Across America, small businesses are the backbone of the economy. According to data from the Center, they account for 99.9% of all firms and employ almost half of the country’s private-sector workforce. They also export a significant amount of goods and services and generate more new jobs than large corporations.
But running a small business isn’t for everyone. It takes determination, open-minded thinking and the ability to plow through when things get tough. It’s also important to be aware of the risks that can come with being a small business owner so you can take steps to mitigate them.
For example, some of the biggest challenges small business owners face are having enough capital to grow and meet operational costs, and being able to attract customers outside their local area. To combat these problems, many experts recommend conducting market research and building a strong network to support your business’s success. Having a variety of revenue sources is also a good idea to help you weather economic changes.
In terms of structure, a small business can be any legal entity, including a corporation, partnership, LLC or sole proprietorship. However, to qualify as a small business, federal and state agencies use size standards that vary by industry — these are called North American Industry Classification System (NAICS) codes. For example, the SBA sets different revenue and employee-count limits for each industry. You can find the NAICS codes for your industry by searching for its name in the SBA’s table of size standards.
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