What is a Small business entrepreneurship?

Small business entrepreneurship: A small business is inherently different from a startup/scale-up venture. They differ in purpose, ownership, and focus. Some of these differences are fundamental to the way they operate and the goals that they try to accomplish. I like small businesses as they represent vast majority of the entrepreneurial ventures. Most entrepreneurs are small businesses and represent people with enterprising skills. Most small businesses are restricted by their size, revenue opportunities and scale at which they can grow.

This is completely different compared to a startup where the primary motive is to scale and expand. For this debate, we will not go into the details of a scalable startup entrepreneurship. instead, we will focus our conversations around the values of a small business.

What is a Small business entrepreneurship?

As the name indicates, a small business refers to a business that has reduced size and scope. Most small businesses are either single-person-owned or family establishments. You’ll also see some businesses that are partnerships and don’t have the formal structure of shares, investments etc that are central to a startup.

The image below shows a few characteristics that define a small business entrepreneurship. They generally have few employees, and have revenue capabilities of <$7.5Mn revenue. Most small businesses earn significantly less than that. However, some outliers are capable of churning higher revenues.

Some of the key characteristics of a small business are:

1. Ownership: They are usually sole person-owned or small partnerships. Most small businesses don’t have a share split or formal split apart from revenue arrangements etc.
2. Funding: Self-funded or through loans, investments through friends and family etc. They don’t usually have an equity-based funding which is common in the startup world.
3. Formal structures: Small businesses are organic. They sometimes won’t have the structures such as HR departments, career development programs, rewarding structures etc.
4. Flexibility: They can afford to be flexible, nimble and adapt quickly. Startups however have to answer to the board or investors that makes it time-consuming compared to the owners making a decision. On the other hand, it also means that there are no adequate checks and balances that support good decision-making.

The table below shows some of the key characteristics that define a small business’s entrepreneurship.