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Definition of Small Business

The SBA definition of a small business has evolved over time and is dependent on the particular industry. In the 1950s, the SBA defined asmall business firm as “independently owned and operated…and not dominant in its field of operation.” [13] This is still part of their definition. At that time, the SBA classified a small firm as being limited to 250 employees for industrial organizations. Currently, this definition depends on the North American Industry Classification System (NAICS) for a business. The SBA recognizes that there are significant differences, across industries, with respect to competitiveness, entry and exit costs, distribution by size, growth rates, and technological change. Although the SBA defines 500 employees as the limit for the majority of industrial firms and receipts of $7 million for the majority of service, retail, and construction firms, there are different values for some industries. Table 1.1 “Examples of Size Limits for Small Businesses by the SBA” presents a selection of different industries and their size limits.

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Table 1.1 Examples of Size Limits for Small Businesses by the SBA

NAICS Code NAICS US Industry Title

Size Standards (Millions of $)

Size Standards (Number of Employees)

111333 Strawberry farming 0.75

113310 Timber tract operations 7.00

114112 Shellfish fishing 4.00

212210 Iron ore mining

 

500

236115 New single family housing construction 33.50

311230 Breakfast cereal manufacturer

 

1,000

315991 Hat, cap, and millenary manufacturing

 

500

443111 Household appliance store 9.00

454311 Heating oil dealers

 

50

483111 Deep sea freight transportation

 

500

484110 General freight trucking, local 25.50

511130 Book publishers

 

500

512230 Music publishers

 

500

541214 Payroll services 8.50

 

541362 Geophysical surveying and mapping services 4.50

541712

Research and development in physical,

500

 

 

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NAICS Code NAICS US Industry Title

Size Standards (Millions of $)

Size Standards (Number of Employees)

engineering, and life sciences

 

Except aircraft

 

1,500

722110 Full-service restaurants 7.00

722310 Food service contractors 20.50

811111 General automotive repair 7.00

812320 Dry cleaning and laundry services 4.50

813910 Business associations 7.00

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