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Learn About Quality

What is a Small Business?

Quality Glossary Definition: Small business

Small business is defined as a privately owned corporation, partnership, or sole proprietorship that has fewer employees and less annual revenue than a corporation or regular-sized business. The definition of "small"—in terms of being able to apply for government support and qualify for preferential tax policy—varies by country and industry. The U.S. Small Business Administration defines a small business according to a set of standards based on specific industries.

Industry Not to exceed
Manufacturing and mining 500 employees
Wholesale trade 100 employees
Retail and service $6 million average annual revenue
General and heavy construction $28.5 million average annual revenue
Special trade contractors $12 million average annual revenue
Agriculture $0.75 million average annual revenue

While small businesses often can implement the same quality management systems found in larger corporations, they may face different challenges along the way. For instance, small businesses tend to have fewer human resources and less up-front capital to dedicate to quality initiatives. Upper management commitment and accessibility, however, can be stronger in a smaller business, and internal communications can be more straightforward.

The values perceived by small business personnel tend to become common factors in the personnel’s behavior and can become important factors that generate good long-term performance. Upper management can contribute significantly to small business culture development if they can express values and ideas to help guide the efforts of personnel. Ideas that describe part of the culture are typically known as organizational values and are expressed by concepts such as values, mission, vision, policies, and objectives. Typically, these concepts are established by the leadership and adopted by the personnel.

An example of the hierarchy and the relationship among these small business organizational values are represented in Figure 1.

Small Business Organizational Values
Figure 1: Small Business Organizational Values

Small Business Resources

ISO 9001 for Small & Medium-Sized Businesses (Webcast) View a recorded webcast in which Denise Robitaille, author of ISO 9001:2015 Handbook for Small and Medium-Sized Businesses, presents an overview of using ISO 9001 to help small and medium-sized businesses better serve their customers.

ASQ/ANSI/ISO 19011:2018: Guidelines for Auditing Management Systems (ASQ Quality Press) The ISO 19011:2018 American National Standard provides guidance on principles of auditing, managing audit programs, and conducting quality management system audits and environmental management system audits. This text includes supplemental guidance added for small businesses.

Toward Socially Responsible SMEs (PDF, Quality Management Journal) Recent changes in quality award structuring promote the concept of social responsibility among small- and medium-sized enterprises (SMEs). This article explores how the European Foundation for Quality Management Excellence Model provides guidance in integrating social responsibility into quality management. 

Applying Lean Six Sigma in the Wood Furniture Industry: A Case Study in a Small Company (PDF) This paper presents a study on the implementation of lean Six Sigma in a small furniture company.

Building Quality Communities (PDF) When considering how to create growth and public interest, focus on a few smaller projects at a time, rather than trying to tackle all of a community's issues at once.

Importance and Implementation of Baldrige Practices for Small Businesses (PDF) An empirical survey was conducted to identify the high-performance management practices outlined in the Malcolm Baldrige Criteria.

Small Business, Big Feat (Quality ProgressEmployee empowerment, solid leadership, and use of quality tools led PRO-TEC to a Baldrige award.

Malcolm Baldrige National Quality Award (Quality Resource) An award established by the U.S. Congress in 1987 to raise awareness of quality management and recognize U.S. companies that have implemented successful quality management systems, which includes a category for small business.

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