Micro, Small, Medium, or Large. Why size matters in business?

Feb 2

Whether your business is a micro or small business as a sole trader, or a small, medium, or large business as a company or a partnership. Each of these company sizes and legal structures has different requirements, responsibilities, and reporting.

So let’s take a quick look at what criteria relates to size in business, why size matters, and how we can support you.

A micro business is a business that often holds an employee base of 1 - 4 employees. This is often a sole trade business, but dependent on the product or service offered it may be a proprietary limited company.
A small business is a business that holds an employee base between 5 - 15 employees and annual revenue turnover of less than $10 million. At this point, more often than not a business will be or become a registered and trading as a Proprietary Limited company with ASIC (the Australian Securities Investment Commission).
A medium business is a business that holds an employee based of 16 - 99 employees, with assets up to $25 million, and annual revenue turnover up to $49million. At this point, the business quarterly and annual reporting requirements with ASIC will start to change.
A large organisation is a business that holds employees upwards of 100 employees, with assets over $25million, and annual revenue turnover over $50million. At this point, the organisations compliance and reporting requirements are significant and consistent.

These category definitions and metrics are provided by the Australia Bureau Statistics, FairWork Australia, and the Australian Securities Investment Commission (‘ASIC’), and Australian Treasury.

The advantages, and challenges by size

MICRO

Advantages ~ For micro businesses the start and set up costs and time required and the barriers to enter can be minimal, but these can also quickly become challenges in that to grow and expand or manage a volume of work and if the business is micro maybe 1 or 2 employees, managing the growth and changes required whilst also producing the work required can be daunting.

Challenges ~ Accessing additional funds, reducing personal risk including personal assets, and scaling the demand of workload volume with professionals that will exemplify your brand and quality can be difficult. The scale and growth of the business is reliant on the personal network, strategic fortitude, operational expertise, and financial backing of its owner whom is usually a sole person. Having the time to ensure your business is informed and meets its regulatory and compliance requirements can be difficult but if not performed correctly can be a costly mistake.

SMALL

Advantages ~ A small business in cost and time to set up will become more than a micro business but manageable if reliant on the sole director/person of the business, or if it’s a registered company the Company Director. For more information and steps to transitioning to a Company, click here. A small business is nimble, flexible, and will adapt to changes desired or required with more agility than its medium and larger business whose cogs in business turn more slowly.

Challenges ~ At some point to scale and grow the business a small business will collaborate or partner with other businesses to produce their product or service or take on employees directly. By still being small, they are nimble and flexible to adjust, change and adapt to the changing needs in the business, market, or customers without internal bureaucracy that can create delays. This can present a new series of challenges in hiring and managing others whilst growing and managing the business, customers, and attract new business.

The regulatory and compliance requirements of the business will also increase when financials, assets, and employee’s grow in numbers. Being aware of your regulatory and compliance requirements and implementing governance procedures (our Business Governance Playbook can help you get started!) is important to maintain the healthy operations of your business and to maintain and improve business assets such as property, tools, equipment, and would also include your suppliers, customers, employees, and stakeholders.

MEDIUM

Advantages and Challenges ~ A medium business by virtue of its increase in size will generates more annual revenue, greater asset holding, and a larger population of employees. This increase in size also creates more complexity and demands as there is greater breadth and depth in the components of the business such as more locations, costs, products and services offered, customers, suppliers, assets, stakeholders, and employees. A medium size will hold greater regulatory and compliance requirements and in many instances a company will have an appointed and inhouse People and Culture Specialist, Legal Specialist, Financial and Accounting Specialist, Risk and Compliance Specialist, and Company Secretariat to ensure strategic and operational plans and decisions are designed with thorough and current knowledge and advice to enable confident decision making by Company Directors.

Having the right people at the business table to provide information, guidance, and practical workmanship is essential. As a medium size business the opportunities are great but the requirements and expectations by law, the market, and the public are greater. Greater rigour in strategic decisions and operational execution is required.

LARGE

Advantages and Challenges ~ A large business leads the way for all other categories. Their size and characteristics are significant in nature, complex, dynamic, and fluid. No day is the same, the opportunities and challenges are unique. The cogs within the engine room of the company can move slowly, so they are less nimble, flexible and able to adapt to market or industry change needs or desires.

The regulatory and reporting requirements are complex and unrelenting. Compliance and Governance are essential. Inhouse specialists with external expertise appointed as required are available to ensure strategic plans and decisions and operational plans and decisions are designed with thorough and current knowledge and advice to enable confident decision making by Company Directors.

Having the right people at the business table to provide information, guidance, and practical workmanship is essential. As a large business the opportunities are great but the requirements and expectations by law, the market, stakeholders, shareholders, employees, customers, and the public are greater. Greater rigour in strategic decisions and operational execution is required.

HOW WE CAN HELP YOU

Each business and business category’s needs and requirements are unique. If your business is:

growing and you have more complexities and components occurring in your business that don’t flow as well as you would hope, Contact Us or
if you are planning growth and want to ensure your business has a strong foundation with all the necessary knowledge, information, tools, and support to ensure your people, customers and all assets are maximising, Contact Us.

Let’s arrange a time to assess where you are, where you are going, and what actions we can take that will make a impact and attain the goals you desire. Contact Us and let’s chat!

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Disclaimer - This information is designed to be general business and employment information. You should seek professional advice that is based on your business circumstances prior to its use. Purchasing and/or utilising any of our templates, tools, agreements, documents does not constitute professional advice including legal advice.