Small business finance & SSI definition have undergone several changes over the years to fit the present needs and context. The definition of small business has always been associated with the idea of trade or commerce involving small units. Over time the meaning of the small unit has changed and now refers to the definition of small businesses. Today, as it is commonly understood, a small venture includes any type of trade or commerce involving production of primary commodities such as food, beverages, tangible personal property, and/or services.
Production of primary commodities for sale to the market is the core activity for most small scale companies or businesses. The definition of small scale also includes any production unit that employs fewer employees than the value of the production produced. In order to qualify for small scale production, there must be a lower level of total employment than the value of production. In other words, the company must generate more revenues than the number of employees. Companies normally have either one location or several sites where production takes place.
Some businesses are classified as small because they employ fewer employees. These types of companies usually specialize in a single field such as the production of sports equipment, medical supplies, or garden care products. A small scale brewer is a manufacturer of beer and has a small market share compared to the larger brewer. A small scale producer can also be a retailer of goods such as toys, clothing, books, and electronic gadgets. A manufacturer can also be a small scale pharmaceutical manufacturing facility.
Small scale production activities in the United States fall under two main heads: retail sales of goods produced by companies and activities performed by government agencies. Retail sales refer to the sales of products directly purchased by customers. Government activities include those conducted by federal, state, and local government agencies. Examples include leasing, tax, educational, correctional, and social service programs. The government definition of small business also includes those not-for-profit organizations engaged in charitable activities.
The second major definition of small businesses in the United States is that those engaged in direct selling have fewer employees than the number of employees of the largest seller. Direct selling is defined as selling products directly to consumers. Most small companies that sell directly to consumers also own some retail outlets. This is part of the strategy for increasing sales volume.
Small companies usually start out with a small capital investment and are unable to expand beyond a certain point. One way to increase a company’s scope is to acquire another small scale firm that can expand into larger operations. This can often be accomplished by purchasing a firm that already owns a plant or fleet of vehicles. Another way is to use a technology startup to produce and distribute goods similar to those produced by the original firm. The best deals on technology startups often come from acquisitions made by bigger companies.
Small scale agriculture companies are also eligible for government financing as long as certain requirements are met. The main requirement is that companies involved in small scale agriculture have established regular year-to-year sales. The second requirement is that they must operate with a control plan that shows how their sales and expenses will be managed. Government policy tends to be restrictive with regards to foreign-owned enterprises.
A third type of small business for government policy is the technology startup. A technology startup is either a research organization or a venture capital firm that is engaged in finding businesses that require resources in the form of human capital and technology know-how to undertake technological innovations. Some examples of startup businesses in this category include educational institutions, businesses developing software applications, and corporations developing hardware. The government will sometimes provide seed money for these ventures if they qualify for a program designed to boost small business start ups.