It’s what’s on the inside that counts.
Well, that, and the size of your business.
While all businesses in the United States contribute to the same economy, they do so in all different shapes and sizes. Functionality, leadership, and mission statement are all important, but classifying the size of your business should not be overlooked, as it helps correctly measure impact and success.
What are the three business size classifications?
- Small business
- Mid-market enterprise
- Large enterprise
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.
3 types of business size classifications
The size of a business is a relative term. Does it refer to the number of employees? Or the size of the building? What about revenue? All of the above?
Before we break down each classification, it is important to note that there is no concrete definition of what makes a business considered small, mid-market, or large. According to the Small Business Administration (SBA), it all depends on the industry the business is in.
However, it doesn’t hurt to provide the framework of the classifications. Below are the general descriptions of what a small business, mid-market enterprise, and large enterprise are based on. It comes down to two things: revenue and number of employees.
1. Small business
A small business is, well, the smallest business size. However, they aren’t always a group of struggling employees working in a basement. Typically, a small business makes a maximum of $38.5 million in annual revenue, and has no more than 1500 employees. A majority of businesses in America are considered small businesses with a whopping 30.2 million in the United States alone.
2. Mid-market enterprise
Mid-market enterprises are more expansive than small businesses, but not quite as big as a large enterprise. They usually employ anywhere from 1500 to 2000 employees and make between $38.5 million and $1 billion in annual revenue.
3. Large enterprise
Large enterprises are few and far between. However, due to their size and industry domination, they account for most of the revenue of all businesses in the United States, generating over $1 billion each year with a team of over 200 employees.
Want to see where your business falls? Check out the U.S. Small Business Administration’s Size Standards Tool to find out the true size of your business.
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.
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.