30 Ways to Categorize Your Small Business and Why It Matters

The first week of May is National Small Business Week, when we celebrate those businesses that make our communities unique. You may think you know what these seemingly simple firms are that we lump under the single term "small business," but maybe you don't.

What you don't know could cost you. These categories give power or can take it away. Technology and analytics makes them possible and inevitable. With each new one, we can find better ways to reach people easily to ask what they are. We can count and measure how many of those are included and not included in the new category. We can give our findings a value. Some are considered better than others.

In some ways it's like a game. If you use the right words to describe or categorize your small business, you win; use the wrong ones and you lose—money, prestige, customers, profit, and potential.  You can also look at these terms as a way to keep up with the latest trends in business categories, something you can use in tough negotiations or polite conversation.

The 1st Category: Small Business

"Small business" doesn't appear as a proper name until about 62 years ago. Dinsmoor Brothers Butane in West Texas was a typical small business. The men who ran it just thought of it as a "business," not a size. When there weren't enough employees to drive the dangerously narrow roads carrying gas that could explode if you hit a bad bump, they drove the trucks themselves. It wasn't until the formation of the Small Business Administration on July 30, 1953, that the term most of us use was created and accepted, found its first users, and led to a new business category being born.

8 New Terms Paint a Picture

At the end of the last century, states and others start defining and using size terms that become a gauge of creditworthiness and a way to measure regulatory impact. What we have are laws and statutes relating to:

• "Micro," the very smallest of businesses
• If they grow, they become "small," "medium," or "large" businesses.

Some government agencies turn these into cliched "animal" categories in their reports:

• Micro becomes "Mice"; and
• Small businesses (under 100 or with as many as 499 employees) become "Elephants."
• "Tweener businesses" that are fast growth (20% sales growth or more annually) are labelled "Gazelles." They are the love of Venture Capitalists, investors, and economic development specialists, chambers, and politicians. They get the hype and they get the glory.

That's 9 terms and categories and counting.

Economic Terms Make the Rounds

Where we are today is with another 19 terms and categories for you and others to use to evaluate your business. What are you?

• Minority-Owned Business or alternately Minority Business Enterprise or MBE
• Woman Owned Business or alternately Women's Business Enterprise or WBE (often pronounced WeeBee)
• Minority-Woman Owned Business or alternately MWBE
• Disadvantaged Business (kind of a loose term referring to a business that was deprived of opportunity or Small Disadvantaged Business (SDB) or Disadvantaged Business Enterprise (DBE)
• Service-Disabled Veteran Owned aka SDVBE, aka DVBE* which became a federally-certified classification in 1999
• Independent Business or alternatively Independently-Owned & Operated Business

The terms for the owners have expanded, too:

• Vetrepreneur (any veteran-owned business)
• Solopreneur (a late comer to the category name game, usually a simple business with one owner who is also the main employee)
• Social entrepreneurs who try to solve social problems

Twenty-eight names, terms, and categories and we're not done yet. A business could have more than one category;  for example: a woman-owned, veteran solopreneur and social entrepreneur certified as a disadvantaged business.

Other Countries Contribute Categories

America is not the only country to play the name game with small business. In England, they have added the "Nifty Fifties" businesses started by those over 50 years old. My Japanese colleague and I added "Heritage Businesses," those small privately-owned businesses that are over 100 years old. There are more than you might think and they continue to provide good examples to those just getting started.

Grand Total: 30 or more.

And, you thought it was simple!

In the end, I have to agree with Steve Blank. Although he was only referring to the four types of entrepreneurship he identified, I believe all of us "need to keep in mind that as different as they are, understanding them together is what makes the difference between a jobs and innovation strategy and a disconnected set of tactics."