This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How Big Can a Small Business Be?

CHICAGO ( TheStreet) -- Small business is one of those terms we take for granted -- until we try to dig down to what it really means. In the United States, a small business can be anything from a suburban coffee shop to a rural farm stand to a thriving manufacturing company that exports worldwide, with workforces that vary from one person to hundreds of employees. Can one definition cover such radically different enterprises?

The flexible nature of "small business" became even more obvious this year, when the Small Business Administration revised its guidelines for exactly how small a company must be to be eligible for its services and loans. In its latest attempt to categorize small businesses, the SBA expanded the maximum size of businesses in more than two dozen industries, with some definitions stretching the meaning of "small."

In farming and agriculture-related businesses, "smallness" is measured by revenue, not employment, acknowledging the seasonal and short-term nature of much farm work. Most farming operations are considered "small" if they make $750,000 a year or less, yet a company that offers farm management services is "small" if it makes less than $7 million.

Switch to building-related companies (another field where employees tend to be short-term and/or seasonal), and the numbers are drastically higher. According to the SBA, a "small" remodeling or contracting business is one that earns $14 million or less a year. A residential or commercial construction company, however, can make up to $33 million a year, yet still get the preferential services and loan terms of a "small" business.

Most industries that produce durable goods are classified by employment, with the maximum number of workers ranging from 500 to 1,000 to be considered a small business. (Companies that sell wholesale, on the other hand, can have no more than 100 employees.)

Whether a business is small depends in part on what it produces: if you make cheese or chocolates, you're small if you have 500 employees or fewer, but if you make shoes or process tobacco, you can have up to 1,000. And companies in the ammunition or aircraft-building business get a special dispensation: They can have up to 1,500 workers.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $121.30 0.00%
FB $94.01 0.00%
GOOG $625.61 0.00%
TSLA $266.15 0.00%
YHOO $36.67 0.00%

Markets

Chart of I:DJI
DOW 17,689.86 -56.12 -0.32%
S&P 500 2,103.84 -4.79 -0.23%
NASDAQ 5,128.2810 -0.5040 -0.01%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs