I talk to people everyday who want to know more about working with the
government and leveraging socio-economic programs to gain an edge as they do so.
I mentioned in a previous entry that there is a gross misunderstanding of what
it takes to do business in the federal sector and what being a small business is
For the sake of this conversation, let's separate small business owners into
two categories. Small Business Owners and Entrepreneurs. There is a difference.
Anyone can be a Small Business Owner, but not everyone is an Entrepreneur. In my
opinion, Entrpreneurship is something you're born with. It's a state of mind, a
will to adventure and push the envelope. Not to say that being a Small Business
Owner does not develop some of these qualities, but having true Entrpreneurial
Spirit just adds a certain zing.
I feel as though I can tell the difference.
Entrepreneurs live their businesses. Small Business Owners take it on as a
job. Just my opinion.
To that end, there are many definitions for small business. Everybody has
their version of it, literally. Go poll twenty people on the street about what a
small business is, ad you'll likely get twenty (or more) different answers. In
some way, most or all of them may be right. In the commercial world (B2B) there
are different definitions for small business than there are in federal
contracting. If you are working with State, Local and Municipal agencies, you'll
likely see different measures there as well. As far as companies that do
business direct with federal agencies and those that subcontract to companies
that work with government agencies, all that matters is that you meet the burden
of the Size Standard associated with the related North
American Industrial Classification System (NAICS) Code. The NAICS code
is the new, improved and more granular version of the four digit Standard
Industrial Code (SIC) system. NAICS Codes are six digits long, and are more
descriptive than SIC Codes. The definitions of the NAICS Codes describe the
particular disciplines, processes, expertise and offerings of entities operating
in the described business segments. For example, if you provide educational
services, it may drill down into post-secondary, accredited training,
apprenticeship training (further broken down into sheet metal, electricians,
plumbers, carpenters, etc.) Each of these NAICS definitions will have an
associated size standard represented by a dollar amount in millions of
dollars or by numbers of employees.
The dollar amount may range from $750,000 for a hog farmer, to $165,000,000
in assets for a credit union. The number of employees may range fron 100
employees for a dairy products merchant wholesaler to 1,500 employees for
companies involved in aircraft manufacturing. As long as the organizations are
below the given number for a three year average (current year and two previous)
they would qualify as a small business for federal contracts under that specific
Most companies will have more than one NAICS Code that relates to the
products and services they offer, so it's a matter of studying the codes to
determine which one best represent you. Additionally, you may find that you
qualify at different levels based on the NAICS Codes you select. This will be
important to note because as bid opportunities are issued by government
agencies, they are assigned a NAICS Code based on the prevalent disciplines
required to complete the requirement. You may be a small business for one
opportunity and not a small business for another.
In a future post, I'll talk about small business set-aside requirements.