March 11, 2011

How Small is Your Small Business?

Filed under: Uncategorized — Tags: , — agramling @ 6:53 pm

With 20 or so employees and fast-growing revenues, Locum Leaders is a US Chamber of Commerce Blue Ribbon Small Business of the Year for the second year in a row. It’s a well-deserved honor for a young start-up that has consistently exceeded expectations.

But if the company keeps growing, as we expect it to, when will it no longer be a “small” business?

For the purposes of the Chamber’s annual Blue Ribbon competition, the current threshold is $20M in annual revenue. Grow beyond that and you’ve outgrown this particular award.

The US Small Business Administration (SBA) has a more exacting measure of small that takes into account three-year revenues and/or number of employees. The SBA definitions are important, especially for those who seek SBA loans or preferential treatment in the pursuit of federal contracts.

Software giant SAP, whose software products we resell at RunE2E, has used the term SME (Small or Mid-sized Enterprise) to define the vast market segment immediately below $1B companies. You could be a $500M industry leader and still be a SME to SAP—proving that all sizing is relative.

The lack of agreement on what constitutes a small business is one reason Scott Shane, a professor of Entrepreneurial Studies at Case Western, says the term ‘small business’ is baloney!

Writing in Bloomberg BusinessWeek, Shane calls for more stratified small biz classifications that would range from ‘non-employer businesses’ and ‘microbusinesses’ (1 to 9 employees) all the way up to ‘large small businesses’ with 100 to 499 employees.  It’s this last group, he notes, that accounts for most of the job growth commonly attributed to U.S. small business.

Whatever the definition, Locum Leaders is proud to be a Blue Ribbon Small Business of the Year for 2011. It also proudly plans to outgrow the award one day soon.

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