About Small Business Owners

Updated on February 20, 2018
heidithorne profile image

Heidi Thorne is an author and business speaker specializing in sales and marketing topics for coaches, consultants, and solopreneurs.

Source

How do you define small business owners? By how many employees they hire? Revenues? Where they do business? Actually, it can include any of these, as well as differences in goals.

For those wishing to become small business owners or those selling to them, knowing the differences is important.

How the SBA Defines "Small Business"

Here is the a technical definition of a small business from the United States Small Business Administration (SBA):

The most widely used, and SBA-endorsed, sizing criteria for small businesses is the following - the business must have no more than 500 employees for most manufacturing and mining industries, and no more than $7 million in average annual receipts for most nonmanufacturing industries.

There are additional classifications as they relate to size, receipts and industry. However, these are primarily followed when a small business is applying for SBA loans and government contract bidding eligibility.

What's interesting is that about 40 percent of all sales generated in the United States are attributed to firms with less than 500 employees. So they are a major economic engine.

In practical reality, there are two broad categories of small businesses and small business owners:

  • Micro, SOHO and Solopreneur
  • Small to Medium Business (or Enterprise)

Micro, SOHO and Solopreneur Businesses

At the very smallest are micro, Small Office/Home Office (SOHO) and solopreneur (an entrepreneurship consisting of only one person) businesses. A shocking fact is that about three-quarters of all U.S. businesses are nonemployer firms with no employees (SBA.gov, 12/22/2017)! However, in spite of their numbers, they only generate just over 3 percent of all sales in the United States.

These businesses would be identified by:

  • Size. Many consist of only one person! Help, if it is even hired, is often part-time or even contract workers.
  • Location. As the SOHO name suggests, many of these businesses are run from homes. Others may have small offices or retail locations. Office suite arrangements (paying a fee for use of an office location not permanently occupied) are popular so that they can meet with clients in a professional setting. Some just go to restaurants and office centers to meet customers or to work.
  • Revenues. On the revenue scale, their income could be not much more than that of a full-time worker, sometimes even less. Conversely, some could also realize significant revenues due to lower overhead and no payroll.
  • What Makes Them Tick. Some of these businesses are started for the love of the business, following a "do what you love, the money will follow" philosophy. While often not the wisest of things to do in business (reading the books The E-Myth and The Entrepreneur Equation explain why), these small business owners may not even pay attention to financials and other business metrics. Usually not "empire builders," they value freedom and flexibility to run a business on their terms.
  • Tips for Selling to Them. Most micro, SOHO and solopreneur business owners have a high personal investment in their companies. So every dollar is coming out of their own pockets. Resistance to part with personal cash may make them difficult to close. Also they are often attracted to DIY (do it yourself) strategies and seek flexibility (no contracts, no penalties for cancellations, easy returns, etc.). Part of this is "I'd rather do it myself" attitude stems from their necessity to wear many functional hats within a one-person operation. Showing them how your offering can help them keep flying solo in their businesses can help them buy in.

Small to Medium Businesses (SMB)

According to the U.S. Census Bureau, small businesses are firms that have up to 499 employees (a large business is classified as any business with 500+ employees). More recently, this category of business has been referred to as "Small to Medium Businesses," or SMBs.

These businesses would be identified by these demographic factors:

  • Size. Can have anywhere from one to 499 employees.
  • Location. Although they can be located in homes, it is more likely that SMBs have specific business locations and/or conduct business outside the home. Some may have large or multiple facilities and offices.
  • Revenues. As noted earlier, SMBs account for approximately 37 percent of total sales in the United States (2007 Census data). However, revenues per business can vary widely, depending on the type of business, location, number of employees, management capability and many other factors.
  • What Makes Them Tick. Some SMBs may start out as micro businesses which grow to a point where employees and capital investments are needed. Family businesses are common in the SMB category. Some SMBs may be large operations, requiring teams of people. But this large group usually diverges onto two different paths: 1) Those that want to stay small enough so owners can retain control while still growing revenues and profits; and, 2) Those for whom SMB status is just a point on the path to building a larger enterprise or empire.
  • Tips for Selling to Them. Small business owners on the first path want to know how this or that offering will help them gain or retain more cash with minimal investment. Some of them, especially family businesses, may have a large personal investment in the operation and may exhibit the attitudes of micro small business owners, particularly if the business started that way. Conversely, owners on the second path to enterprise greatness want to see how an investment in an asset, personnel, products or services will help get them to the next level. Salespeople need to watch for clues to properly put a prospect in one camp or the other.

Disclaimer: Any examples used are for illustrative purposes only and do not suggest affiliation or endorsement. The author/publisher has used best efforts in preparation of this article. No representations or warranties for its contents, either expressed or implied, are offered or allowed and all parties disclaim any implied warranties of merchantability or fitness for your particular purpose. The advice, strategies and recommendations presented herein may not be suitable for you, your situation or business. Consult with a professional adviser where and when appropriate. The author/publisher shall not be liable for any loss of profit or any other damages, including but not limited to special, incidental, consequential, or other damages. So by reading and using this information, you accept this risk.

Questions & Answers

    © 2013 Heidi Thorne

    Comments

    Submit a Comment

    • heidithorne profile image
      Author

      Heidi Thorne 4 years ago from Chicago Area

      Thanks, tammyswallow, for reading and commenting! I agree that small biz is becoming more niche-y which does require more advanced business skill than ever before. It sure does benefit everyone when we can patronize our local small business owners. Have a great week ahead!

    • tammyswallow profile image

      Tammy 4 years ago from North Carolina

      It seems that small businesses are becoming specialized and advanced. Great hub! It benefits everyone when we support small business.

    • heidithorne profile image
      Author

      Heidi Thorne 5 years ago from Chicago Area

      Hi billybuc! I do like being a micro business owner, but have no interest in being a "captain of industry," even on a 1 to 499 employee scale. God love those who do (which are a number of my clients). Always appreciate your kind comments and support!

    • heidithorne profile image
      Author

      Heidi Thorne 5 years ago from Chicago Area

      So agree! As a micro business owner, I don't even want to mess with employee issues. It really hampers my creativity. Thanks for reading and your kind comments, cyoung35!

    • cyoung35 profile image

      Chad Young 5 years ago from Corona, CA

      Great insight into small business owners. I always say if you can make good money in a business without hiring employees, then do it. You start running into problems and more expense when you have to hire outside help. Yes it gives you more freedom but it also gives you more headaches. Great hub!

    • billybuc profile image

      Bill Holland 5 years ago from Olympia, WA

      Nice research and excellent presentation. Been there, done that, and no desire to return to my own business. :) Good job, Heidi.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, toughnickel.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: "https://toughnickel.com/privacy-policy#gdpr"

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)