What is a Small Business?

Quality Glossary Definition: Small business

Small business is defined as a privately owned corporation, partnership, or sole proprietorship that has fewer employees and less annual revenue than a corporation or regular-sized business. The definition of “small”—in terms of being able to apply for government support and qualify for preferential tax policy—varies by country and industry. The U.S. Small Business Administration defines a small business according to a set of standards based on specific industries.

Industry
Not to exceed

Manufacturing and mining
500 employees

Wholesale trade
100 employees

Retail and service
$6 million average annual revenue

General and heavy construction
$28.5 million average annual revenue

Special trade contractors
$12 million average annual revenue

Agriculture
$0.75 million average annual revenue

While small businesses often can implement the same quality management systems found in larger corporations, they may face different challenges along the way. For instance, small businesses tend to have fewer human resources and less up-front capital to dedicate to quality initiatives. Upper management commitment and accessibility, however, can be stronger in a smaller business, and internal communications can be more straightforward.

The values perceived by small business personnel tend to become common factors in the personnel’s behavior and can become important factors that generate good long-term performance. Upper management can contribute significantly to small business culture development if they can express values and ideas to help guide the efforts of personnel. Ideas that describe part of the culture are typically known as organizational values and are expressed by concepts such as values, mission, vision, policies, and objectives. Typically, these concepts are established by the leadership and adopted by the personnel.

An example of the hierarchy and the relationship among these small business organizational values are represented in Figure 1.

Figure 1: Small Business Organizational Values

Small Business Resources

You can also search articles, case studies, and publications for small business resources.

Books

ISO 9001:2015 Handbook For Small And Medium-Sized Businesses

Failure Mode And Effects Analysis (FMEA) For Small Business Owners And Non-Engineers

Articles

Small Business, Big Feat (Quality Progress) Employee empowerment, solid leadership, and use of quality tools led PRO-TEC to a Malcolm Baldrige National Quality Award and helped them achieve its goal of becoming an industry leader.

Quality From Scratch: A Model For Small Business (Quality Progress) Many small businesses may find limited resources and conflicting priorities make the quest for organizational excellence difficult. Small business owners starting a quality program will find the Baldrige self-assessment tool an excellent compliment to traditional SWOT (strengths, weaknesses, opportunities, and threats) analysis.

Importance and Implementation of Baldrige Practices for Small Businesses (Quality Management Journal) An empirical survey was conducted to determine how small business perceive and implement the high-performance management practices outlined by the Malcolm Baldrige Criteria for Performance Excellence.

Development of a Social Network Website Using the New ISO/IEC 29110 Standard Developed Specifically for Very Small Entities (Software Quality Professional) The new ISO/IEC 29110 standard developed specifically for very small entities and startups was used to develop the software for a Web application to allow users to collaborate with all members of a network of friends.

Case Studies

Applying Lean Six Sigma in the Wood Furniture Industry: A Case Study in a Small Company (Quality Management Journal) Lean Six Sigma (LSS) helps to optimize processes by focusing on reducing waste and defects and improving quality. This paper presents a study on the implementation of LSS in a small furniture company.