So, just how big is a “small” business?

By | October 11, 2013

Ok, in my last few posts, I talked about how equipment financing companies tend to advertise their “biggest” name clients, but in reality, most of their customers are fairly small businesses.

But that begs the question – just how big is a small business? What size business is it? Is it two people, ten people, 100 people? Or more? And how big is a medium business? And a large one? When a business go from small to medium to large? Is it the same timeframe that my shirt size increased over the years?

Truthfully, the answers are all over the place, and definitely not definitive. It really depends on who you are talking to / what you are reading, and the context of such.

In “official” terms, a business’ size is determined by its revenues and number of employees. For example, according to the SBA, for most types of businesses, having less than 500 employees or less than seven million in revenues makes you a “small business”.

So 499 employees, and you’re a “small business”… how do you think that makes, say, a ten-person landscaping company feel? Do you feel like they are the “same size” as a 499 person company? Do you feel they have the same issues and problems and outlook? Hardly.

So the official definitions aren’t really helpful. And to take this further, you can bet the two-person landscaping company looks to the ten-person one and says “boy, I hope we can grow as big as them someday!”

Now let’s throw another wrench into this: The person who runs that ten person landscaping company… trust me, he or she definitely doesn’t feel the business is “small”. After all, more than one family likely counts on it for their livelihood, there are multiple vehicles, lots of government regulation, the IRS always sends forms, and so on. To the people running this company, they don’t like being called “small” (that’s a moniker for their two-person competitor) – they think they are the “medium” in the phrase “small and medium sized businesses”. But the 700 person company… hey, they think they are medium too!

Confused yet? Don’t be. Like I mentioned earlier, it’s all a matter of perspective. You’re as small or as large as you think you are. Except in shirt size – the mirror doesn’t lie.


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