Despite hopes and aspirations, some businesses are destined to remain small and successful, more suited for dominance in the local market than dominance on a national scale. Small-scale businesses are the heart and soul of American capitalism, known in some states as “Mom-and-Pop” stores that serve their community and generate enough profits to stay in business for many years. Common sets of characteristics define small-scale businesses, making them distinct from national brands.

Limited Staff

To keep payroll costs manageable, small-scale businesses often limit their number of employees. In some instances, businesses operate as a one-person shop in which a single person handles customer inquiries and customer interactions and outsources things such as accounting and marketing to a specialist. More commonly, however, small-scale businesses tend to have a dozen or fewer employees, although that number can increase to nearly 100.

Localized Market

Small-scale business owners focus on their local community and try to tailor their marketing to their specific audience. While they may create a website to attract online orders from people who live outside that community, their bread-and-butter revenue is made from local customers. For example, a small-town barbershop services that town’s residents and isn’t concerned about attracting customers from the big city unless those customers happened to be visiting the town. This local focus keeps marketing costs low, but it limits revenue, which is why a targeted marketing plan and positive word-of-mouth is essential for long-term survival of the business.

Limited Revenue

Small-scale businesses tend to generate far less profit than large-scale businesses, precisely because they exist in a localized market and don’t have the marketing budget to attract a high number of customers. That doesn’t mean that small-scale businesses don’t generate profits or that some aren’t highly successful, but there is a much lower ceiling for the amount of money these businesses can generate without scaling up.

Limited Budget

By design, a small-scale business is one that owners can build from the ground up without needing a huge amount of initial investment. That’s why so many of these businesses are sole proprietorships or partnerships with two or three people that band together in common purpose. Budget limitations, however, aren’t as prohibitive as they used to be. In the digital era, platforms such as social media provide small-scale business owners with the opportunity to reach a wide audience without having to spend millions of dollars.

Limited Locations

Some small-scale businesses are successful enough for owners to open other stores in different locations or to franchise their stores to other owners. In general, however, small-scale businesses have limited locations and typically operate one main store, shop or office. Many small-scale business owners are choosing to run their operations from a home office, which saves overhead for rental space and can also provide a beneficial tax deduction.