How “Small” Is Your Small Business?

According to a recent SBA press release, there is a proposal to revise the definition of small businesses. This redefinition of how “small” a business is, is in accordance with the Small Business Act. The establishment of size standards has two considerations.

how small is your small business

The first one is that it should have variance depending on industries to account for the differences between them and the second is that the policies set forth by the Small Business Administration should be for further help to small business concerns by encouraging them and reinforcing competitiveness. Small business concerns are defined by the Small Business Act as one that “is independently owned and operated which is not dominant in its field of operation”.

A small business size standard is the definition of how “small” a business is, with regards to either the number of employees the business has or its average annual receipts. You might be one of those who ask why you should care if the SBA does or doesn’t change size standards. Well, the answer is simple, really.

There are various Federal programs and services that are reserved for small businesses. If your business does not qualify as a small business by definition under this proposed amendment, then you would not be able to take part in those government programs and services such as being eligible for Federal contracts. The proposed revisions apply to businesses in 36 industries and one industry in professional, scientific and technical services, and one industry in other service sectors.

This proposal proves to be causing disparity between business owners. On one hand, there is growing concern that larger businesses could also take advantage of what is supposedly for small businesses only. And on the other, there is hope for a more level playing field because this proposed broader scope of small business means that federal agencies have a more varied and larger choice for small business procurement opportunities.

This is also the case why other small business owners are skeptical about this change. A broader definition of small business means more competition; more competition means fewer chances to be chosen. You could also check out the whitepaper issued by the SBA entitled, “Size Standards Methodology” which gives an explanation of how the SBA establishes, reviews and modifies small business size standards.

Currently, this is just a proposal and the SBA is going to continue its comprehensive review. There is nothing final yet and whether you are in agreement of this proposal or not, you, the small business owner have a chance to be heard. Your comments regarding this proposal can be submitted online until May 16.


1 Comments How “Small” Is Your Small Business?

  1. Shaleen Shah

    I’m having the same question too and yes, what you wrote here makes sense. Still, we need to see a more specific definition of the subject and metrics on how to differentiate a small business from others.


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