In today's dynamic economy, small businesses stand out as pivotal forces, driving innovation, community growth, and job creation. Yet, for many aspiring entrepreneurs and small business owners, stepping into the business world can be daunting. Understanding the essence of what it means to operate a small business is crucial for any entrepreneur aiming to carve out a niche in the competitive market.
The term “small business” is often perceived through the narrow lens of neighborhood cafes, local boutiques, and multi-generational operations, yet its scope is far more expansive. This designation extends across various sectors and embodies a broad spectrum of impact and potential, offering profound implications that transcend its simplistic wording. Far from a one-size-fits-all label, a small business reflects the diversity of the people and passions that propel these enterprises forward.
The Buzzword Breakdown
Unlike most “Kill the Jargon” terms, “small business” doesn’t fit into one corner of business nicely and neatly. While the phrase "small business" might conjure images of the local dry cleaner, tech startups, or family-owned restaurants, its actual scope is much broader, influencing nearly every sector of the economy. Small businesses reach across every industry, every community across the world, and every generation, dating back thousands of years. From retail and services to manufacturing and technology, the small business designation is omnipresent, driving innovation, employment, and community development across the board, defined not solely by its size, but by its capability for agility and creative problem-solving in the ever-changing world around it.
What is a Small Business?
Small Business Definition
The United States Small Business Administration (SBA) offers a nuanced definition, detailing that a small business not only maintains fewer employees and generates lower annual receipts than its larger counterparts but also adheres to specific industry standards. The United States’ Internal Revenue Service (IRS) defines a small business based on applicable tax codes to a business, which range from number of employees, revenue, net worth, assets, or outlays/outputs (Small Business Taxes 2024). And yet, different industries also have their own definition of small businesses, where a manufacturing company with 500 employees may qualify as a small business in one sector, while a retail operation might hit that classification with just 100 employees.
So, while the “official” definition of a small business might change depending on your industry, finances, or employee count, all “small businesses” have a consistent core:
It is an entity that is independently owned and operated, has a smaller scale of operations, and can respond more promptly and out-innovate their much larger counterpart more effectively.
Keep it Simple
Imagine you have a lemonade stand in your front yard. It's just you and your stand, “Bob’s Lemonade.” You make special lemonade using your secret ingredient, honey. You set up a little table and sell cups of the delicious drink to people who pass by. This lemonade stand is a "small business." It's small because it's only your stand, not a big store, and you’re in charge.
Just like your stand, a small business is one where a few people come together to sell something or provide a service, like a small shop, an office, or even sell things from home. They're not a big corporation with multiple locations; they're more like your special lemonade stand, unique and local. However, small businesses are not limited to a single location. If your new friend Tom wanted to join your lemonade selling success and open another location in his driveway two streets over, together you both run “Bob and Tom’s Lemonade,” and are still considered a small business. When neighbors buy lemonade from you or Tom rather than Wendy’s, they are supporting the local community, encouraging your ambitions, and backing a new business that makes their neighborhood unique and enjoyable.
Applicable Business Case Studies
While small businesses are the local bakery and your favorite vegetable stand at the farmer's market, they don't always stay small. Let's take a look at three companies that started small and local then grew in demand popularity through their unique and exceptional offerings.
Business Case No. 1: Burt's Bees
Burt's Bees began in the early 1980s in a Maine town of just 4,000 people when Roxanne Quimby began using excess beeswax from Burt Shavitz's honey business to create a small, homemade candle operation. It wasn’t until 1991 they first developed lip balm which launched the beauty brand of Burt’s Bees. Over the years, products were added, and the company transformed into a globally recognized personal care brand, emphasizing natural ingredients and sustainability. While maintaining a commitment to sustainability, the homestead business scaled from local neighbors to a New York City boutique shop to dedicated multi-product shelf space in major big box retailers like Kohl’s, Target, and Ulta Beauty.
With over 30 years in the beauty industry, the dedication and vocality of Burt's Bees to use natural ingredients was an influencer in the demand for cleaner, healthier skincare. Roxanne and Burt’s modest leftover beeswax business showcases how a small venture, starting with a simple idea and minimal resources, can grow into a major player in the global market by adhering to core values of quality and environmental responsibility.
Business Case No. 2: Warby Parker
Warby Parker, founded in 2010 by four friends in business school, disrupted the eyewear industry by offering a direct-to-consumer model that significantly lowered the cost of prescription glasses. Struggling to find affordable prescription glasses, even forgoing corrective eyewear for an entire semester to save up enough for replacement glasses, the four friends took on the lens and frame monopoly of Essilor and Luxottica, respectively. By leveraging e-commerce and addressing unmet consumer needs, Warby Parker grew rapidly, moving from solely online sales to their first retail location in New York City within three years.
