Definition of Small-Scale Enterprise

by Flora Richards-Gustafson

Sometimes called a small business, a small-scale enterprise is a business that employs a small number of workers and does not have a high volume of sales. Such enterprises are generally privately owned and operated sole proprietorships, corporations or partnerships. The legal definition of a small-scale enterprise varies by industry and country.


The U.S. Small Business Administration states that small-scale enterprises generally have fewer than 500 employees within a 12-month period in non-manufacturing industries. A company must consider any individual on its payroll as an employee. In Australia, however, a small-scale enterprise is one that has fewer than 15 employees on payroll, as defined by the Fair Work Act. The Small Business Act for Europe states that small enterprises are those that have 250 employees or less. Small-scale enterprises in Asian countries generally have 100 or fewer employees, while small-scale African enterprises hire 50 or fewer workers.

Financial Measures

In some countries, the definition of a small-scale enterprise is bound by financial measures such as net profits, balance sheet totals, the value of assets and annual sales. In the United States, for example, a non-manufacturing small-scale enterprise is one that does not earn more than $7 million in a year. Financial measures can vary by industry, as annual receipts may be higher for industries that have higher overhead costs to operate. In general, small-scale enterprises are businesses that do not dominate their respective industry.

Economic Impacts

While large enterprises employ many individuals, small-scale enterprises in the United States account for nearly half of the gross domestic product. Small-scale enterprises help stimulate local economies by providing local individuals with jobs, as well as products and services to community members. Moreover, such enterprises help diversify and grow their respective industries, as many women and minorities make significant contributions to the small-business world. When there is a rise in small-scale enterprises, countries may see reforms in basic rights. For example, some U.S. states now allow sole proprietors without employees to have access to group health care. In times of recession, however, the SBA states that small-scale enterprises can account for a large number of employee layoffs.

Types of Small-Scale Enterprises

Small-scale enterprises exist in almost every industry. They can range from mom-and-pop convenience stores to small manufacturing plants. Additional types of small-scale enterprises can include privately owned restaurants, law firms, inns, bakeries, architectural and engineering firms, dry cleaners and construction contractors.

Photo Credits

  • Digital Vision/Digital Vision/Getty Images
Suggest an Article Correction