Q.What are the different parameters used to measure the size of business?

The size of a business unit cannot be judged by a single yardstick, so several parameters are used, each with its own limitations.

There is no single, perfect measure of the size of a business, so different parameters are used depending on the purpose:

1. Number of persons employed — the size of the workforce engaged in the business.
2. Capital invested — the amount of money invested in the business.
3. Volume or value of output — the quantity of goods produced, or the value of that output.
4. Power consumed — the amount of power used in carrying out business activities.

Each parameter has its own limitations, so the one used can vary with the need. In India, the Government of India defines small industries on the basis of the investment in plant and machinery (and, for service enterprises, the investment in equipment), because this measure suits an economy where capital is scarce and labour is abundant.