A small business is an organization with limited dimensions, characterized by having a low number of workers and a modest annual income. It is below medium-sized companies but above micro-enterprises.

These criteria, which are, generally, the number of employees, the annual turnover, and the total balance they have, are considerations that each country imposes within its territory. Therefore, there are no standards that classify employees worldwide. Companies vary according to their size but differ from nation to nation.\

Characteristics of small businesses

• Due to their size, they are one of the most common types in countries.
• They have already experienced a stage of business growth since they are ascendants of microbusinesses.
• Small businesses are those that employ between 10 and 50 people and generate between 2 million and 10 million euros in revenue annually, according to the EU..
• They form, together with medium-sized companies, what is known as SMEs (small and medium-sized companies).

 Importance Of Small and Medium-Sized Businesses

Small businesses are vital to the nation’s economy because of their ability to create jobs, manufacture locally available goods, support large corporations with auxiliary services, and contribute to the local economy.

Small and medium-sized businesses play an important role in economic development. In successful developed or developing countries, the bulk of GDP comes from SMEs. Small companies help promote healthy competition and economic growth. These enterprises are quite flexible and can quickly change their direction, taking into account changes in demand, which allows them not to leave the market but to adapt to it. In conditions of the economic crisis and the departure of a number of companies from the domestic market, small and medium-sized businesses contribute to the sustainable development of the economy.

Small and medium-sized businesses are taxpayers; accordingly, the more of them there are on the market and the higher their profitability, the greater the amount of tax revenues will go to budgets of all levels. Increasing tax revenues to budgets is the most important aspect of a sustainable economy. Today, there is an increase in the state budget deficit. An effective tool for aligning budget revenues and expenditures is the growth of tax revenues.

The classification of business by size (scale) of activity of market economy subjects is extremely important because this allows us to identify and analyze the strengths and weaknesses of small, medium, and large businesses and determine the optimal options for their relationship and interaction. The advantages of large enterprises are based on economies of scale and are based on the fact that:

• As enterprises grow in size, the ability to take advantage of specifications in production and management increases;
• Larger enterprises may use high-performance and expensive equipment;
• More opportunities for diversification of activities, development of in-line advantages, and production of products based on the main production.

The guiding principles of small businesses are to focus on the needs of their customers, adjust to their changing needs, provide the market with novel offerings, act responsibly, and look ahead. Small businesses carry out a multitude of crucial tasks in a market economy, including organizational, social, creative, resource, and economic ones. Numerous scholars contend that because small businesses reduce social tension and democratize market relations, they serve as the structural foundation for the emergence of the middle class. Large-scale production is changing, which is why small and medium-sized business development is necessary.