We’ve got you covered regarding information about small businesses and the pros and cons of owning your own.
SMB…another acronym to add to your arsenal. What does it mean? It’s a little complicated — SMB can be interpreted to mean various things, with its meanings split across many fields. So, if you are reading this article, it might apply to you!
Both! Server Message Block, one way to interpret the SMB acronym, is a communication protocol designed to allow shared access to files and printers across devices on a network. The SMB protocol is crucial technology; however, it is inessential for the SMBs we’re talking about — small and medium-sized businesses.
Different organizations, such as the Internal Revenue Service (IRS), the Affordable Care Act (ACA), and the Small Business Administration (SBA), have different criteria for what qualifies as an SMB. However, a general definition is that an SMB is independently owned and operated within the United States.
An SMB can be categorized as a:
Some common types of small and midsized businesses are:
While those are several types of SMBs or SMEs (small and medium-sized enterprises), when determining if something is a small or medium-sized business, you must look at:
These three aspects go into an equation that determines whether or not a business is considered an SMB. Let’s dive into each.
What do small and medium mean when talking about small and medium-sized businesses? The general rule is that an SMB employs up to 1,500 people (based on the industry).
For something to fit into the SMB category, it depends on the industry of your business. The Small Business Administration (SBA) provides a Table of Size Standards that keeps track of what the Federal Government defines as small and medium enterprises based on the number of employees.
Annual revenue is another consideration the SBA makes when defining an SMB. The general rule is that small and medium-sized businesses can make up to $38.5 million (depending on the industry).
Again, revenue is a massive factor for a business to be considered small to medium. On the Table of Size Standards, the SBA also considers revenue and directly relates to the number of employees.
The type of industry is the third factor in determining whether a business is considered an SMB. While it’s true that a business can have up to 1,500 people and makeup up to $38.5 million in revenue, you also have to calculate based on the type of industry.
This means that your particular type of business might not have the exact requirements of another industry.
Based on the Table of Size Standards, below are some examples of what qualifies as an SMB based on industry and number of employees:
Based on the Table of Size Standards, below are some examples of what qualifies as an SMB based on industry and revenue:
Now that we’ve covered the definition of a small and medium-sized business, let’s examine some pros and cons of running an SMB.
Like anything else in life, there are certainly pros and cons to running an SMB. If you’re an entrepreneur considering starting your own small to medium-sized business, you must decide if it is truly right. Take a look below to see a few things to consider as you weigh your options.
Some pros include:
Some cons include:
You are correct if you noticed some pros and cons are the same! Let’s start with the pros.
Perhaps the biggest pro of starting your own business is that you can make your job something you love. If you have something that you’re good at, love it, and have a plan, then creating a business out of it could be your next move.
There is so much that goes into being your boss. However, if you relate to the saying, “Pressure is a privilege,” then being your own business owner might be a great fit.
Running a private sector business, whether a large company or a micro-enterprise, means you can do most things and make decisions the way you want. If you are confident in your leadership skills and think you have what it takes to build something from the ground up, then you might love being your boss.
If you’ve always had an aversion to typical 9-5 jobs, running your own business offers you the freedom to break that mold. Don’t get us wrong, running your own business will take countless hours, but you don’t necessarily have to complete your work during traditional business hours.
Now that we’ve highlighted the bright spots, let’s review the cons of starting your SMB.
Starting your own business is a considerable risk. No matter how hard you work, factors will always be out of your control. It takes money and collateral to get things going; more often, that money is your own.
Before you take the plunge, you need to decide whether you are willing to enter the risky environment of owning an SMB.
If being your boss sounds fantastic, you need to consider the responsibilities of it. Being your boss often means that you will also be someone else’s boss, so you have to be prepared to:
Being your boss is no easy feat. Before you jump in, make sure you are up for the challenge.
So, you don’t love 9-5s? You almost certainly won’t have that while running your SMB — you’ll have way more. One of the downsides of running your own business is the massive amount of hours you will likely have to put in.
Setting your schedule will likely mean you don’t have a schedule because work will take up so much of your day. Lines will blur, and you must be extra conscious about work-life balance to care for your mental health throughout the process.
An SMB is a small and medium-sized business, which will ultimately depend on your number of employees, how much revenue you make, and what industry you are in. Medium businesses have fewer employees than large businesses or large firms, yet they tend to display more economic growth than micro businesses and smaller startups.
If you are interested in starting your own SMB, refer to the Small Business Administration for detailed guidelines on how your business will qualify.
Before starting your business, you also need to make sure you seriously weigh the pros and cons. Being your boss is not something to take lightly, but the process can be truly rewarding if you’ve got a plan and know the risks.
If you’re looking to start an SMB, Hoist is here to help. Check out our site to learn more about how we can help you start, run, and grow your own successful painting business.
Sources:
Self-Employed Individuals Tax Center | Internal Revenue Service
Small Business and the Affordable Care Act (ACA) | HealthCare.gov
What is the Server Message Block (SMB) protocol? How does it work? |TechTarget
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