Size isn’t the only difference between small business ventures and large ones. Of course, it is the most immediate and obvious separator of the two, but by peaking a little below the surface, you will discover that the unique elements of each stand out plainly to see.
There are a number of key differences between small businesses and large businesses. One of the most important is the size of the customer base. Small businesses typically have a less diverse customer base, which can make them more vulnerable to economic downturns. Large businesses, on the other hand, typically have a more diversified customer base, which can help to cushion the blow during tough times.
Another key difference is the scale of operations. Small businesses tend to be more nimble and adaptable than large businesses, but they also lack the deep pockets and economies of scale that large businesses enjoy. Finally, small businesses are often owner-operated, while large businesses are frequently run by professional managers.
This can give small businesses a more personal touch, but it also means that they may lack the expertise and resources of larger businesses.
Small business definition
A small business venture is basically a company that isn’t large. It is therefore possible for medium businesses to fall into the category of “small businesses.” A small business is defined as one that:
- Employs less than 250 employees
- With a turnover of less than £50 million or a total balance sheet of less than £43 million
- There are three types of small businesses within this category: medium, small, and micro.
- There are no more than 10 employees and a turnover of less than £2 million for a micro business
- Small businesses have fewer than 50 employees and a turnover of less than £10 million
- In a medium business, there are no more than 250 employees and a turnover of less than £50 million or £43 million or less on the total balance sheet
A small business is also known as an SME (small or medium-sized enterprise) and accounts for 99% of UK businesses. Most of these businesses are sole proprietorships, meaning they have no additional employees.
Large business definition
Businesses that exceed the aforementioned limits on employees and turnover are considered large businesses. In the UK, large businesses account for 40% of employment. In terms of finances, a large business also offers more options. In terms of marketing, supply, and speed of production, a large business will take the lead over a small business if it goes into a public limited company (via the stock market).
It should be noted, however, that small businesses and start-ups in the UK are far more numerous than large corporations and have an identity that is distinct not only in the consumer space, but also in areas such as corporate culture and social responsibility.
Small business advantages
The fact that small businesses aren’t as big as large businesses doesn’t mean that they are any less important. UK businesses are dominated by SMEs for a variety of reasons, including customers, investors, job seekers, and business buyers:
Flexibility and personality
A long-standing issue is that companies seem less human as they grow larger. When corporate processes replace the charisma and enthusiasm that once made a SME great, some companies lose their competitive edge. Due to the lack of board of directors and multiple regional leads, small businesses are more likely to think outside the box and act quickly.
The power to disrupt
Disrupting accepted norms is the goal of every small business. In the past decade, food delivery has changed dramatically. By pushing back against norms and expectations, a small business can deliver something bigger companies can’t.
All about people
A smaller team will naturally be closer than a larger one. Teamwork is essential when running a small business, especially a start-up. Like a large company, a small company cannot outsource or hire someone to fulfil every role, so it relies heavily on collaboration, creativity, and cooperation. As a result, there is a greater sense of team spirit, which is more attractive to jobseekers than the corporate face of large companies.
In large companies, bureaucracy usually takes the form of glass ceilings, corporate jargon, and silos of thought. Small businesses must operate in a flexible manner that often benefits from a flat hierarchy that allows casual dress and a relaxed work environment. According to research, young people are much more responsive to work-life benefits than they are to salary alone.
Both the government and private investors offer small business grants to SMEs. In this way, start-ups can explore new opportunities through creativity and risk-taking.