There are millions of businesses around the world and all of them vary in size, hence it is useful to classify businesses according to their size to have a better understanding of external business environment.
Measuring the size of businesses is helpful to managers as we can make comparisons between various business organizations, and also assess their business growth (or lack of growth) over time. This information of business size is also of interest to other stakeholders such as workers, investors and the government.
The official definitions for micro businesses, small businesses and large businesses is easily discoverable from the trade and industry department in your own country.
Let’s take a look at the one from The European Union.
Micro businesses
It is quite common to make a distinction for a very small business known as micro-enterprise, in addition to measuring businesses only as small companies and big companies. It is because most of the business organizations that exist in the world are micro businesses and very small businesses such as sole traders with either one or no additional workers. Micro businesses employee very few people (if any) and generate low sales revenue compared to other firms in the economy. All of the business organizations that employ 10 or less people, generate up to EUR€2,000,000 in sales revenue and have capital employed less than EUR€2,000,000 are classified as a micro business.
Small businesses
Small firms offer many benefits for the dynamism of an economy such as induction of new ideas or creation of new products. Governments around the world very often support small companies in many ways offering various assistance to entrepreneurs. All of the world’s largest companies like Google, Amazon or Apple had started off as very small firms and had been operating as small firms for many years before started to grow. According to The European Union definition, a small business hires between 11 and 50 employees, earns between EUR€2,000,000 and EUR€10,000,000 in sales and has capital employed between EUR€2,000,000 and EUR€10,000,000.
Medium businesses
They hire between 51 and 250 workers, record between EUR€10,000,000 and EUR€50,000,000 in sales revenue and have capital employed between EUR€10,000,000 and EUR€34,000,000.
Large businesses
Big businesses are usually huge multi-national corporations employing hundreds of thousands of people around the world such as McDonald’s or Walmart. According to the EU classification of business size, a large business hires over 250 employees, generates over EUR€50,000,000 in sales and owns capital employed over EUR€34,000,000.
I wonder what classification of businesses according to size look like in other major countries and regions.
