He was probably offended because in his eyes his business is “big.” He’s probably invested a great deal of time and effort to get his business where it is now.
You, on the other hand, may have just been considering the number of employees and revenues.
He’s probably an exception, not the rule. In the future with him you could just say, “businesses of your size”… or “businesses such as yours” 

I work at a company with 1500 people and we are called a small company because of the size of our parent company. 

I worked for a small company in France (I used to live in France) where up to 50 was a small company by government legal-speak. We had 49 people and the owner started a side company to legally remain small. And then a third company to protect the ‘small’ status (and not give employees benefits that a medium sized company was required to give).

Both descriptions above are (can be) correct, in the eyes of the outsider looking in. In both cases I know that neither company was small. It didn’t bother me in France, but here it did. 
2 cents - I also like what @adamgottlieb said “businesses of your size…” or say something like companies with less than 50 employees… or companies not yet earning… and fill in the blank. If you say less than 30 employees you are giving a measuring point. Your size might lead to the question on how many is needed to be the next size.

David, your client probably has other issues that caused his reaction. I would not change how I referred to his business type unless I used terms that Adam suggested.(IMHO)  @davidblide @adamgottlieb

@davidblide  I’m proud to be a small business … This country strength is in it’s small businesses!