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Small Business: A Profile

• A business that is independently owned and operated for profit and is not dominant in its field

• SBA “smallness” guidelines– Manufacturing—500 employees– Wholesale trade—100 employees– Agriculture—$750,000 – Retail trade—$6.5 million– General and heavy construction—$31 million– Dredging—$18.5 million– Special trade construction—$13 million– Travel agencies—$3.5 million (commissions & other income)– Business and personal services—$6.5 million

• Architectural, engineering, surveying, etc.—$4.5 million• Dry cleaning, carpet cleaning—$4.5 million

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Small Business: A Profile (cont’d)

• Small-business sector– There are about 27.2 million businesses in the U.S.

– Just over 17,000 employ more than 500 workers

– In the last decade, the number of small businesses increased 49 percent

– Part-time entrepreneurs have increase fivefold and account for one-third of all small businesses

– Two-thirds of new businesses survive at least two years, 44 percent survive at least four years, and 31 percent survive at least seven years

– The primary reason for these failures is due to poor management stemming from a lack of business know-how

– Small businesses provide over 50% of the jobs in the U.S.

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Industry Group-Size Standards

Source: http://www.sba.gov/services/contractingopportunities/sizestandardstopics/summarywhatis/, accessed October 3, 2008.

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Industries that Attract Small Businesses

• Attractive small-business industry characteristics– Low initial capital investment

– Some special skill requirements

– High growth and profit potential

• Industry categories where small businesses tend to cluster– Distribution—retailing, wholesaling, transportation, and

communications (33% of all small businesses)

– Service—medical and dental care; watch, shoe, and television repairs; hair cutting and styling; restaurant meals; dry cleaning; financial services (48% of all small businesses)

– Production—construction, mining, and manufacturing (19% of all small businesses)