Who Is a Small Business Owner? The Definition Is Broader Than You think

Who Is a Small Business Owner? The Definition Is Broader Than You think

Who Is a Small Business Owner? The Definition Is Broader Than You think

I started my first small business when I was 22 years old. It was an electric sign repair business, and it consisted of me, a truck and some tools. To find clients, I would drive around town all night looking for signs that needed fixing and then call the owner the next day from my kitchen phone and offer my services for half the going rate.

It was not a sexy operation. When prospective clients called back—if they called back—I would change my voice and pretend to be a secretary. Then I’d put them on hold for a minute (i.e., cover the mouthpiece with my hand and just sit there), say hello in my normal voice, and give them my pitch.

I thought back to these days when I read a recent article in The Guardian by Gene Marks, a well-respected writer and entrepreneur. The gist of his piece is that when the US Census Bureau claims the existence of roughly 32.5 million small businesses in America, they’re wildly off. The actual number, in his estimation, is around 8 million.

Marks makes some arguments for his position. Principle among them is that of the 30 million-plus businesses counted by the Census Bureau, a mere third of them have employees.

The other two-thirds consists of 1) people with regular day jobs who do some sort of side hustle for extra money (driving an Uber, selling crafts on Etsy); 2) legit business owners whose tax returns imply more businesses than they actually own, thus messing with the Census Bureau’s estimations; and 3) what most of us think of when we think of small business owners at all — those independent folks who work for themselves full-time and generally provide a service of some kind.

Fixing electric signs, for example.

None of the above, in Marks’ estimation, count as true business owners. To claim that status, you must meet two requirements: “the business is a stand-alone entity that files its own tax return. More importantly, the business has employees.”

As the owner of a company devoted to the success of businesses of every shape and size, I find this assertion hard to swallow. Especially when Marks raises the bar even higher by claiming that “true business owners sign paychecks. They have vacation policies. They do performance reviews. They know what it’s like when a trusted employee doesn’t show up for work one day or just quits for no reason, leaving them high and dry. They find themselves spending more time on staff scheduling than selling. They have a break room.”

Whew. That’s a lot of stuff. A pretty daunting list, in fact, for those doughty souls who each year decide to strike out on their own and pursue the American Dream. During my first year in business, I killed it. I systematically worked my butt off, built something out of nothing, and made more money that I dreamed possible.

But I didn’t incorporate. I didn’t have vacation policies. I most certainly didn’t have a break room. Those steps came later, but in the beginning it was just me. I eventually learned the agonies of losing good employees, the rigors of staff scheduling, etc., etc., etc., but the thought that my business didn’t qualify as a true business until I’d earned those marks as the result of a long and painful process seems manifestly false.

Gene Marks’ article, while a provocative read and a reminder that the US Census Bureau could use a little standardization, brought this fact back home to me with all the force of a revelation.

At Nav, we have one mission. It’s simple. If you’re an entrepreneur in need of help or guidance, we’ll provide it. If you run an Etsy shop and are looking for a business credit card to order supplies and build a business credit score simultaneously, you’re as legitimate as a tech startup with a dozen employees. Period.

This article was originally written on October 10, 2018 and updated on December 10, 2020.

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