Small business can be termed as that type of business, which has a limited number of workers or employees. The definition of small business varies from one country to another, however, in the United States, if the number of employees of a business is less than 100, it is regarded as a small business.
On the other hand, if the number of employees of a business is less than 50, it is considered to be a small business in the European Union (EU). Small scale businesses can take the form of a partnership, privately owned corporation, or sole proprietorship concern.
In order to categorize small businesses, a number of methods or criteria are utilized, for example, yearly sales or turnover, valuation of assets according to the balance sheet, net profit, headcount, and balance sheet totals. Some of these methods are also adopted in the European Union.
Small business is also sometimes referred as small-scale business. The small scale businesses are a general form of business in a large number of countries according to the economic infrastructure that is prevailing there. Examples of small scale business are convenience stores, small shops like a delicatessen or bakery, tradesmen, hairdressers, lawyers, accountants, solicitors, guest houses, restaurants, small-scale manufacturing units, photographers, and many others.
Usually, small businesses are independent in nature.
The small scale businesses can be broadly categorized into the following types:
- Small scale industrial undertaking
- Ancillary industrial undertaking
- Tiny enterprise
- Enterprise by women entrepreneurs
The advantages of small scale businesses are the following:
- Small scale businesses require low expenditure and can be done on a part-time basis
- Small scale businesses are more flexible and adaptable to change
- Small businesses are suitable for Internet marketing
- The small business owners have a close relationship with their clients or customers