This article are provided for information purposes only, and are not intended as legal advice.

What is a small business?

May 28th, 2009

Ever thought about what is the definition of a small business?  Someone says, I want to buy a small business, what is do they mean?  Do they mean that there are no employees and just the owners of the business, does it mean under $1 million of sales?  The bank have a definition of the small business market as under $100 million in revenue.  Not my definition but it appears that everyone has a different definition.  Wikipedia defines small business  as  “A small business is a business that is independently owned and operated, with a small number of employees and relatively low volume of sales”, others define small business as “annual receipts not in excess of $500,000 and has fewer than 500 employees”.  If you have 500 employees, I hope your revenue is in excess of $500,000.


Others say “A small business is one which has a small number of employees, profit and/or revenue. Often these are owner-managed, with few specialist managers”   The SEC says the revenue must be below $25 million and not an investment company.  Some definitions appear to define the type of business, others the size.  Some say 20 employees and others up to 500?  Which one is right? 


This shows that everyone has a different view point therefore when you decide to buy a business, you cannot say I want a small business, you will have to define what size of business and define it by number of employees, revenue, profit etc.  That way you can narrow down your search for the company which you are looking to buy.

Filed under: Buy a business — Gary Landa @ 10:55 am

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