What's a small business?

With venerable business secretary's long-awaited small business rescue package finally unveiled today, the press has been full of speculation as to whether or not putting an extra £20bn behind small businesses is going to make the blindest bit of difference.

David 'the bandwagon' Cameron has made an uncharacteristically enthusiastic u-turn, veering in spectacular style from his unwavering commitment to criticising Brown for investing too much in the economy and instead slamming him for not spending enough to prevent small businesses from going under.
Whether or not it helps save the 20% of small businesses expected to slip into insolvency this year remains to be seen, but one thing is bugging us - who exactly will the money go to? On this morning's Today programme, Mandelson said the cash will go to 'credit-worthy small businesses with a turnover of up to £25m'.
Eh? Last time we checked, 'small businesses' weren't turning over £25m. Far from it. In fact, according to The Companies Act, a small business needs to satisfy two of three criteria: a turnover below £5m, a balance sheet total below £2.8m, or fewer than 50 employees.
There seems to be a lot of confusion surrounding the matter. In the US, a small business is defined as under 100 employees, while in Australia, it's under 19 employees, and the British Bankers' Association says it's a business with a turnover of less than £1m.
Twitter was equally unhelpful. "I would say less than 30 employees," suggested @beatpoll, while @Goodadvice thought 'a solopreneur' (sole trader, we can only assume) best fits the definition.
It seems Mandelson may have to reconsider his criteria before he starts dishing out the cash - Smarta suggests he works it out using measures such as loo to employee ratio, the number of people who feel responsible when the kitchen gets dirty or perhaps how loudly you need to shout to get the attention of the person on the other side of the office. On the other hand, he could adopt a more zen-like approach: perhaps being a small business is merely a state of mind.

With venerable business secretary's long-awaited small business rescue package finally unveiled today, the press has been full of speculation as to whether or not putting an extra £20bn behind small businesses is going to make the blindest bit of difference.

David 'the bandwagon' Cameron has made an uncharacteristically enthusiastic u-turn, veering in spectacular style from his unwavering commitment to criticising Brown for investing too much in the economy and instead slamming him for not spending enough to prevent small businesses from going under.

Whether or not it helps save the 20% of small businesses expected to slip into insolvency this year remains to be seen, but one thing is bugging us - who exactly will the money go to? On this morning's Today programme, Mandelson said the cash will go to 'credit-worthy small businesses with a turnover of up to £25m'.

Eh? Last time we checked, 'small businesses' weren't turning over £25m. Far from it. In fact, according to The Companies Act, a small business needs to satisfy two of three criteria: a turnover below £5m, a balance sheet total below £2.8m, or fewer than 50 employees.

There seems to be a lot of confusion surrounding the matter. In the US, a small business is defined as under 100 employees, while in Australia, it's under 19 employees, and the British Bankers' Association says it's a business with a turnover of less than £1m.

Twitter was equally unhelpful. "I would say less than 30 employees," suggested @beatpoll, while @Goodadvice thought 'a solopreneur' (sole trader, we can only assume) best fits the definition.

It seems Mandelson may have to reconsider his criteria before he starts dishing out the cash - Smarta suggests he works it out using measures such as loo to employee ratio, the number of people who feel responsible when the kitchen gets dirty or perhaps how loudly you need to shout to get the attention of the person on the other side of the office. On the other hand, he could adopt a more zen-like approach: perhaps being a small business is merely a state of mind.

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