94% of US Language Companies Now Considered ‘Small Businesses’

LSP Small Business ALC

What is a small business? To paraphrase the punchline of many a translator’s joke, “It depends on the context.”

It is true: The US Small Business Administration (SBA), a cabinet-level federal agency that provides contracting expertise to small businesses, determines company eligibility by annual revenue, but the requisite turnover varies by industry and sector.

For language service providers (LSPs), SBA has decided to include firms with annual revenues under USD 22.5m, a 181% increase from the prior figure of USD 8m. The new, higher limit went into effect January 1, 2022, and immediately grew the number of LSPs that qualify as small businesses. 

The 2023 edition of the Association of Language Companies’ (ALC) annual industry survey explored the proportion of companies surveyed with SBA small business status, as well as professionals’ thoughts on the impact of the change.

94% of respondents to the survey are now considered small businesses. The impact of this change, however, is not yet clear.

One in seven companies (14%) credited the higher threshold with new opportunities for their business, as small businesses are eligible for set-aside contracts with the US government and other benefits, including training and funding. SBA small businesses also have access to various business development initiatives, mentorship programs, and expert consulting.

When SBA initially proposed the new threshold in early 2021, critics warned that increasing the size standard for LSPs would hurt very small businesses by giving a leg up to larger competitors. Some, in fact, suggested reducing the threshold to even the playing field.

Seven percent of respondents echoed those concerns, reporting that the increased threshold has had a negative impact by making it more difficult to compete. 

The majority (41%) of companies, however, said the impact is not yet clear, and 39% said the change has had no impact so far. 

Slator ran the 2023 ALC Industry Survey from August-September 2023, surveying LSPs in the US and globally to produce an in-depth 130-page report analyzing key language industry topics — from growth and business strategies, technology, and supply chains, to pricing, salaries, and recruitment.

For more key industry data points and insights, contact ALC to obtain a copy of the ALC Industry Survey Report

Slator’s language industry intelligence enables owners, operators, investors, and buyers to make better business decisions and execute their strategy. Schedule a discovery call with Slator’s Research and Advisory service today.