Size Really Does Matter…or Does it? (Part 1 of 2)

You may take it for granted that your company is a “Small Business,” but you’ll find out otherwise when it comes to gaining capital or recognition. The distinction is important, especially if you wish to register for government contracting as a small business. Once you do register as a contractor, you must adhere to industry size standards established by the U.S. Small Business Administration.

If you’re a “Micro Business, or Microenterprise,” located within the U.S. (which is the category most of us fall under), then you want to be classified accordingly and you also want to join the Microenterprise Trade Association; The Association of Enterprise Opportunity or AEO. The Association for Enterprise Opportunity (AEO) is the national leadership organization and the voice of microenterprise development. They provide cutting edge training, knowledge sharing, Federal and State public policy, advocacy, and communications. AEO empowers a community of nearly 500 member organizations to be uniquely effective in serving the needs of micro-entrepreneurs who do not have access to traditional sources of business education or capital. Either way, you need to know how you measure up and where to look for resources that you’ve previously been overlooking, that could help you start or expand your business.

Let’s see how the State of Tennessee measures up. The state of Tennessee considers a business small an entity that is continuing, independent, and for profit (which means it performs a commercially useful function with residence within Tennessee and has total gross receipts of no more than ten million dollars (averaged over a three year period) and employs no more than thirty (30) persons on a full time basis. I could find no category for micro-business within Tennessee’s guidelines. However, the federal micro-business definition stands.

Next, we’ll look at how The Small Business Administration looks at size. First let’s see what they define as a business. The SBA defines a business as an organization conducting commercial activities for profit within the United States, and having a physical business location in the U.S., operating primarily in the U.S., and making a significant contribution to the U.S. economy through taxes or material and products. Now, most of us won’t fill that bill because of the word significant. If you’re a small or micro ‘mom and pop’ operation; neither your taxes, material nor product contribution would be considered significant. So are we really in business? Hell yeah; Even if we only contribute to the makers of antacids and hair dye companies.

The agency further defines a small business as independently owned; not dominant in its field on a national basis, and having fewer employees and monetary assets than a specific number, depending on the industry. Worthy of a mention is that the business may be a sole proprietorship, partnership, corporation, or any other legal form (distinguishable from state to state). Note for the old noodle - that when determining what constitutes a small business, the definition will vary to reflect industry differences, such as size standards (we’ll visit that, codification (CFR-Title 13, Part 121) recognized by the NAICS, standards, utilization, and significance in Part 2 of this series).

Microenterprises - Here’s where most of us inch highs are standing. The AEO defines us as businesses with five or fewer employees; usually the owner is it (Wow! The big cheese stands alone, no wonder we have so many sleepless nights, and graying or no hair.) It is further stated that such microenterprises generally need less than $35,000 in loan capital to start or run and we don’t have access to the conventional commercial banking sector. While we’re at it lets add a little salt to the wound, we are further classified by federal government standards as low-to-moderate income and by definition, most of us entrepreneurs are minorities, recent immigrants, women, disabled or for other reasons have special challenges that reduce our ability to access traditional credit and other services.

Talking about a big pin in the proverbial dream balloon! However, this assessment is probably true. The average entrepreneur in the U.S. believes ourselves to be a small business when in actuality we are a microenterprise and we should operate as such, with no shame nor animosity toward the big guys; we’ll take them out later!

Whether you’re a home-based business owner, or dreamed of opening up your own ‘mom and pop’ business, here are some must do’s while you’re waiting to take them on.

Get proper licenses and permits – it’s a misconception that freelancers, consultants or home-based business don’t need appropriate licenses. In fact, every business needs one or more federal, state or local licenses or permits to operate. Everything from the general to the specific and be found at Permit Me – this state site let’s business owners easily identify the licenses and permits required for their business.

Register your Business Name (DBA) – You cannot officially operate under a name until it is registered with your local government. Until such time as you register, you will operate under your given name.

Financing – There are several financing programs available to microbusiness owners from the SBA, including the Basic 7(a) Loan Program and the Microloan Program. To identify the right type of financing visit Loans and Grants Tool@business.gov.

Marketing – Shout now and reap the rewards later. In today’s marketplace social media is the link and the key to getting the word out about what you do or will be doing. Maximize them to the hilt and watch the results.

Insurance - Cover your business and your rear! Even if you're working out of your home, make sure that you've got insurance in the event that your source of income is disrupted by natural disaster or an idiot with nothing better to do than break into your home or place of business. Protect your investments and your dreams.

Last but not least, don’t stop dreaming; even if you don’t have a million dollars in your trust fund. Dream anyway and dream big, and always be prepared for success even when it seems you’ve failed for the fifth time; remember, slow and steady wins the race. You can have a map, compass and a flashlight and still get lost, so what! Re-chart your new course and keep swinging because it’s not the size of the dog in the fight, it’s the size of the fight in the dog!

Size Really Does Matter…or Does it? (Part 1 of 2)

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