Small business is a term that encompasses a vast range of businesses, from local mom-and-pop shops and solo entrepreneurs to private law firms, restaurants, boutique stores and more. Small business owners can be found in every industry and are known for their adaptability, flexibility and innovation. However, they can also face challenges from competing against larger companies and may have less access to financial resources. Despite the hurdles, small business owners often find it rewarding to run their own shop, and many have great stories to tell of how they got started and made it successful.
In a recent survey by the Pew Research Center, small businesses were praised more than any other institution by Americans—including the military and churches. The 33 million small businesses in the United States are a huge part of our economy, employing nearly half of all U.S. workers and providing services in communities across the nation. In order to be considered a small business, companies must fall within the SBA’s “size standards,” which are based on three factors: company type, average annual revenue and number of employees. If you are a small business, it is important to know how to identify and understand these metrics, as they may impact your eligibility for certain government contracts.
The SBA’s size standards differ by industry, and even within industries the criteria varies by revenue and number of employees. To determine your business’s size standard, use the SBA’s size standards tool and select the North American Industry Classification System (NAICS) code that most closely matches your business. In order to qualify for federal contracting opportunities, your business must be a small business according to the SBA’s size standards for the specific NAICS code selected.
A small business is usually defined as a privately owned corporation, partnership or sole proprietorship with fewer than 500 employees and less than $40 million in revenue. In addition, a small business must be independently owned and operated, physically located in the United States or its territories and must have less than 100 percent of common ownership with another business. Some federal agencies, such as the Department of Veterans Affairs, require that a small business meet additional requirements in order to be eligible for certain contracts.
One of the biggest issues facing small businesses is the current high level of inflation. In fact, it is the top concern of most small businesses surveyed by MetLife and the U.S. Chamber of Commerce in their Small Business Inflation Monitor. Inflation can cause businesses to lose money on sales, and it can make it harder for them to pay their bills.
Fortunately, there are several ways that businesses can reduce their exposure to inflation. One way is to improve cash flow management by regularly tracking their income sources and expenses. This can help them better predict when their expenses will increase, which allows them to plan accordingly. A second way is to invest in strategies that can help protect their profits against rising inflation, such as by investing in fixed-income assets.