SMBs are the lifeblood of the U.S. economy accounting for roughly two-thirds of new jobs in the last 25 years. Learn more about the U.S. SMB landscape in BSBCON’s latest blog series.
SMB Meaning
According to the U.S. Small Business Administration (SBA), small and medium-size businesses (SMBs) are businesses that are under a certain threshold in either average total receipts (expressed in millions of dollars) or number of employees. This is based on the North American Industry Classification System (NAICS) code for the particular business. The SBA size standards are published by the agency and periodically updated, with the last version as of 2017 and a new version forthcoming in 2022. While this varies based on industry, the general rule of thumb is that a small business is any venture with a maximum of 1,500 employees and $41.5 million in gross revenue. Furthermore, over 99% of all businesses in the United States are small, making these types of enterprises the lifeblood of the U.S. economy. In fact, small businesses accounted for about 2 of every 3 jobs in the United States over the last 25 years, according to the SBA.
Difference Between Small and Medium Enterprises (SMEs) and SMBs
Small and medium enterprises (SMEs) is a more internationally-recognized term than SMB, as it is the official phrase used by the World Bank, World Trade Organization, European Union, and United Nations. In general, an SME is a legally independent entity or company with up to 500 employees and $1 billion in gross revenue. To further complicate matters, SMEs have varying definitions and standards by country.
This is a much broader class of businesses than SMBs as this also includes middle-market firms, and not just small enterprises. As a result, it is advisable to refer to the terms SMBs and middle-market, particularly when focused on doing business in the United States. Nonetheless, when discussing international businesses it is important to consider the term SME.
What is a Large Enterprise?
Beyond SMB, and middle-market, there exists a large enterprise. In the United States, a middle-market firm is generally considered one with revenues above $100 million and below $3 billion in gross sales so one that exceeds this would be considered a large business. These figures are not set in stone, however, and other publications consider large enterprises to be those which exceed $1 billion.
Evaluating your SMB
In general, it is important to apply some level of qualitative and quantitative analysis to a business rather than using definitive rules. Although for the purposes of the SBA it is essential to understand size standards for loans and government grants, for every day parlance it is more about understanding the business itself.
For example, large businesses typically have multiple nationwide offices and an international presence. The brand is recognized in the U.S. market as a leader for that particular industry at or near the top. It may also be helpful to understand the industry and potential reach of the business. A mobile welding business, moving company, or local restaurant is much different than a fast-growing technology company which has more potential to achieve middle-market or large enterprise status in 2022.
This does not mean that the aforementioned small businesses cannot be profitable or successful, but ultimately the customer profile will be much different and targeted to B2C or smaller B2B clients. It is important to understand the differences between the terms SMB, middle-market, and large enterprise to consider the current state of your business as well as formulating an effective company strategy for future operations.
What is a Micro Enterprise?
On an even smaller scale than SMBs is the micro enterprise which typically only has a few employees up to perhaps 10. This may include solopreneurs, individuals with a side hustle, business owners with a single location, and freelancers. Websites like Upwork and Fiverr are popular for individuals to start their own micro enterprise, until eventually scaling out of these freelancing platforms. Nonetheless, many individuals make a living as freelancers, for example, there were 70.4 million in 2022, according to Statista. These companies are quick to start, require very little capital, and usually leverage existing skills the individual may have learned while at a large enterprise or middle-market firm.
How BSBCON helps SMBs achieve growth
In our next blog, we will provide essential tips and tricks to achieve growth for your small business. Our team of business plan writers are experts in the market and review your SMB to determine the best strategy going forward. We will discuss small business plan templates that can help you achieve your goals as well as initial investment. Additionally, in future blogs, we will go in depth on international entrepreneurs looking to immigrate to the U.S. by leveraging various visa programs available such as the E2, L1, EB2-NIW, EB-5, and E1 visa programs. Stay tuned for other exciting topics as we explore the United States SMB landscape.
Why BSBCON?
As a team of experienced business plan writers and consultants, we are positioned to assist U.S. SMBs excel in their respective markets. Our business model is to work virtually to help companies across the U.S. scale as small-medium sized businesses. The partnership developed with clients is intended to solve their most imperative business challenges, and unlock hidden value. In an evolving economy, BSBCON is a consulting firm at the tip of the spear for change. We use our team’s years of experience across the SMB market to create digital opportunities, combat threats, lean into strengths, and overcome challenges. We leverage frameworks, leading practices, and our own methodology to create bespoke business plans, strategic plans, and other winning business deliverables.