3 signs you're a small business (that aren't all about money)

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3 signs you're a small business (that aren't all about money)

How do you define the place where you work? See if any of these three characteristics sound familiar to you.

Whether or not the place you work or business you own "makes the cut" and fits the official definition of a small business can matter, because there are tax concessions, licensing and other laws that might affect you.

As this report notes, the last thing you want to do is waste money to comply with laws when you don't need to - or get fined for not bothering.

If you're wondering where the place you work fits into this, there's two often-cited ways to classify your business:

  • One is money - an "aggregated turnover of less than $2 million" is classified as a small business by the ATO.
  • The second is staff - "actively trading business with 0–19 employees… an ABN and are actively remitting in respect of a GST role." are small business according to the ABS.

In some ways small business is a bit of an antiquated term - think of the successful startups that have a handful of employees, for example.

3 signs you're a small business (that aren't about money)

The reason we bring this up? In case you're curious, we spotted some other interesting common characteristics of "small" businesses in this report that aren't about how much money you make. We found them in the Productivity Commission 2013, Regulator Engagement with Small Business, Research Report, Canberra (page 29):

  1. it is independently owned and operated, that is, it is not part of a larger corporation or controlled by another firm
  2. the owner manager is the principal decision maker
  3. the owner manager contributes most, if not all, of the operating capital.

The report also cites these other characteristics "common to the way a small business operates":

  • a small number of individuals work in the business — sometimes from the same family
  • a simple management structure, usually with no specialised finance, personnel or regulatory/legal managers or systems
  • limited resources, including finance, staff and skills — this often requires the owner manager to fulfil all regulatory obligations, leaving them time poor
  • a small market share with a greater propensity to only supply the local market, or operate within a single state or territory.

(The text in italics above is quoted from the report Productivity Commission 2013, Regulator Engagement with Small Business, Research Report, Canberra. The report was published last month by the Australian Government Productivity Commission.)

The report states that a Council of Small Business of Australia (COSBOA) survey found that small businesses viewed these characteristics as "central to the nature of a small business".

Another common thread - do you have an IT department?

"What's your definition of a small business" is also one of the questions I often get asked here at BIT. When I'm interviewing and coming up with articles, I try to avoid putting a dollar figure on the size of the businesses we write for. Because when it comes to the cloud, NBN and a whole range of tech topics, there are plenty of reasons these things are relevant, whether you're a person running a home business, or a company with 50-100 staff.

If there is one common thread that runs through the articles we do, it's that generally we want our articles to be helpful if you're not an IT professional. Many small businesses don't have IT departments, or if they do, it's sometimes a third party that visits them on a part time basis.

As the report we linked to above notes, "there is no such single universally accepted proxy definition of a small business."

How do you define yours? Do you think of your business as "small"? Add your comment below.


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