By Ashley Nowe
Defining a small business is not cut and dried. Different standards apply to federal companies than to state companies and even those definitions are broad.
“Defining a small company is not black or white,” said Robert Blaney, district director of the Small Business Administration. “There are many, many shades of gray.”
According to the Small Business Administration, the most common size standards to define a small company is having 500 employees or less.
However, this definition itself can vary depending on the industry. A small business in the wholesale trade industry is defined as 100 employees or fewer. Other industries, such as construction and special trade contractors base the definition on annual revenues.
The state has another definition, ruling that a small business as 100 employees or less.
“There is an odd connotation to the word small,” said Charlie O’Dowd, the southern Arizona director of the Arizona Small Business Association. “People think that small means the guy in the back room fixing radios, but that just isn’t so.”
According to O’Dowd, 97.5 percent of people residing in Pima County are employed by a small business. The rest of the population typically work for Raytheon, or a government entity.
Not having a uniform standard to define a small business is “something we are always up against,” O’Dowd said. “The definition varies. A small business really is everything that is not big.”
According to Michael Hull, regional advocate for the Small Business Administration, there are round-table discussions under way in an attempt to simplify regulations, making them more uniform. He expects that within the next six months there will be a new rule proposed. Once the proposal is released, there will be a minimum of 90 days of public comment, where people can say how the new rule would affect them and their business.
In the meantime, all federal agencies and state and local governments, with a few exceptions, use the size standards established by the Small Business Administration.
Being a small business does have some benefits that large corporations do not have.
Many agencies set aside a designated amount of contract money to hire small businesses.
Also, small businesses can apply to be part of the Small Business Innovation Research Program, which allows businesses to propose innovative ideas that meet the research and development needs of the federal government.
This is a three-phase process, and, if approved, the company receives an allotted amount of money to continue research and develop ideas.
While there are no grants or special tax treatments for small businesses, there are competitive small-business loans.
Microbusinesses, companies with five or fewer employees, are eligible for micro loans through the Small Business Administration.
The Microbusiness Advancement Center offers a loan program as well, used by many who are looking for loans under $35,000.
With 110,000 of the 112,000 business in Pima County defined as small, microbusinesses and small businesses are vital to the local economy.
Nationwide, small businesses account for 60 percent to 80 percent of new jobs annually, according to the Small Business Administration Web site.
“We focus on the smallest of small business because very often with small businesses, you have people who want to be in Tucson,” said Mary Gruensfelder-Cox, executive director of the Microbusiness Advancement Center. “There is real value in that because the money turns over into the local economy again.”
For more information on small businesses visit the Small Business Administration at www.sba.gov.
Arizona small-business profile comparison to other states and U.S.
Fewer than 500 employees
2001 2002 2003 2004
New employer businesses 14,541 14,291 13,332 12,421
Business terminations 16,371 17,642 15,488 17,553
% Small businesses 97.2% 97.1% 97.1% 97.2%
New employer businesses 128,885 130,840 113,500 117,016
Business terminations 149,831 156,858 140,435 143,115
% Small businesses 99.1% 99.1% 99.1% 99.2%
New employer businesses 8,864 8,826 9,749 10,843
Business terminations 8,525 8,667 8,939 9,012
% Small businesses 95.7% 95.6% 95.6% 95.7%
New employer businesses 574,500 550,100 572,900 580,900
Business terminations 585,800 584,500 554,800 576,200
% Small businesses 99.7% 99.7% 99.7% 99.7%
Source: U.S. Small Business Administration’s Office of Advocacy
112,000 businesses in Pima County
110,000 businesses in Pima County that qualify as small businesses
60% to 80 percent of new jobs created annually are in small businesses
500 the maximum number of employees to be considered a small business, according to the Small Business Adminstration
100 the maximum number of employees to be considered a small business, according to the state of Arizona