What’s it: A large business is a business category with an above-average business size, has large operations, and high economies of scale. They hire a lot of labor and generate a lot of revenue. They may target national or even international markets.
With large resources, large companies have a higher competitive capacity than small businesses. They may operate several production facilities and rely on advanced production technology and techniques. They also have more access to capital and are easy to attract specialists or professionals.
How to categorize a company as a big business?
Each country or institution has a different approach to categorizing companies. However, businesses are usually divided into micro, small, medium, and large-sized businesses in the general classification.
But, based on what criteria they categorize the business, it can vary. For example, it can be based on the number of workers and revenue. Or, it could also be based on production volume, total assets, and capital. Market capitalization is another criterion used for public companies, where their shares are listed on an exchange and are publicly traded.
The following are examples of categorizing a company as a large business:
- Indonesia: The business employs 5 to 19 people.
- Europe: The business has less than 50 workers and has an annual turnover of no more than €10 million.
- United States: The business has annual revenues of less than $38.5 million and no more than 1,500 employees, depending on the industry.
- OECD: The business has more than 250 employees.
Large business characteristics
In addition to higher-than-average operating sizes in their industry, large businesses also share the following characteristics:
- Hiring more workers to support operations with a more professional workforce than small businesses.
- Relying more on technology, and for manufacturing companies, are more capital intensive and rely on automation or robots in their production facilities.
- Having large resources and capital to support expansion and competitiveness in the market.
- Better access to finance than small businesses and can raise funds from the capital market (by issuing shares or bonds), not relying solely on bank loans.
- Lower cost of funds than small companies because they are considered to have high borrowing capacity and lower default risk.
- Generating substantial revenue, which can come from multiple product segments.
- Having formal legality by being registered as a private limited company or a public limited company.
- Structured organization with a clear division of business functions, each supported by specialized human resources.
- Targeting a broad market, can be national or international, and even some have production facilities or subsidiaries in several countries.
