This is not as strange a question as it appears. And, the answer is, it depends. What difference does it make? Well, if you are going after government contracts, some of them have goals for small and disadvantaged businesses. Some large federal contractors also have goals which means more opportunities, IF you are the “right” kind of small business - usually minority.

If you are looking for funding, the statistics applied to small business are applied to you- both the good and the bad. And, so do the myths. Most bankers and funding sources have heard most businesses fail. But, according to the Small Business Administration, of every seven businesses that shut their doors, only one leaves unpaid debts. Unfortunately, getting traditional funding is still very difficult. About 40% of small businesses, under ten employees, have to fund their businesses using credit cards.

Federal agencies and some states have their own definitions. At the federal level, sometimes you can be considered a small business if you are the smallest in a specific North American Industrial Classification Code (NAIC). The SBA defines small business as fewer than 500 employees or by revenue. Texas and some other states have defined a new kind of small business, a “micro business.” These are businesses with less than 20 employees.

The good news is that according to the SBA, we employ 53% of the private nonfarm workforce, contribute 47% of all sales, are responsible for 51% of the private gross domestic product, and created an estimated 64% of the 2.5 million new jobs in 1996. The bad news is we paid over 60% of the taxes. And, the other bad news is the IRS has stated that it goes after small businesses first when looking for violators.

Since small businesses represent 99.7% of all employers, it is not surprising that we are now being asked to deal with social problems— and not just those regarding employees. Check your telephone bill. Every business telephone line pays an extra surcharge to pay for putting Internet accessibility in all the schools. The Americans with Disabilities Act affects businesses with 15 or more employees in terms of employment. But, it impacts ALL businesses no matter what size in terms of customers. Every business is required to provide access and reasonable accommodation to their customers.The news is not all bad, because these potential customers have money to spend- about $175 billion.

The Regulatory Flexibility Law, Chapter 2006 of the Texas Government Code, provides for consideration of the impact in the adoption of a rule that would have “an adverse impact on small business.” Although many show the impact on large business, oddly enough, almost every proposed regulation in the Texas Register carries the statement “there is no adverse impact on small business.”

Maybe this is why the SBA’s research has found that small businesses produce 55% of innovations and twice as many product innovations per employee as large firms. We have to be creative to deal with the new laws which, at the federal level, cost a small business $5400 per employee as compared to $3000 for large businesses in regulatory costs, paperwork and tax compliance.

If you consider yourself a small business, celebrate your accomplishments and watch out for those definitions.

To thrive in tough times, take our Business and Marketing Plan Owners MBA courses this month or talk to us (933-1983)

More tips from the owner’s view next month.

Jan Triplett, Ph.D. is the COO of the Business Success Center which was named one of Austin’s top 20 Management Consulting

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