Business Measurement

In the world around us there are some businesses which are small and some are big. But how do we categorize these businesses as big or small. We can consider the following factors:

  • The number of employees: but business which use more machinery and technology i.e. capital intensive may have few employees but they still might be big. Example Microsoft has less employees but still it the biggest business on earth.
  • The amount of capital invested: A business which might not use a lot of investment in machinery but and involves less investment may still be big. Take the example of software companies and consultancy firms like McKenzie & Co.
  • The sales turnover: A business may be going through a bad phase and may not have huge sales does it make the business small?
  • Market capitalisation: markets are very volatile and share prices change every day does it alter the size of the business every day?
  • Market share: a business may not be a market leader but still may be huge whereas if the market is itself very small, a major market share won’t make a business big.

So while deciding the size of business as big or small a combination of factors needs to be considered.

profit is not a method of measuring business size


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