Every election cycle, the news is filled with quotes from government officials running for office extolling the critical role Small Business plays in our economy and how they plan to support small business if elected. Moreover, many lenders market themselves as being small business friendly. Then why is it that most business owners say that government legislation regarding small business does not affect them and so many businesses are turned down for your loan? The answer lies in the definition of a small business.
On two occasions I have had the opportunity to go to Washington DC to lobby for small businesses and our local ecosystems. Each trip included many meetings with Senators, Congressmen and their staffers. In each conversation I had, I was sure to ask the same question:
“What is your archetype of a Small Business in America?”
The answers I received typically contained the same three elements.
Been in business for a decade or more
Employs several dozen people or more
Has maintained good credit through an economic downturn
Since becoming a business mentor, I have mentored thousands of entrepreneurs. Only a handful of the clients I have met would qualify as a small business based on these three elements. In fact, more than 90% of the clients I mentor have none of the criteria these government officials and lenders attributed to small businesses.
Being self-employed, a freelancer or a jobber makes you a micro business or what I sometimes call a lifestyle business. Essentially, the aim of a lifestyle/micro business is to sustain a particular level of income to allow the owner to enjoy a particular lifestyle. Micro/lifestyle businesses are generally run by one or two founders, often related by birth or marriage, employee few people other than themselves, and trade time for money or be present in an establishment to generate revenue. No effort = no revenue. They are “The business” and if they were to go away, the business would cease to operate.
Having a side-hustle means that you only do casual projects as a part-time effort while maintaining full-time employment elsewhere.
While being self-employed, a freelancer, a jobber, and even having a side-hustle technically make you a business owner, you’re are not a small business in the eyes of the government or lenders.
Would your business qualify as a small business in the eyes or the government?
