Small, medium and large business; what are the main differences
In this article we will look at such a thing as "small business". We will find out what it is and how it differs from a large one, what are the advantages and disadvantages.
What is small business in simple words
Small businesses are small entrepreneurial companies with no more than 100 employees.
These organizations have several distinctive features:
- Small area. Here, attention is paid to both the areas occupied by office space and the areas that the company serves.
- Limit the list of activities. Small business can be defined by the principle of little variety in the types of goods or services provided.
- Decrease the set of checks. Small organizations are provided with a kind of "vacation" by the regulatory authorities. And when the time for supervision is right, then this procedure does not last more than 50 hours a year.
- No need to confirm the status using special tools. Everything here is based on well-defined criteria.
If everything is clear with the first three points, then the last one should be considered more carefully.
Criteria for small companies
Restriction of organizational and legal forms of enterprises
Legislation strictly restricts organizational and legal forms, registration in which allows you to apply for the "title" of a small business:
- Business company;
- Business partnership;
- Production cooperative;
- Consumer cooperative;
- Peasant (farm) economy;
- Individual entrepreneur.
Unitary enterprises, concerns and holdings, groups of the financial and industrial sector, religious and public associations cannot be included here.
A small business is a small firm or business owned by an individual. The organization is characterized by small production volumes, relatively small revenue, and a limited number of personnel. Before choosing this form of entrepreneurship, it is worth analyzing the main distinctive features.
What is small business and what are its main features
From a legal point of view, this area of activity is regulated by the Federal Law “On the Development of Small and Medium-Sized Businesses in the Russian Federation”. Small businesses include:
- citizens registered as sole proprietors or farms;
- registered consumer cooperatives or commercial companies - the exception is municipal or state organizations.
What is small business? The main characteristic of this definition is considered to be the limitation of the number of employees. According to the legislation of the Russian Federation, their number over the past year should not be more than 100. There are also micro-enterprises. The number of employees in such firms does not exceed 15 people.
Another important feature is revenue. This parameter should not exceed 800 million rubles over the past year for small businesses and 60 million for micro-enterprises.
For small businesses, it is acceptable to work under a franchise agreement. This allows start-up firms to leverage technology from large corporations. However, this concept cannot be applied to all industries. It is most often used in tourism, trade, catering.
Important! Today it is not difficult to arrange a small and medium business. This is due to the fact that the state is trying to provide him with maximum support.
A distinctive feature of a small business is the involvement of the owner of the company in the work process. At the same time, in large organizations, the investor only provides initial capital, while trained people are engaged in business management.
This is the reason for the emotional attitude of novice businessmen to their business. If you trust only emotions in this matter, everything can end badly. Restricted access to the capital market discourages the use of a large number of instruments. This negatively affects the quality of the organization's advertising policy. Often, small businesses have to look for the cheapest methods of attracting customers, which is not the best reflected in the revenue.
Important! Low capitalization reduces the attractiveness of enterprises in the market. This means getting capital can get tricky.
Many different forms of entrepreneurship can be found on the market. Some of them are distinguished by a large volume, while others serve a small number of clients. And most importantly, some types of commerce in themselves involve development to a certain size. Small, medium and large business - what it is, what are the features and differences of each of them, we will tell you here.
Definition of concepts
Any independent systematic commercial activity is considered to be a business. This means that it is initially aimed at making a profit for the sale of its goods, services, the provision of property for use, and so on. Regardless of how the work is conducted, it must be registered in the manner prescribed by law.
The size of an enterprise determines many unique criteria for its work. The state traditionally supports small firms by reducing taxes and other mandatory payments, while large firms impose many demands, since they bring huge income. Naturally, it is important for young entrepreneurs to understand the difference between all forms in order to conduct their business correctly.
Small business is by far the most widespread. It is easier to organize, even with little or no work experience. Gradually, the size can increase to medium, due to an increase in annual turnover and attracting more resources.
Only a company that covers several regions of the country or has entered the international level can be called a large enterprise. He always has a large number of end consumers, which means that demand exceeds supply.
Main characteristics of entrepreneurship
Each of the above forms has its own unique features and characteristics. But some of them combine commerce as a whole:
Any company becomes a participant in market relations.
Companies in their work are always faced with two main aspects: economic and legal. It is prohibited to conduct business without taking into account organizational and legal norms.
The main function of any company is to participate in the economy of the country in which it is located, and to make the required innovations in order to constantly develop it. We are talking here about the use of new technologies, the search for alternative energy sources, raw materials and other things.
Small business is defined by law as entrepreneurship within small companies and enterprises that operate on their own and are not part of associations. This type of activity is important for improving the quality of human life, actively introducing new products to the market, improving the quality of services and creating jobs. Each of us is faced with the manifestation of small business everywhere - shops, cafes, hairdressers, pharmacies, small production workshops. Due to the small size of investments and turnovers, small businesses are more adapted to market changes than large enterprises.
Today in Russia small business includes commercial activities carried out by organizing structures with a certain number of staff and a small income.
The parameters by which a company can be classified in this area include the following restrictions:
Number of employees
The size of the staff for a small business has a limit value - no more than 100 people. Among them, microbusiness companies are distinguished, when no more than 15 people are involved in the work. The jobs are counted for the past calendar year. In this case, all employees are taken into account, including those working part-time, civil law contracts, employees of branches or separate divisions.
Amount of income
The size of a firm's profits is of great importance. To obtain or confirm the status of an organization that belongs to the small business segment, a certain amount is established by law:
- limit of 400 million rubles. for a small business company;
- up to 60 million rubles, if the company falls under the definition of microbusiness.
If you are planning to start your own business, it would be great to begin with understanding the existing forms of entrepreneurship. Such knowledge will facilitate not only the task of registering a business, but also the process of creating a business plan.
So. There are 4 forms of entrepreneurship: micro, small, medium and large business. And how they differ, as well as the advantages and disadvantages of each form, we will consider in this article.
Medium is the name given to enterprises whose staff is from one hundred and one to two hundred and fifty employees, and revenues do not exceed 2 billion rubles per year.
There are usually small networks of businesses that distribute their products, not limited to one city or even a region.
The same enterprises in which the staff exceeds two hundred and fifty people, and revenues for the year start at 2 billion rubles are already referred to large business. Often such organizations operate not only on a national scale, but also on the international market.
Financial analysis of small and medium-sized businesses:
Organizations with fewer than 16 employees and an annual income of less than 60 million rubles are called microbusiness. But, we will not consider this form of organization of an enterprise within the framework of this article.
The advantages of different forms of business
Any of these forms of business organization has both disadvantages and advantages.