When people think of small business, they often envision the local mom-and-pop shop or a franchise. But small businesses come in all shapes and sizes and are the backbone of our economy, making up the majority of all U.S. businesses according to a 2021 study by the Census Bureau.
Typically, small businesses have lower overhead than larger companies, allowing them to offer more competitive prices. This can also allow smaller firms to be more flexible and respond quickly to market changes. Additionally, many small business owners work closely with customers, providing a level of service and attention that can build customer loyalty and turn them into advocates for the company.
Many small business structures are available, with the most common options being sole proprietorships and partnerships. The type of business structure chosen can impact legal responsibilities, tax obligations and the ability to grow.
There are a number of ways for entrepreneurs to secure funding, including small business loans, venture capital and angel investments. Some small businesses may also be eligible for grants, which do not need to be repaid.
In order to qualify as a small business, businesses must have a North American Industry Classification System (NAICS) code and meet size standards set by the Small Business Administration. These size standards vary by industry and revenue. For example, a roofing contractor would have different size standards than an asphalt shingle and coating material manufacturer. To determine if your business qualifies, visit the SBA’s Table of Size Standards.
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