The definition of a small business can vary depending on the context, industry, and location. A small business is characterized by its size, revenue, number of employees, and ownership structure.

Here are some common criteria used to define a small business…

1. Number of Employees – Small businesses typically have a relatively small workforce compared to larger enterprises. The specific threshold for the number of employees varies by industry and country. For example, in the United States, the Small Business Administration (SBA) defines a small business as one with fewer than 500 employees for most industries.
2. Annual Revenue – Small businesses generally have lower annual revenue or sales compared to larger companies. Again, the threshold for annual revenue varies by industry and country. In the U.S., the SBA uses revenue or receipts to define small businesses, with thresholds ranging from $750,000 to $38.5 million, depending on the industry.
3. Ownership Structure – Small businesses are often privately owned and operated by individuals, families, or small groups of partners. They may be sole proprietorships, partnerships, limited liability companies (LLCs), or closely held corporations. Publicly traded companies with widely dispersed ownership are typically not considered small businesses.
4. Local or Independent Operation – Small businesses are often characterized by their local or independent operation, serving a specific geographic area or niche market. They may be independent retailers, restaurants, service providers, or professional practices that cater to the needs of their local community.
5. Market Share and Industry Concentration – Small businesses may operate in competitive markets with relatively low barriers to entry and a diverse range of competitors. They may have a smaller market share compared to larger competitors but can still thrive by offering personalized services, niche products, or specialized expertise.
6. Flexibility and Agility – Small businesses are often known for their flexibility, agility, and ability to adapt quickly to changing market conditions, customer preferences, and regulatory requirements. They may have shorter decision-making processes and more direct communication channels compared to larger organizations.

The definition of a small business can vary significantly depending on the industry, location, and specific criteria used for classification. The definition may change over time as businesses grow, evolve, or face different economic conditions. Government agencies, industry associations, and financial institutions often provide guidelines and definitions to help classify small businesses for regulatory, statistical, and lending purposes.