Certification in Supplier Diversity Practice Exam

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What does the Small Business Act define as a small business?

Large corporations with numerous employees
Businesses independently owned and operated
Franchises of major international companies
Businesses with government contracts

The correct answer is: Businesses independently owned and operated

The Small Business Act defines a small business as one that is independently owned and operated, which highlights the importance of ownership and operational independence. This definition underscores the characteristics that separate small businesses from larger corporations or franchises. Independent operation ensures that small businesses are not dominated or controlled by larger entities, allowing them to contribute uniquely to the economy and innovate in different sectors. The definition serves to support the growth and sustainability of small businesses, which play a critical role in job creation and economic enhancement. By focusing on independently owned entities, the Act aims to promote a diverse and competitive marketplace that is essential for healthy economic functioning.