, Census Bureau, Current Population Survey, March Supplement (special tabulation).
How to Make Sure that Your Business Fail Soon
1. Start your business based on Wrong Idea – it simply won’t work! Non-Starter!
2. Complete Failure of Poor Management – you have no Education, no Skills, no Experience, wrong Personality. One month to Self-Destruction.
3. You have Insufficient Capital – Undercapitalization will ruin you in 2 weeks.
4. Poor Planning and Marketing, including wrong Location, lack of Business Plan. Slow and Painful Death guaranteed within a year.
Here are some official stats:
Seven out of 10 new employer firms survive at least 2 years, half at least 5 years, a third at least 10 years, and a quarter stay in business 15 years or more. Census data report that 69 percent of new employer establishments born to new firms in 2000 survived at least 2 years, and 51 percent survived 5 or more years. Survival rates were similar across states and major industries. Bureau of Labour Statistics data on establishment age show that 49 percent of establishments survive 5 years or more; 34 percent survive 10 years or more; and 26 percent survive 15 years or more. Non-employers fail much faster.
Source: U.S Dept. of Commerce, Census Bureau, Business Dynamics Statistics; U.S. Dept of Labour, Bureau of Labor Statistics, BED.
Goods-providing businesses only lose employees, whereas service providers lose and gain at the same rate.
[Source : http://www.bls.gov/bdm/home.htm]
Number of SB gaining jobs:
284,000 in 1st Qtr of 2010
1,403,000 in 1st Qtr of 2010
Number of SB losing jobs:
341,000 in 1st Qtr of 2010
1,525,000 in 1st Qtr of 2010
I suppose the reason being service providing SB are easier to start and with less capital and/or employees, but the overall trend possibly points at a stream of goods producing jobs toward overseas.
Most Popular Small Small Businesses and One Person Operations to Consider
Air Conditioning and Heating Company, Commercial Building Construction, Drywall Contractors, Electrical Contractors, Flooring Contractors, Framing Contractors, Glass and Glazing Contractors, Masonry Contractors, Painting Contractors, Plumbing Contractors, Poured Concrete Foundation, Residential Remodelers, Roofing Contractors, Siding Contractors.
Education and Health Services
Apprenticeship Training, Art School Gallery, Automobile Driving Schools, Child and Youth Services, Chiropractor Offices, College Planning Consultant, Computer Training, Cosmetology and Barber Schools, Dance Studios, Day Care Services, Dentist Offices, Educational Support Services, Exam Preparation, Family Planning Centers, Nursing Care Facilities, Occupational Therapist Offices, Optometrist Offices, Physical Therapist Offices, Physician Offices, Podiatrist Offices, Speech Therapist Offices, Sports and Recreation Instruction, Tutoring.
Appliance Rental, Auto Insurance Claims, Claims Adjusting, Equipment Rental and Leasing, Financial Planner, Formal Wear and Costume Rental, Insurance Agencies and Brokerages, Investment Advice, Lessors of Real Estate Property, Offices of Real Estate Agents and Brokers, Property Manager, Real Estate Agent, Real Estate Appraisers, Vehicle Rental and Leasing.
Directory Publishers, Greeting Card Publishers, Internet Publishing, Online Business, Periodical Publishers, Recording Studio, Sound Recording Studios, Video Production and Distribution.
Leisure and Hospitality
Actors, Independent, Advertising Copywriter, Aerobic Dance and Exercise Centers, Agents and Managers, Art Gallery, Art Restorers, Independent, Artists, Independent, Athletes, Amateur, Independent, Bar/Club Business, Bed-and-Breakfast Inns, Caterers, Fitness Centers, Independent Artists, Independent Performers, Musical Groups and Artists, Promoters, Restaurant and Food Business, Sports Recreation Guides, Sports Trainers, Writers.
Apparel Manufacturing, Arts and Crafts, Banner-Making, Breweries, Canvas Work, Clay Product Manufacturing, Commercial Printing, Embroidery, Food Manufacturing, Jewelry Manufacturing, Metalworking, Pottery, Sewing, Wood Product Manufacturing.
Animal Daycare, Appliance Repair and Maintenance, Astrology Tarot Card Business, Auto Body, Paint, and Interior Repair and Maintenance, Auto Decal Business, Automobile Detailing Business, Automobile Inspection Business, Automobile Restoration, Automotive Glass Replacement Shops, Automotive Repair, Car Wash Business, Diet and Weight Reducing Centers, Electronics Repair and Maintenance, Equipment Repair and Maintenance, Hair Salon & Day Spa, Household Goods Repair and Maintenance, Laundries and Drycleaners, Machinery Repair and Maintenance, Personal Concierge / Shopper, Pet Business, Private Households, Wedding Consultant.
Professional and Business Services
Accounting Firm, Administrative Service Business, Advertising Agency, Advertising Consulting, Advertising Material Distribution Services, Agricultural Consultant, Building Inspection Services, Carpet and Upholstery Cleaning Services, Certified Public Accountants, Cleaning Service, Collection Agencies, Computer Related Services, Consulting Service, Convention and Trade Show Organizers, Court Reporting, Employment Agencies, Engineering Services, Environmental Consulting Services, Event Planning Service, Exterminating and Pest Control Services, Graphic Design Services, Home Design, Home Inspection Service, Investigation Services, Janitorial Services, Landscape Architects, Lawn Care/Landscaping Business, Lawyers, Marketing Consulting Services, Marketing Research, Medical Claims Billing Service, Notaries, Office Administration Services, Photography Studios, Public Relations Agencies, Repossession Services, Research and Development Agencies, Security Guards, Specialty Travel and Tours Business, Sports Tour Operators, Tax Preparation Services, Telemarketing Bureaus, Temporary Services, Travel Tour Operators, Translation and Interpretation Services, Travel Agencies, Veterinary Services, Web Design.
Transportation, Warehousing, and Utilities
Couriers, Limousine Service, Local Delivery, Local Messengers, Motor Vehicle Towing, Taxi Service, Trucking.
Wholesale and Retail Trade
Art Dealers, Art Sales Custom Framing, Automobile Dealership, Automotive Parts and Accessories Store, Boat Dealers, Clothing Stores, eBay Business, Electronic Shopping, Farm Product Wholesalers, Farm Supply Stores, Florists, Fuel Dealers, Gasoline Stations, Gift, Novelty, and Souvenir Stores, Grocery Wholesalers, Hardware Wholesalers, Health and Personal Care Stores, Hobby, Toy, and Game Stores, Import/Export Business, Internet Auctions, Jewelry Stores, Luggage and Leather Goods Stores, Motor Vehicle Dealers, Personal Service Wholesalers, Retail Store, Used Merchandise Stores, Vending Machine Operators.