Five Thousand Employees Can’t Do it All

In theory, a small business is just a small corporation with fewer assets and sales than a large corporation. That’s what the name suggests. However, as in most endeavors in life, it isn’t that simple. For one thing, not all small businesses succeed. And there are several differences between a small corporation and a small business.

To understand what makes them different, it’s important to first define what a small business is. A small business is defined by the United States Small Business Administration as any company that has fewer than one hundred employees when the owners are closely related. The definition doesn’t apply, for instance, to small cooperatives or even state or local governments. A small business administration also refers to government-sponsored frameworks or agencies designed to help small businesses like banks and other financial institutions, as well as measures to protect small businesses from circumstances that might hurt their future success, such as bankruptcy. These measures might include mandatory hiring of employees, development of a corporate veil or by-laws, and licensing or certification programs.

For this article, we’ll use the SBA’s own definition of a small business administration, which is one that meets the following criteria: The company must be operated entirely or partly out of the home office of the owner, with at least one employee located in the same city as the business. It must have at least one executive director and one or more general managers. It can have a total annual revenue of at least five million dollars and not require more than three full-time employees.

There are two major types of entities classified under the small business administration umbrella, business conglomerates and partnerships. Real small businesses have revenue of fewer than ten million dollars and don’t have more than nine employees. The smaller companies fall into one of four categories: partnerships, limited liability companies, public enterprises, and exempt, unincorporated organizations. There are also special small businesses, which fall under one of seven different classifications based on their sizes, such as the sole proprietor, partnership, limited liability company, C-corporation, partnership, and corporation. Real small businesses and their owners may also be self-employed and fall under any of the seven classifications described above.

The Small Business Administration was established in 1953 with the passing of the Economic Recovery Act (ERISA). ERISA is important to modern small businesses because it establishes the legal framework for small businesses including the SBA and provides oversight and counseling regarding tax issues. Many small business owners fail to take advantage of ERISA’s many opportunities because they don’t know what it is or how to utilize it. Even those who do know what ERISA is often flummoxed by all it requires of them.

Many small business owners believe they can set up an SBA if their firm is too small or is a service firm that doesn’t provide enough services. But although the Small Business Administration may be able to assist many small firms, it isn’t designed for those who don’t have a product or service of their own. There are many small firms with products and services that are not directly related to technology, like legal services or landscaping services. Even smaller firms that have the ability to create their own products or services can do so through service firms.

Small firms can achieve maximum growth rates if they apply the correct marketing mix to their businesses. Some small businesses believe their marketing mix consists of only one or two major channels, but this is far from the truth. When applied correctly, marketing mix can mean the difference between growth or stagnation in your business. Many firms fail to achieve their growth goals because they apply an outdated marketing mix.

The number one mistake made by most small businesses is not hiring enough employees. The number of employees you hire depends largely on your business size, the revenue you receive, and the amount of time you have to invest in training your employees. If you plan to run a home-based business with as few employees as possible, you won’t need very many employees. The rest of your employees should be managed by a department head with a broad range of skills so that each employee performs his or her own job effectively.

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