Small businesses are critical to the American economy. They drive job creation, fuel innovation and provide a platform for entrepreneurs to realize their dreams. In addition, they receive the highest positive reviews of any U.S. institutions surveyed by Pew Research Center, even ahead of the military and churches.
A small business can take many forms – from a privately owned corporation or partnership to a sole proprietorship – and their numbers and revenue vary widely by industry. To qualify as a small business, companies must adhere to the Small Business Administration’s size standards, which are based on number of employees and average annual revenue. The criteria for each of these metrics varies by industry, but most small businesses have fewer than 500 employees and less than $5 million in revenue (although exact numbers and caps differ by sector).
If you want to do business with the government, you must also self-certify as a small business through System for Award Management. However, registering is not the only step to start a small business; you must also have an employer identification number (EIN), legal documents and licenses, tax obligations, and a bank account that reflects your company’s unique structure.
Once you’ve established your business, it’s important to understand the regulatory landscape and how to differentiate yourself from the competition. This includes conducting market research and competitive analysis to identify opportunities and limitations in your marketplace. It’s also crucial to secure funding through a variety of sources, including business grants and angel investors.