In general, the U.S. Small Business Administration defines a small business as having less than 500 employees. The European Union considers anything under 50 employees a small business. In Australia, anything under 15 employees is a small business. So, how small is a small business?
Locally, Dug Jones, the associate vice president of economic development at Santa Fe College’s Center for Innovation and Economic Development, said that there are maybe five companies in Gainesville that have 500 employees. Out of 150 or so companies that the Santa Fe CIED has incubated, Jones said, none have reached or will reach 500 employees. Only one or two have reached 100.
“25 to 50 is kind of the tipping point,” Jones said. “Anything under 25 is clearly small business to me; anything over 50 has a whole different set of needs and challenges.”
Erik Bredfeldt, economic development and innovation director for the City of Gainesville, agreed that in Gainesville, 25 employees is right around the cut-off for small business.
According to the most recent census data, 91 percent of businesses in Florida are smaller than 20 employees.
Of Gainesville’s currently registered 6,646 businesses, Jones and Bredfeldt agree that at least over half are in the 25-employee range.
There are three main issues that could define a small business: diversity of the skill set within the employees, the need to outsource certain jobs and cash flow problems, Jones said.
In a small business, somebody might be the business’s bookkeeper as well as the person who schedules the workers. This could mean that in HR, you don’t necessarily need a human resources director.
In outsourcing certain tasks, the business has to be flexible. Whoever handles web presence, for instance, may not be on your own staff. And even though the work may be done, the difference between receiving one month or the next is crucial for small businesses. Larger businesses have a wider financial margin — a $50,000 accounts receivable item could be a fraction of a percent of their revenue, Jones said.
“It’s a maturation process,” Bredfeldt said. In addition to running the business, business owners are tasked with understanding management, marketing and insurance.
“They’re juggling many balls, basically, in addition to just trying to run their business,” Bredfeldt said. Leadership dynamics are also different. A small business is more likely to be privately owned and have a boss in his or her thirties.
This results in presumably higher levels of flexibility and agility that can be assets, Jones said. And without having to answer to investors or a board, if the boss decides to paint the building, he or she can.
There’s an art to knowing how fast to grow, how much to grow and where to grow, Jones said. If they hit the crest of the wave, the results are great, but if they overextend, they make what they already have vulnerable.
“They succeed or fail sometimes more based on one person’s vision,” Jones said. “They have their own value system.”
In smaller businesses, it’s easier not only to define the values and culture but also to execute them. As a business gets larger, divisions in the workplace naturally arise, either from different departments or work groups.
Jones listed Exactech and Infinite Energy as companies pushing or past the 500-employee count that have reputations as a good work space. That’s harder for bigger businesses.
“It takes those large organizations a special effort to inculcate that culture… and to build that brand around that culture,” Jones said. “It’s herding cats.”
In a small business, if there’s a problem, someone can call a staff meeting and get everybody together in the same room. Employees can get a better feel for what his or her boss does and doesn’t like, so it can feel more personal.
With the smaller shops, it’s more horizontal as opposed to vertical and there is more of a team approach, Bredfeldt said. But, that also comes with the long, awkward hours of the beginning stages of a business. Many businesses don’t have the capital for a building or an office, so they start in the home.
“Folks are having to sort of find their own way and, in some sense, get into the marketplace on their own,” Bredfeldt said. “The days of a person spending their whole career with one organization or one institution or one large business and retiring is no longer the norm.”
One of Gainesville’s strengths is its intellectual capital, Bredfeldt said. There is a lot of formal commercialization of research but there is also a lot of informal commercialization — people are doing things “off the beaten path.”
With informal commercialization comes a lot of creative destruction, noted Bredfeldt. On any given day, the business you saw on the corner a week ago could be a completely new business. There’s a certain dynamism in the quantity and types of businesses here. This is reflected in the number of incubators in the city, from Santa Fe’s CIED, UF’s Innovation Hub, GTEC and others.
“We have a lot of potential in Gainesville,” Bredfeldt said. “I think we have a very strong platform for a lot of emerging development of our small business community here. I think it’s going to continue to be that way for the future.”
RAMÓN PEÑA is a fourth-year journalism major at the University of Florida. He hopes to become rich and be able to retire before his thirtieth birthday. In the meantime, he’s content speaking a mixture of English, Spanish, and French, trying to kick-start his internet fame and being a full-time journalist on the side.