Now with over 200 brick-and-mortar stores across the United States, their own line of contact lenses, and a plethora of styling options, Warby Parker exemplifies how small businesses can challenge established market norms and provide innovative solutions to common problems. Their vertically integrated, direct-to-consumer model worked so well, in fact, that founder Jeff Raider co-founded Harry’s just two years later with the same premise of making high-quality razors available to men at a reasonable price.
Business Case No. 3: Zingerman's Community of Businesses
Zingerman's started in 1982 as a deli in Ann Arbor, Michigan, and evolved into a community of businesses, literally, including a bakery, coffee company, creamery, and more. Disregarding “traditional” expansion expectations, the success of Zingerman’s Delicatessen sparked a new growth path – “a collection of Zingerman’s businesses, each with its own food specialty, all located in the Ann Arbor area.” For Ann Arbor residents, Zingerman’s became more than a small business; it’s a cornerstone of their community. Through its expansion and community involvement, Zingerman's has significantly impacted the local economy and culture.
It's cultivated a unique model for sustainable growth and corporate responsibility. The Zingerman’s Experience personifies the diverse potential of small businesses to innovate, challenge the status quo, and positively impact both their industries and communities, underscoring the importance of vision, adaptability, and a commitment to Guiding Principles (and lots of exclamation points!).
Impact on Your Business
Aside from its relative size and revenue earnings, a “small” business can be anything but small. From the industry disruption to community building and customer-first approaches, small businesses breathe new life into aging and static economies. With high aspirations and openness to opportunities, small business owners can leverage their unique position for growth and sustainability. Here’s how:
Innovation as a Differentiator: Small businesses often have the agility to innovate more rapidly than their larger counterparts. By focusing on innovation, you stand out in a crowded market, pushing the boundaries of the status quo.
Customer-Centric Approach: Identifying and removing barriers customers regularly face not only makes it easier for them to obtain your product or service, it positions your company as a caring, thoughtful, intentional brand, genuinely interested in your audience, increasing the likelihood of repeat business. Engaging directly with customers to understand their needs and gathering feedback can also guide your business strategy and product development.
Community and Culture: Building a strong community presence can serve as powerful marketing and create a supportive ecosystem around your business, including a loyal customer base. Consider how you can engage with the community, like sponsoring local events, collaborating with other small businesses, and participating in community service.
Adaptability and Resilience: To survive and thrive, small businesses must be adaptable to the ever-changing market landscape. This includes pivoting when necessary, exploring new markets, or adjusting business models in response to external changes like customer demand and trends in order to maintain competitiveness and relevance.
Leveraging Technology: Identifying areas where technology can provide a competitive advantage, improve customer experience, or streamline business is vital to long term success. In today’s digital age, leveraging technological opportunities isn’t just crucial, it’s a necessity for optimizing operations, reaching customers, and scaling your business.
Harnessing the Power of Small Business for Big Impact
Exploring the concept of a "small business" redefined what it means to be small in scale but large in impact, stretching far beyond the quaint shops and family-owned restaurants often envisioned. Small businesses are not merely survivors in an infinite economic landscape but are frequently at the forefront of innovation, community development, and market disruption. They start with simple ideas, leftover resources, or solutions to problems and grow into market leaders not by mimicking the vast scale of larger corporations but by nurturing their core values and maintaining close ties with their communities. They embody agility, creativity, and resilience—qualities that allow them to seize opportunities that larger entities often cannot maneuver quickly enough to capture.
Whether you're operating a lemonade stand or launching a solution-based startup, the spirit of "small" in business is about much more than size. It's about a mindset and transforming modest beginnings into powerful enterprises that not only compete but lead in the global marketplace. By understanding and harnessing the inherent strengths of being small, businesses can achieve big things on a pathway not just to success but to significant influence. The journey of a small business owner is one of discovery, challenge, and immense reward. Here's to your journey, your impact, and the infinite possibilities that lie ahead in the world of small business.
If you found this "Kill the Jargon" article helpful, leave a comment explaining which Impact Point would benefit your small business the most. To share your thoughts, join our free membership and connect with other entrepreneurs. For similar articles, discover more KTJ posts on its dedicated VTO blog post page.
About the Author:
Em is the co-founder of L2Business and Director of Communication. With a passion for writing and helping others, "Kill the Jargon" is Em's favorite L2 project. When she's not busy with the business, you can find her yelling at the TV watching her alma mater Texas Tech or any hockey game she can find. Let's connect on Facebook!
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