Dimensions of Success: Evaluating the Scale of Your Small Business

So, what actually makes a business “small”? Is it about the number of employees, the annual revenue, or perhaps that family-run, personal touch? When does a small business transition to being medium-sized, and why does this classification even matter?

These are great questions because the size of your business can significantly influence several aspects, like taxes, revenue, and eligibility for federal grants and programs. To help you understand where your business stands, the Small Business Administration (SBA) has a Table of Small Business Size Standards.

According to the SBA, a “size standard” is typically defined by the number of employees or average annual receipts and represents the largest size a business (including its subsidiaries and affiliates) can be to still be considered a small business. This definition varies by industry. For example, a creamery can have up to 500 employees and still be considered small, while a bookstore meets the criteria if it earns less than $25.5 million annually. It’s essential to know where your business fits to plan for future growth effectively.

If you’re seeking a small business loan, understanding your business size is crucial. Not meeting the size requirements disqualifies you from SBA business loans. When applying for SBA-guaranteed loans, you’ll need to provide information about your annual sales, employee count, and other details to prove your eligibility and support your loan request.

For those interested in government contracts, these size standards are equally important. Many government agencies set aside a portion of their procurements exclusively for small businesses. Having your small business certified can give you a competitive edge in these situations.

Also, the government allows you to challenge a size determination made by a contracting officer. If you believe a competitor has inaccurately qualified as a small business to win a bid, you can protest. This helps level the playing field, ensuring only truly small businesses get the opportunities meant for them.