I need to know because we are designing a tool to help small consulting businesses connect with prospects and grow. You might ask the experts at the Small Business Administration. The SBA is the sole government standard setter regarding how big a business can be and still be considered small. Government size standards have settled on $7.0 Million in Revenue and 500 employees being the upper limit for most industries. Specific industries, however, like Pipeline Transportation and Ammunition Manufacturing can have up to 1500 employees and $34.5 Million in revenues respectively. How is a business with 1500 employees and $34.5 million in revenues “small” by any stretch of the imagination? Clearly some political horse-trading around government concessions for tax, loan and grant qualifications went into those definitions.
For a startup business focused on the small business market like Naumu, the SBA definitions aren’t very helpful. When I think of small business I think of a small design studio in coastal city creating websites. I think the Australian TV comedy “Very Small Business” got the characterization down almost exactly right with its eponymous “Worldwide Business Group” consisting of just one man publishing a portfolio of magazines until he hires his first and only employee.
We need to clearly focus on a discreet set of US firms which share similar challenges and opportunities, business processes, and needs. Although it would be great to be able to say, “We’re building our tool for small businesses.” The target is so large and diverse as to be pretty much meaningless. Ditching the SBA definitions in favor of stricter criteria of our own devising gives us a definition of “small business” that better jibes with our internal picture of the archetypical vision of small business for whom we are designing the tool. The kinds of things that are standing out for us as useful criteria are: number of employees, how firms bill their clients, and whether they sell goods vs. services. When we apply these filters to the Census data of firms in the US, a startlingly clear set of businesses emerges. This set of businesses looks a whole lot like the Richard Florida’s “creative class”, or rather that part of it which decided to go into business for themselves.Sabin
1 comment:
Sabin --
I was directed over here by my friend Sara, who is doing some work with you. I am currently finishing up a PhD in innovation and organizaitonal economics -- so I suppose I am supposed to know something about this. Perhaps less than you would think, but I have thought about these issues a bit just in terms of using statistics in my own work. One thing -- you are right. Size is used in all the statistics but smallness itself isn't very interesting. Politicians will say that most jobs are produced by small businesses, but that doesn't say much.
A firm of 5 people could be an independent professional such a doctor or lawyer or a small shop. This is the large majority of them and they've been around for ever. They do not drive job growth or economic growth or much of anything. Or it could be a start-up that will grow into the next Google. Or it could be a creative professional -- an artist, or chef or small entrepreneur or craftsperson who, because of the internet and the way markets are developing can now set up on their own. Individually their companies might not grow that much just because they are interested in small niches, but collectively, they may account for a lot of growth. It sounds like your business is aimed at this later set -- providing services so that they can outsource administration and marketing and such and focus on what they do best.
Sasha Cole
sashacole510@gmail.com
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