What Is a Small Business?

The idea of a small business can mean different things to different people. For some, a small business is a mom-and-pop operation with just a handful of employees. For others, it’s a company with hundreds of employees but still considered small because it’s privately owned.

The U.S. Small Business Administration (SBA) defines a small business as a company with fewer than 500 employees. But that’s not the only way to measure smallness. Other factors can include annual revenue, the number of locations or the amount of capital invested.

The SBA also offers different assistance programs for businesses that meet its size standards. So it’s important to know how your business is defined before you can take advantage of those programs.

The Benefits of a Small Business

There are lots of benefits to being a small business. For example, small businesses often have more flexibility than larger companies. They can be nimble and quick to respond to changes in the market. They can also be more personal, offering a level of customer service that you can’t always find at a big box store.

Small businesses also have the opportunity to make a big impact in their communities. They can be more involved in charitable work and other local causes. And they often employ people who live nearby, which can have a positive effect on the local economy.

The Disadvantages of a Small Business

Of course, there are also some challenges that come with being a small business. For example, small businesses often have limited resources, which can make it tough to compete against larger companies. They may also have trouble attracting and retaining top talent.

And because small businesses are so personal, the death of a founder or key employee can be devastating. The loss of a key customer can also be a big blow.

The Risks of a Small Business

Owning a small business also comes with some risks. For example, you may have difficulty getting funding from traditional lenders. And if your business fails, you could lose everything you’ve put into it.

There is also the risk of burnout. When you’re responsible for everything, it can be hard to take a break. You may also have trouble delegating tasks and letting go of control.

What Do You Need to Own a Small Business?

Typically, it is very easy to get started as a small business. You may not even need any money to get started. Sometimes, you may just need a website (what is the best website builder for small business?) and some business cards.

Of course, there are some businesses that do require some startup capital. For example, if you’re starting a brick-and-mortar store, you’ll need to lease or buy a space. And if you’re starting a business that requires special licenses or permits, you may need to invest in those as well.


There is no one-size-fits-all definition of a small business. But in general, a small business is a privately owned company with fewer than 500 employees.

If you’re thinking of starting a small business, there are many benefits to consider. But there are also some risks. Be sure to do your research and understand what it takes to be a successful small business owner before you get started. With some dedication and hard work, you can make your small business dreams a reality.