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Small business vs. large business

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Last editedMar 20212 min read

The difference between a small business and a big business may be obvious – size. But look beyond the surface and there are plenty other differences separating the two.

Small business definition

Generally, the definition of small business refers to companies that, essentially, are not large businesses. This means medium businesses can sometimes fall within the category of “small business.” A small business is a company that:

  • Employs less than 250 employees

  • Has a turnover of less than €50 million or with €43 million or less on the total balance sheet

Within this category, a small business can further be defined as a medium, small, or micro business. 

  • A micro business has no more than 10 employees and a turnover of under €2 million

  • A small business has no more than 50 employees and a turnover of up to €10 million

  • A medium business has no more than 250 employees and a turnover of less than €50 million or €43 million or less on the total balance sheet

Small businesses are also referred to as SMEs (small or medium-sized enterprises) and currently make up 99% of UK businesses. The majority of these small businesses are sole proprietorships, with no additional employees.

Large business definition

A large business is, therefore, any business that exceeds the aforementioned limits on employees and turnover. Large businesses account for 40% of employment in the UK. A large business also comes with more possibilities in terms of finances. For example, going public (via the stock market), and in turn, a larger cash flow means a large business will trump a small business when it comes to marketing, supply, and speed of production.

However, as the figures show, start-ups and small businesses are far more numerous than large businesses in the UK, and have created their own unique identity not only in the consumer space, but in areas like company culture and social corporate responsibility.

Small business advantages

From small business grants to a lively customer base, small businesses are by no means the lesser entity simply because they aren’t as big as large businesses. There are several reasons why customers, investors, job-seekers, and business-buyers have allowed SMEs to dominate the UK business population:

Flexibility and personality

It’s a long-standing issue that the bigger a company becomes, the less human it seems. As the charisma and enthusiasm that once made a SME great is replaced by corporate processes, some companies can lose the edge that helped them grow. A small business doesn’t have serious obligations like a board of directors and multiple regional leads to answer to, meaning they are more able to think outside the box and act on the fly.

The power to disrupt

It’s the goal of any small business to disrupt the accepted norms. Just look at how much food delivery has changed in the past decade. Without dozens of higher-uppers to appease, a small business can push back against norms and expectations to deliver something customers aren’t getting from bigger companies.

All about people

It’s natural that the smaller the team, the closer they are. A small business, especially a start-up, isn’t easy to run, and teamwork is absolutely vital. A small company can’t just outsource or employ someone to fulfil every role like a big company can, so it relies on collaboration, creative thinking, and a lot of cooperation. This results in richer team spirit that has been shown to attract job-seekers more than the corporate face of big businesses.

Better benefits

A large business is usually big on bureaucracy, whether that means glass ceilings, corporate jargon, or siloed thinking. A small business needs to operate in a flexible way that often benefits from a flat hierarchy which translates to benefits like casual dress, relaxed work environment, and other perks. It’s been found that young people are much more responsive to these work-life benefits than they are to salary alone.

Financial assistance

SMEs are also eligible for a wide range of small business grants, both from the government and from private investors. This can encourage the creativity and risk-taking outlined above, enabling start-ups to explore new possibilities.

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