Copyright © Cengage Learning. All rights reserved. 5 | 1 Small Business: A Profile A business that is independently owned and operated for profit and is not dominant in its field SBA “smallness” guidelines –Manufacturing—500 employees –Wholesale trade—100 employees –Agriculture—$750,000 –Retail trade—$6.5 million –General and heavy construction—$31 million –Dredging—$18.5 million –Special trade construction — $13 million –Travel agencies — $3.5 million (commissions & other income) –Business and personal services — $6.5 million Architectural, engineering, surveying, etc.—$4.5 million Dry cleaning, carpet cleaning—$4.5 million

Copyright © Cengage Learning. All rights reserved. 5 | 2 Small Business: A Profile (cont’d) Small-business sector –There are about 27.2 million businesses in the U.S. –Just over 17,000 employ more than 500 workers –In the last decade, the number of small businesses increased 49 percent –Part-time entrepreneurs have increase fivefold and account for one-third of all small businesses –Two-thirds of new businesses survive at least two years, 44 percent survive at least four years, and 31 percent survive at least seven years –The primary reason for these failures is due to poor management stemming from a lack of business know-how –Small businesses provide over 50% of the jobs in the U.S.

Copyright © Cengage Learning. All rights reserved. 5 | 3 Industry Group-Size Standards Source: accessed October 3, 2008.

Copyright © Cengage Learning. All rights reserved. 5 | 4 Industries that Attract Small Businesses Attractive small-business industry characteristics –Low initial capital investment –Some special skill requirements –High growth and profit potential Industry categories where small businesses tend to cluster –Distribution—retailing, wholesaling, transportation, and communications (33% of all small businesses) –Service—medical and dental care; watch, shoe, and television repairs; hair cutting and styling; restaurant meals; dry cleaning; financial services (48% of all small businesses) –Production—construction, mining, and manufacturing (19% of all small businesses)