The small business has suffered much from the recent economic downturn. This has resulted in many small companies to be on the lookout for alternative funding sources to enable them to continue their operations. However, small business owners often forget one of the most important aspects of their businesses – the annual revenue. While it is certainly true that a company’s size does have an impact on its potential for success, the annual revenue is not the only measure of success when it comes to a small business.
Small businesses often rely on a combination of private funds and government contracts to keep their doors open and their operations going. As such, they tend to focus much of their attention on how much revenue they are bringing in rather than on the other more important aspects of their company. They fail to consider the ways in which they can use the same sources of funding to improve their bottom line. Unfortunately, this lack of attention to the other factors often results in small businesses simply focusing their attention on reducing costs rather than improving their profit margins. As such, it is vital that small businesses take a long and hard look at government contracting as a source of additional funding, especially if they are struggling with a dwindling amount of annual revenue. You can get more information about Small Business Insurance Quotes Online.
According to the Small Business Administration, there are more than 38.5 million small businesses in the United States. The SBA defines a small business as any company which meets the following criteria: It needs to generate less than $1 million in annual revenue; it must be owned and operated by a U.S. citizen or a legally authorized resident; it is operated for profit. Many small businesses are eligible for federal grants and loans, including those that are owned and operated by the owner rather than by an employee.
The Small Business Administration determines the size standards for a small business based on both competition and the resources of the company. In order to qualify for federal funding and receive assistance with business start-up, the SBA will review company data in order to determine if the company is viable and capable of growing to meet the national economic growth goals. The SBA will also consider the resources of the company in order to determine its profitability and viability. The final factor, called competition, is used to calculate the size standards for a small business and assist in determining who gets government contracts.
The definition of a sole proprietorship refers to when only one owner owns a small business. This differs from a partnership, which allows two or more people to share in profits and liability. S Sole proprietorship is often the result of individuals starting their own businesses without prior management experience or business planning knowledge. Because the ownership structure is often risky for new businesses, many of these small business size standards are designed to increase the likelihood of success of existing businesses rather than hinder the possibility of new companies becoming successful.
While a sole proprietorship has been around for centuries, the Small Business Administration formalized the regulation in 1950. Today, sole proprietorship plays a large role in the US economy because it allows entrepreneurs to use their own personal assets to provide the capital to start and grow a business. For this reason alone, the Small Business Administration approves most sole proprietorship applications. To learn more about the rules that govern sole proprietorship, including the benefits and disadvantages of owning your own business, register for a free small business guidebook.
