I have a headache. Erin, our Director of Multi-Media informed me that this was National Small Business Week. She thought this might be a great topic for my weekly Blog. Being that Ebsco is a “small business” and the prominent role small business plays in America’s economy (per all the politicians) I agreed. I felt the first step was to get some statistics on small business. Off to the internet I went.
- 99.7 of all business’ in the US are identified as small business’
Wait…. Seriously??? 99.7 of all business’?
Okay, I needed to find out what the definition of a small business was. Next stop the government Small Business Administration web site. I should have known venturing to any federal web site meant I had a headache coming. I was not disappointed. Here is how the SBA defines a small business:
- Manufacturing, maximum employees between 500 and 1,500 employees depending on what you manufacture. Why does it matter what you manufacture? Up to 1,000 employee difference? Seriously?
- Wholesaling, maximum of 100 to 500 employees, depending on what you wholesale. Why such a difference compared to manufacturing? What business is small at 500 employees and what company is not small at 101 employees? Not making a lot of sense to me. Headache starting to come on.
- Services, Maximum receipts of $2.5 to $21.5 million a year, depending on the service industry. Okay, now we look at sales not people? Look at the range. $21.5 million a year doesn’t seem small to me.
- Retail, maximum receipts of $.5 to $21 million a year, depending on what you sell. $20.5 million difference in the biggest retailer and the smallest that the SBA defines as “small”. I bet that retailer doing $.6 million that isn’t a “small business” really wonders why that other retailer with $20 million in annual sales is eligible for an SBA, low-interest loan and they are not. Rubbing temples profusely now.
- Construction, $13.5 million to $17 million maximum annual sales, depending on what you construct. Well at least the range is a little closer. Depending on what you construct? The headache is official now. A lot of information and I now understand absolutely NOTHING.
Looking at other countries I found that Australia considers a small business as one with 15 or fewer employees. I can understand that. 15 employees, I’m a small business, 16 I’m not. Pretty simple. In the European Union it is defined as any employer with 50 or fewer employees. That’s pretty clear also. When you hire that 51st person you are no longer a small business. I’m sure Australia saved a fortune on paper by making their definition so simple. The US guidelines requires pages and pages with SIC codes and other things no one else understands to simply define a small business. Australia needs one sentence. they can use really large font so it fills and entire page if they want.
So why is the United States definition so complicate? Why can’t we have one definition for everyone, or least one definition within each industry?
MONEY! MONEY! MONEY! MONEY! MONEY! MONEY!
There are a lot of economic benefits for companies identified as a “small business” from the US Government. Small business’ are eligible for SBA loans. SBA loans are lower interest, government insured loans. Ebsco has taken advantage of this. It’s a great benefit for “SMALL BUSINESS” The military and other government entities are required to utilize small business’ for a portion of the contracts they offer. This helps small business’ to compete with the big boys. It prohibits the big companies from under bidding small business to drive them out of business. It allows small business’ the chance to grow and compete one on one. There are several programs, training and other opportunities offered at little or no costs to small business’. As you can see, there are economic benefits to being identified as a small business.
The definition of a small business is driven by elected officials that are influenced by the contributions of constituents. The owner of a NOT “small business” who would like to be eligible for government small business contract, makes a sizable contribution to their representative and magically the definition of a small business in that field changes. SIMPLE. No, I do not have any proof of this but I do know the answer is always “Follow the Money”. When it comes to government guidelines that money is in the form of political contributions.
WOW! This Blog really got off track. I started wanting to provide some statistics on the contributions of small business to the US economy and I ended up with a tirade on the inadequacies of American politics. Not the direction I had planned. I don’t think I’m going to post any of the other statistics I dug up on small business, since many of the business’ included in the statistics aren’t really all that small.
Here is what I do know. With under 100 employees, I’m confident Ebsco is a small business. We export our product all over the globe, contributing to US trade balance. We employee several people who pay taxes and spend money driving the US economy. We pay taxes buy supplies and spend money that create other jobs. With the confusing definition of small business’ I have no idea how many other companies are small business’ but I do know that they make a significant contribution to America. Small business creates jobs and pumps money into the American economy. Small business creates new products, technologies and innovation. Building a small business is the ultimate achievement in the American Dream. So I offer this salute to all the small business’ in America, that help make this country work. Even if I have no clue who you are.