Just ask the owners of the more than 30 million small businesses in the U.S. While celebrating small businesses during National Small Business Week it’s helpful for would-be entrepreneurs to know the benefits of being a small business and for existing small businesses to remember why they chose this life’s work.
1. The sky’s the limit
Entrepreneurs start their businesses with a dream. They want to create, help, support, provide, etc. through the products or services they offer. In return, they can achieve success. Each may define success differently—money, fame, innovation, supporting a family, creating jobs, building an empire—but there’s no limit to the opportunities that may abound. Every Fortune 500 company and multinational corporation started as a small business!
2. Doing it your way
A small business can go for the gold in more ways than money. They can define how they want to operate. Examples:
- Personalizing the customer experience. Due to size, the staff and owners in small businesses can continue to maintain close relationships with customers.
- Greening the workplace. Small businesses can choose how eco-friendly they want to be.
- Giving back to the community. It’s easy for small businesses to support their communities, through donations, volunteer activities, or participation in local charitable events.
Small businesses can respond to changes more rapidly than large companies burdened with layers of decision makers. For example, if a new technology comes along and the cost is not prohibitive, a small business can embrace it immediately without lengthy analysis.
I remember when I started my print newsletter I had a conversation with a person who did an internal newsletter for a Fortune 500 company. Even with an editorial review, I could turn mine around in days; theirs took weeks because everything had to be reviewed by multiple parties.
4. Exemption from employment laws
You can be as generous and helpful to your staff as you want and your budget allows. But being small means you aren’t subject to penalties for not providing certain benefits to employees. For example, you don’t have to offer unpaid time off under the Family and Medical Leave Act unless you have at least 50 employees (there may be state law requirements for smaller employers); of course you can choose to do so. You won’t be penalized under the Americans with Disabilities Act for failing to make accommodations for a disabled employee if you have fewer than 15 employees, although you likely would want to do so if it could be done with reasonable expense.
5. Special tax breaks
There are a number of deductions, credits, and other breaks in the Tax Code restricted to small businesses. Size for these rules may be defined by the number of employees, the amount of revenue, or the amount of assets. For example, tax credits restricted to “small” businesses include:
- Disabled access credit
- Credit for small employer pension plan startup costs
- Credit for differential wage payments
- Credit for small employer health insurance premiums
- Research credit used as an offset to the employer share of Social Security taxes
Despite the growth of multinational corporations, small businesses continue to define their role in the marketplace and grow in numbers. The 2016 Kauffman Index of Startup Activity reported “A heartening increase in the level of startup activity in the United States, despite the numerous headwinds entrepreneurs face.” Why? Because there are lots of reasons it’s great to be a small business.