This paper argues that a definition of small business is important for both research and governmental policy. A chronological history of definitions is discussed along with their limitations. A new definition of small business is advocated when a business has personal guarantees and has no public stock. This definition is measurable, meaningful, and congruent with the perceptions of the market system.

JEL Codes

L25, N81, N82


Small Business, SME, Definition, Define