Definition of Small Scale Enterprise

by Shoaib Khan; Updated September 26, 2017

A small scale enterprise is a privately owned and operated business, characterized by a small number of employees and low turnover. A small enterprise usually only shares a tiny segment of the market it operates in.

Economic Impact

Small scale enterprises (also, small scale businesses) are essential to the economy for industrial growth and diversification. The definition of a small scale enterprise may vary in different economies of the world, but the underlying concept is the same.

Measures

Some measures used to define small scale enterprises include annual sales, asset valuation, net profit, headcount and balance sheet totals.

Number of People

Perhaps the most important measure in defining small scale enterprises is the number of people employed by the business. In African nations, a business is considered to be small scale if it employs 5 to 50 people. In Asian countries, it is between 30 and 100, while in the United States it is any number below 500.

Microbusiness

Microbusinesses are the smallest business entity under small scale businesses. These enterprises typically employ less than 10 people--and, at 95 percent, represent the largest sector of the American economy.

Types

Small scale enterprises operate in diverse industries. Common types are bakeries, convenience stores, law firms, accounting firms, guest houses and small-scale manufacturing facilities.

About the Author

Shoaib Khan began writing in 2006, while working as an advertising professional. His work has appeared in marketing and business communication materials, including print advertisements, billboards and product brochures. Khan completed his Master of Accounting degree at the University of New Mexico.