Planning, Startups, Stories


Tim Berry on business planning, starting and growing your business, and having a life in the meantime.

How Small Business, Sole Proprietors, and Entrepreneurs Are Apples and Oranges 2

Fruit Basket 2

Fruit Basket 2 (Photo credit: AditChandra)

This post starts a new category for this blog, named — for lack of a better name — “Politics Big Biz Small Biz.” It’s based on the assumption that politicians and big businesses want votes and money from an extremely diverse collection of people they call small business. Who are in fact some small business owners, some small business managers, some small and single-person service businesses, some startups, some entrepreneurs, and some others, who have relatively little in common with each other.

To understand how this really works, start by exploring the definition of “small business.” Data collectors define that mostly by how many employees, but definitions are all over the map. The federal government’s Small Business Administration (SBA) includes businesses with as many as 1,500 employees and as much as $21.5 million annual sales, depending on type of business details. Other studies and government agencies cut off “small” at 5, 10, 100, 500 employees.

In practices, buying patterns, and decision making, not to mention motivation and definitions of success, how different is a business with 1,500 employees, or doing more than $20 million a year, from the graphic artist or consultant on her own, or the dry cleaner on the corner? That’s huge. These are not the same thing.

And entrepreneurs? Some people think everybody who owns a business is an entrepreneur. Some think that includes the massage therapist and freelance writer, the self employed; but a lot of them would never call themselves entrepreneurs. And thoughts, writing, ads, and products marketed for entrepreneurs won’t reach these people who don’t define themselves as entrepreneurs.

Amazing fact: More than 22 million businesses legally registered in one way or another in the U.S. have no employees. Some are just service people getting by, some are economic freedom fighters, and some are fake businesses that exist for tax purposes only. They defy classification.

True story: I ran into a business that classified the so-called small business market according to the decision making pattern. There were those in which the owner decided, those in which a functional expert decided, those in which a committee decided, and some others.

What do you think: Is it a small business if it has no employees? Is the owner of a 50-person small business an entrepreneur? Are entrepreneurs only the startups looking for funding? Is the family running the new dry cleaner business on the corner an entrepreneurial family?

Amazing fact: business owners’ political opinions are not predictable. Owning a business doesn’t make a person belong to any party or interest group.

Conclusion: People who own businesses, particularly people who start businesses, but also people who run their own one-person small business, are more likely to be go-it-on-their-own type people than joiners or followers. That’s by definition. So we defy classification systems.

  • Jamiel Cotman

    Eh-hum

    Entrepreneur – Someones who engineers a business that can run itself.

    Simply put, if they have to be there in order for it to function, they are not an entrepreneur.

    Self-Employed – Someones who engineers a job that they own.

    Simply put, they’re their own boss, but must work in exchange for that title.

    Business owner- Both of the above

  • http://www.incomesensor.com/10-tips-to-succeed-an-online-business/ Fathi

    I think, you have selected the right title for this new category Tim, “Politics Big Biz Small Biz”.
    It’s really hard to define exactly what is a “small business”, in these days things are changing every day, but I totally agree with you, is that not every small business owner is an entrepreneur, entrepreneur is a feature in human, if we look at the most real entrepreneurs, we will find that their work add new things and values, because entrepreneurship is, creation, innovation and networking with the right people.
    All that, can’t really go the right way without Political vision, for this I liked to integrate Politics in your new Cathegory.
    Have a nice day.