What kind of small business is yours?

Every small business is different.

It's shaped by the founder or founders' values and the experiences and learning picked up on its journey. So putting small businesses into categories is not easy. It can be helpful though in gaining an understanding of the owner's motives and goals. For professionals like accountants, that helps us to give the right advice and support.

My consultancy colleague, Stewart Peart and I have recognised three main types of small business. All mainly shaped by the owners and what drives them.

The three types of business are Lifestyle, Owner-Managed and Entrepreneurial.

A Lifestyle business does what it says on the tin. It is built around the owner's lifestyle. There is no great ambition of being the biggest or best. It's primarily about working sensible hours fitting around family and leisure, the owner delivering the service and probably no other employees in the business. Examples might be a self employed plumber, hairdresser, accountant working from home etc. The typical business structure might be a sole trader. The owner effectively 'is' the business.

An Owner-Managed business is perhaps a bit bigger in scale. The owner will still be closely involved and 'hands on' with running the business but their role will involve managing as well as doing. Typically there will be employees and the business structure might be a limited company. Examples might be a small retail outlet, a small manufacturing unit or a high street accountancy practice with a single branch

An Entrepreneurial business is something else. This is where the founder or founders are obsessive about growth and scaling up. They are prepared to take significant risks to reach their goals and put the business above everything else. It is not for the faint-hearted or risk-averse. Typical Entrepreneurial businesses will be multi-outlet or nationwide in coverage or international. The structure might be a limited company but probably with a more complex share structure to accommodate investors. Raising capital may be critical to achieving scale in a short timescale

Where does your business fit within these categories?

We've put together a short series of videos which expand on these business types and how to make them work

I hope you find them useful

Watch 'business types' video

https://www.base52.co.uk/services/consultancy