Business Size Matters: Classifications and Impact

If you're evaluating business services providers, applying for government contracts, or scaling into new markets, one factor becomes critical fast: the size of your business.

Your business size doesn’t just determine how you're perceived; it directly impacts what solutions you qualify for, how you’re benchmarked against competitors, and whether you're eligible for small business support programs or enterprise-grade services. From compliance to capital access, the size of your company shapes everything.

Whether you're seeking the right CRM, bidding on RFPs, or navigating funding criteria, understanding how your business is classified, by revenue and employee count, is a must. This guide breaks down exactly how business sizes are defined and what it means for your operations, partnerships, and procurement strategy.

Each business size classification is defined by its own set of characteristics. Let’s take a look at each of these classifications and why segmenting businesses into these groups even matters.

What are the three types of business size classifications?

When we talk about business size, we’re not talking about square footage or office perks. We're talking about the formal company size classifications that shape how businesses are viewed by the government, lenders, and enterprise software vendors.

There are three widely recognized company size ranges:

• Small business
• Mid-market enterprise
• Large enterprise company

Each classification is based on how many employees a company has and how much revenue it generates annually. This framework matters because company size directly affects loan access, procurement eligibility, tax treatment, and even which SaaS platforms will serve your needs best.

Let’s break down each business size category with real-world numbers and industry examples.

What defines a small business? 

According to the SBA, a small business typically meets these criteria:

• Employee count: Fewer than 1,500 employees (often under 500 in many industries)
• Revenue: Less than $38.5 million annually

That may sound like a big range, and it is. A small software company could be a 30-person team, while a small manufacturing business might have 1,000+ employees.

But across industries, a small business is usually:

• Founder-led or independently owned
• Regionally or locally focused
• Resource-constrained (cash, time, systems)
• Agile and innovation-driven

With over 30 million small businesses in the U.S., this is by far the most common business size classification. These companies often wear many hats and rely on cloud-based tools, flexible HR systems, and community connections to grow.

How is a mid-market business classified?

A mid-market company, sometimes referred to as a mid-sized business, occupies the scaling middle ground. They’ve grown beyond small business constraints but aren’t quite operating at enterprise level company size.

Typical mid-market benchmarks:

• Employees: ~1,500 to 2,000 employees
• Revenue: Between $38.5 million and $1 billion

Mid-sized companies often:

• Have a formal executive team
• Operate in multiple regions or divisions
• Require integrated systems (e.g., CRM + ERP + HRIS)
• Are scaling fast but struggling with resource balancing

Because company size classifications by employees can vary, mid-market businesses sometimes straddle two categories. But generally speaking, they face more complexity than small firms and more constraints than large corporations.

The mid-market tier plays a massive role in economic output and job creation and yet it's often the most overlooked when it comes to funding programs and policy.

What is considered a large company?

A large size company is generally one with:

• 2,000+ employees (or as few as 500 in some industries)
• Annual revenue exceeding $1 billion

This is what most people think of when they hear enterprise: multinational corporations, complex org charts, huge capital budgets, and massive market share.

But there’s nuance:

• A large company size in agriculture may mean 800 employees
• A large tech company may cross the threshold with just 400 highly paid staff
• Enterprise sizes often depend on both scale and influence

Examples of enterprise company size: Boeing, Microsoft, JPMorgan Chase. These companies influence policy, shape supply chains, and often set benchmarks for entire industries.

Does business size matter?

Yes, yes it does.

There are business size classifications for a reason. When the size of a business is considered, it provides a clearer vision of its health and economic impact.

Putting a huge restaurant chain like Taco Bell up against the less familiar Paco’s Tacos is like comparing apples and oranges. But when the size of the business is considered, it provides a more even-keeled perspective on how the businesses are performing.

The SBA has created these standards to weed out other businesses that don’t require the protection and promotion that small businesses need to survive in the economy. If Paco needed a loan to compete with Taco Bell, the government would take into account the fact that Paco’s Tacos is a small business.

What does company size mean for growth strategy?

Your company size affects more than just perception, it shapes how you operate day to day. Here's how:

Funding

• Small businesses qualify for microloans and SBA grants
• Mid-market firms seek growth equity or bank lines
• Enterprises access capital markets, bonds, and institutional investors

Compliance

• Larger businesses face tighter oversight (SOX, GDPR, ESG)
• Smaller ones may qualify for exemptions or less frequent audits

Hiring

• Small firms rely on flexibility and mission
• Mid-sized businesses compete for talent without massive perks
• Large companies have brand pull, but face agility trade-offs

Bottom line: The size of your company will define how you scale, compete, and survive.

How to determine your business size (step-by-step)

Not sure if you’re a small business, a midsize operation, or something else entirely? Here’s a simple breakdown to help you define your business size based on headcount, revenue, and structure, so you can choose the right tools and stay compliant.

Step 1: Get your NAICS code

Search your code at naics.com to identify your industry classification.

Step 2: Use the SBA size standards tool

Go to sba.gov/size-standards and enter your NAICS code, revenue, and employee count.

Step 3: Interpret your classification

You’ll learn whether your company is considered “small” under SBA guidelines — crucial for contracts, grants, and exemptions.

Step 4: Contextualize

Use your result alongside hiring, funding, and operations planning to ensure alignment with your business size category.

Business size: Frequently asked questions (FAQs)

Have more questions? Find the answers below.

Q1. Why is it important to classify my business size?

Classifying your business size is important because it determines eligibility for loans, tax incentives, regulatory requirements, and government contracts. Small businesses often receive special support, while larger businesses face different compliance rules. Proper classification ensures you access the right resources and stay legally compliant.

Q2. Do size thresholds vary by industry?

Yes, size thresholds vary by industry. The SBA sets different employee or revenue limits depending on the sector. For example, a manufacturing business may be classified as small with 500 employees, while a retail business may have a lower threshold. Industry-specific criteria ensure accurate classification.

Q3. How can I use the SBA Size Standards Tool?

Use the SBA Size Standards Tool by entering your NAICS code and business revenue or employee count. The tool compares your data to industry-specific thresholds to determine if your business qualifies as small. Access it on the SBA website to confirm eligibility for federal programs and contracts.

One size does not fit all

The size of a business matters. If it didn’t, the SBA wouldn’t have created classifications to separate them. When comparing different businesses according to their outputs, marketing, and other business aspects, don’t forget that size is also important.

Were you shocked when you read that there were 30.2 million small businesses in the United States? Feel free to check out some more small business statistics.

This article was originally published in 2019 and has been updated with content.