Flock Free Nation

No nonsense information on small business.

Jul 18, 2011 - 2 minute read - Comments - entrepreneurship

What Is A Small Business?

The exact description of a small business varies depending on which source you consult.

The Canadian Bankers Assocation defines small businesses as those having authorized credit limits of $500,000 or less, while medium-sized businesses have authorization levels of up to $1 million.

The Export Development Corporation defines small exporters as having sales of less than $1 million.

For the Canada Small Business Financing Program, Industry Canada uses a definition of $5 million in revenue or less. Industry Canada also has an employee based definition where businesses are considered small if they have less than 100 employees or less than 50 employees if it is a service based business. A business that has between 100 and 500 employees is considered medium sized. Businesses with less than 5 employees are called Micro Businesses by Industry Canada.

The term small and medium-sized enterprise (SME) is a commonly used term by many organizations. Industry Canada defines it as a business having less than 500 employes, while those with more than 500 employees are considered large businesses.

To provide a point of comparison, the U.S. Small Business Administration (SBA) defines a small business as having as much as $21 million and 1,500 employees in annual revenue, depending on the product or service being offered.

As you can see, the SBA definition of a small business is considerably larger than the Industry Canada definition. It’s important to undersand this difference because if the small business you are starting is going to sell products and services to other small businesses, a Canadian small busines with 50 employees might have very different needs than a U.S. small business with 1,500 employees.