WHAT IS A SMALL BUSINESS?
What does it mean to talk about “small business”? A neighborhood restaurant or bakery is clearly a small business, and Toyota is obviously not. But among small businesses, there is great diversity in size.
Many efforts have been made to define the term small business, using such criteria as number of employees, sales volume, and value of assets. But there is no generally accepted or universally agreed-on definition. Size standards are basically arbitrary, adopted to serve a particular purpose. For example, legislators sometimes exclude firms with fewer than 10 or 15 employees from certain regulations, so as to avoid imposing a financial bur¬den on the owner of a very small business. However, for our purposes, primary attention will be given to businesses that meet the following criteria:
1. Compared to the biggest firms in the industry, the business is small; in most instances, the number of employees in the business is fewer than 100.
2. Except for its marketing function, the business’s operations are geographically localized.
3. Financing for the business is provided by no more than a few individuals.
4. The business may begin with a single individual, but it has the potential to become more than a “one-person show.”
Obviously, some small firms fail to meet all of these standards. For example, a small executive search firm—a firm that helps corporate clients recruit high-level managers— may operate in many sections of the country and thereby fail to meet the second criterion. Nevertheless, the discussion of management concepts in this book is aimed primarily at the type of firm that fits the general pattern outlined by these criteria.
Thus, small businesses include tiny one-person firms—the kind you may decide to start—and small firms that have up to 100 employees. In most cases, however, they are drastically different in their structure and operations from the huge corporations that are generally featured in the business media.
YOU CAN BE BOTH AN ENTREPRENEUR AND A SMALL BUSINESS OWNER
While certainly not all entrepreneurial endeavors are geared toward owning a small busi¬ness, having an entrepreneurial mindset is critical to the success of any venture, regardless of size. That mindset focuses small business owners on seeking new opportunities that can prove extremely beneficial to the success of the venture. It can also make the trip along the way more rewarding and provide for more growth of the business, as well as chal¬lenging the owner to grow personally. In this book, we’ll focus on small business owners who are unrelenting in their search for opportunities that create value for customers and owners alike.