When it comes to defining the size of business, it is very crucial to take into account the average annual revenue of a company as well as the total number of employees. Typically, the large or giant corporations are the ones, which employ at least 500 or even more individuals and generate average annual revenue of approx. $7 million; on the other hand, the small business firms or organizations are the ones which employ less than 50 employees or generate revenue less than $5.6m. Likewise, if the total numbers of employees are between 50 and 250 and they generate revenue more than $5.6m, it can be considered to be a medium-sized business. However, there are a few exceptions to the standard parameters in the selective business sectors.
Understanding the Key Differences Between The Large and Small Businesses
To categorize the small and large sized businesses, it is crucial to recognize the character of each business organization. This is because every business organization has their unique nature, which must be taken into consideration. However, there are other factors as well which come into play. Apart from the structure and number of employees, the other factors are as follows:
• Employee Salary or Packages: Many people tend to disagree with the fact, that the giant corporations usually offer a higher salary or package to the employees. Others offer their employees an array of perks such as gym membership, healthcare, conveyance, etc.
• Culture: The nature of the operation, as well as the culture, is strikingly different in the case of the large and small business firms. In the case of the start-ups or small business firms, each and every decision is very crucial; on the other hand, the giant corporations are more open towards risks. The startup owners are by nature conservative and tend to strive hard to retain back their existing customers. However, these days any large business firms too, are now trying to follow the strategies of small business owners. Long term planning, followed by a candid analysis of the risk factors tends to benefit the business firms, irrespective of their size.
Examples of Large Business Firms:
• Walmart Stores
• Delaware General Corporation Law
Advantages of Larger Business Firms Over Small
Compared to the start-ups or small business firms, large business firms tend to inherit an array of benefits. Since they are established for several years, they usually have greater funds, resources as well as existing customers. This inevitably enables them to generate higher profit through repeated business and sales. Apart from these factors, the additional advantages include stronger brand value, better human resources, the economy of sale, etc. Purchasing the goods at wholesale rates enables them to set the prices relatively lesser than the small businesses. Thus, they can inevitably increase their profit margins with constant sales.
Examining the differences of the business firms is not an easy task. Each and every factor must be considered, alongside analyzing the nature of each business to categorize them.