A small business is a privately owned and operated business. A small business usually has a small number of employees. Before understanding the nature and meaning of small business, it is important to know how size is defined, with reference to small industries and small business establishments. Several parameters can be used to measure the size of business units. These include the number of persons employed in business, capital invested in business, volume of output or value of output of business and power consumed for business activities.
However, there is no parameter which is without limitations. Depending on the need the measures can vary. One more important point to note is that a definition exists only for small and tiny units but not for large and medium units. Medium and large sized enterprises are not defined. Anything that does not fall under the definition of small can be large or medium.