Did you know that securing a small business designation can significantly enhance your marketing and sales efforts when pursuing new federal business opportunities? Every year, the Small Business Administration (SBA) sets specific percentage goals for budget spending on small business contracts. Therefore, it's crucial to determine if your company qualifies for small business set-aside contracts. But how can you know for sure?

The key lies in the North American Industry Classification System (NAICS). Your company's NAICS Codes help determine if you qualify as a small business based on specific NAICS size standards. Through the Small Business Act, the SBA established size standards for NAICS Codes to assist businesses in obtaining their designation and identifying relevant opportunities for which they qualify. Let's explore NAICS Codes and their significance for your business.

What Are NAICS Codes?
First, let's briefly explain what NAICS Codes are. NAICS Codes are a six-digit standard used by government agencies to classify business establishments for collecting, tabulating, presenting, and analyzing statistical data associated with the U.S. economy.
NAICS Codes are grouped by industry based on the processes used to produce goods and services. They are self-assigned, allowing GSA Schedule contractors to choose the NAICS Code that best represents their core industry in the System for Award Management (SAM).
NAICS codes are crucial for GSA contractors as they help identify business opportunities based on their NAICS codes, especially if they are considered a small business.

How to Determine if You Are a Small Business Using NAICS Codes
The simplest way to find out if your sole proprietorship company qualifies as a small business is to use the SBA document on small business size standards. Each NAICS Code is assigned a threshold revenue amount or a threshold number of employees. You can use this information to determine if your business qualifies as small for opportunities under that NAICS Code. If your company falls under the threshold amount or employee count, then the SBA considers you a small business concern.

Another useful tool to understand and determine size standards is the SBA’s Size Standards Tool.

For example, if you own an IT company whose product offering falls under NAICS Code 334111, Electronic Computer Manufacturing, you can use the SBA’s tool. Simply select that NAICS and enter the number of employees to see whether you qualify as a small business eligible for government set-aside contracts.

NAICS Code Changes
It's important to note that NAICS Codes are updated every five years to reflect changes in the North American economy. In 2022, the NAICS Codes were updated, leading to several significant changes across industries. For instance, NAICS Code 511210—Software Publishers, changed to 513210. Given that this was one of the top 5 NAICS Codes in FY 2022, this change was substantial. It's advisable to review the recent changes to see if your company was impacted. The updated NAICS Codes are available on the United States Census Bureau site.

You Qualify as a Small Business—Now What?
The "Small Business" designation in the GSA contracting world is a crucial title. It grants you access to several tools, programs, and opportunities to help you succeed as a small business.

Small Business Set-Asides
If the SBA considers you a small business, you are eligible for small business set-aside contracts. Small business set-asides are contracts specifically reserved for small businesses to compete in.

Some set-asides are reserved for socio-economic programs, such as 8(a) business development, Women-Owned, Service-Disabled Veteran-Owned, and HUBZone.

Make the Most of Small Business Opportunities
The SBA makes it straightforward for business owners to understand their size standards. Take advantage of the available resources and ensure you don't miss out on potential set-aside dollars.