What Are the Characteristics of a Small Scale Business?

by Anne Kinsey ; Updated November 28, 2018
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There is nothing like an entrepreneur with a dream to make a difference in the world and a little bit of seed money to invest in something that could become big. The characteristics of small business make it indispensable as an important facet of society in the United States, generating jobs and making up over 99-percent of all businesses in this country. As of 2018, 58.9 million people are employed because of small businesses, which makes up 47.5 percent of the workforce. In 2015 alone, small businesses created 1.9 million new jobs. These facts, as well as the contributions to international trade, make small business ownership attractive to many people who hope to make a living while also making an impact.

Characteristics of a Small Business

The Small Business Administration is responsible for defining the characteristics of a small business. While many people picture the small mom and pop shop on the main street or the work-at-home mom who sells handcrafted items on Etsy, the definition is actually much broader and varies from industry-to-industry. For instance, maximum employees could be as low as 250 or as high as 1,500 employees, but most small businesses employ 100 or fewer employees. Likewise, annual receipts could reach a maximum anywhere from $750,000 to over $38 million. On the low end of the scale are industries like agriculture and certain types of mining, while the high end of the scale includes construction and oil. The Small Business Administration publishes a table of small-business-size standards that can help you find the limits in your area.

Average annual receipts and workforce size are not the only characteristics that define a small business, especially in the context of community. Well-respected small businesses are often involved in their communities and known for providing reliable service. Some stores come with heartfelt histories of hard work and success that feed into the culture of the surrounding area. Scheels All Sports in Fargo, North Dakota began when a German immigrant used $300 from his potato crop as seed money to begin the business. Mary Jo's Cloth Store in Gastonia, North Carolina began when a 19-year-old girl sold her father's grocery store to start a cloth store in a room behind a barbershop. Groth Music in Minneapolis began when Chester Groth had a dream to bring a quality music store with integrity to the Twin Cities and has gone on to produce a well-known music-education catalog popular all over the United States. Stories like this become part of the fabric, culture and rich history of towns and communities.

Characteristics of Large-Scale Industries

The characteristics of large-scale industries include higher profits and a larger workforce. For any given industry, a business is considered large-scale once it exceeds the definition of a small business determined by the Small Business Administration. For instance, a construction business is considered a big business once it exceeds $36.5 million in annual receipts, while a wholesale trade business is considered large-scale once the workforce is larger than 100-to-250 employees. Many large-scale industries also have a healthy presence on the stock exchange.

Often, a large-scale business began as a small business and tries to keep its humble beginnings in the forefront, even with rapid growth. Facebook began in a Harvard dorm room, Google started in a garage, YouTube began in a cubicle and The Walt Disney Company began in the back of a small apartment. It just goes to show that even if your business has small and humble beginnings, it is possible for it to grow in ways that impact the world in major ways. It is also evidence that the characteristics of large-scale industries are frequently made possible by the vision, effort and persistence of small business pioneers.

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Small-Scale Industries With Low Investment

One of the ways to become highly profitable and grow from a small business to a big business is to research small-scale industries with low investment. It is possible to break into these small business opportunities with very little financial investment or overhead costs. Combine a solid opportunity with innovation and you could find yourself with a winning combination that creates rapid financial growth and a thriving business.

Direct sales companies are popularly advertised as a way to get into business for a low price. It seems like social media is often flooded with posts about companies like Jamberry, Kalaia, Perfectly Posh or Mary Kay. Many companies offer starter kits for $100 or less and their promises of success can be alluring. It is typical for consultants to make an income from sales, but also from growing a team or organization underneath them, from which they earn bonuses and additional income. Make sure you look at actual income statements from consultants and consider exploring companies that are just starting out but do not yet have a robust sales force. These smaller companies afford you greater opportunities to recruit new team members and make a healthy income. Examine the compensation plan, be sure you can stand behind the products and remember that products do not sell themselves and it will require consistent daily work to build your business and see a profit.

While direct sales opportunities can seem promising, some people are not comfortable with the business model. Thankfully, there are many other small-scale industries with a low investment that offer the chance to build a business and create a solid financial future. These opportunities typically do not involve building a team underneath you, but as you grow you might need to hire additional employees. Here are some examples of low investment industries to consider:

  • Babysitting.
  • Pet care.
  • Etsy or eBay shop owner.
  • On-site photography.
  • Fix-It services.
  • Social media management.
  • Elderly care.
  • Virtual assistant work.
  • Freelance writing.
  • Cooking lessons.
  • Food delivery.
  • Driving instructor.
  • Tax consultant.
  • Makeup artist.
  • Event planning.
  • Interior decorating.
  • Technical support and repair.
  • Tutoring.
  • Coaching.
  • House cleaning.
  • Handmade bath products, wreaths or other goods.
  • Errand service.
  • Grocery delivery.
  • Dog training.
  • Real estate agent.
  • Graphic design .

Starting a Small Business

The characteristics of small business make it alluring for those just starting out, those building a second career and people who are retired and looking for extra income. There is something charming about the thought of working from home, with family and friends or in a small shop where you become part of a larger community. Once you have chosen an industry and have a solid vision for your business, the research and hard work begin.

Find out about any licensing requirements for your chosen industry. Fields like real estate typically require a short course and a licensing exam to start a business. Contact your state for information on what state and local business licenses and permits are required for your business. If you plan to bake from home, most states require a food-handlers license and a kitchen that meets certain standards. Remember to take out small business insurance to protect your family and your business in case of any liability issues, as well as create a financial plan and business goals to get where you want to go. Think about branding, business practices and set yourself apart with memorable customer service that keeps your clients returning again and again.

About the Author

Anne Kinsey is an entrepreneur and business pioneer, who has ranked in the top 1% of the direct sales industry, growing a large team and earning the title of Senior Team Manager during her time with Jamberry. She is the nonprofit founder and executive director of Love Powered Life, as well as a Certified Trauma Recovery Coach and freelance writer who has written for publications like Working Mother, the San Francisco Chronicle, the Houston Chronicle and Our Everyday Life. Anne works from her home office in rural North Carolina, where she resides with her husband and three children.

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