Small and medium sized enterprises (SMEs) play an important role in the economy. According to estimates, SMEs contribute up to fifty percent of the GDP of high-income countries. They employ vast numbers of workers, and they drive innovation in the business sector. For example, in the US, SMEs account for almost half of all jobs. In fact, SMEs are often the first to employ new technologies. While SMEs often face challenges when it comes to investing in digital technologies, they also enjoy an advantageous position within the economy.
The US Small Business Administration (SBA) defines a small business as an employer with fewer than ten employees. A mid-sized business employs anywhere from 10 to 49 workers. This is a fairly arbitrary number, but it does not include home offices, franchises, or small manufacturers. If you have more than twenty-five employees and an annual operating revenue of more than $1 million, you are likely a mid-sized organization.
The Small Business Administration also has a list of official guidelines for small and medium-sized businesses. These guidelines, based on size and industry, are useful when considering the appropriate level of funding for your business. You can learn more about the SBA and their guidelines by visiting their website. Among its many initiatives, it has a new Small and Medium-sized Enterprise Program that provides funding for the formation and growth of SMEs. As the name implies, SMEs have a smaller budget than large firms. However, the program aims to encourage businesses to compete in a variety of sectors, including health care, retail, and technology.
In addition to the federal SBA, the State of California has its own set of rules governing small and mid-sized businesses. For instance, a micro-enterprise is defined as having a payroll of less than $150,000. There are also state-level programs for small and mid-sized companies in the form of micro-loans, tax incentives, and loan guarantees. Some of these initiatives are being implemented in order to improve the economic climate for both local and regional businesses.
The most important part of the small and medium sized enterprise (SME) puzzle is determining the right size. There are a host of metrics to consider, from financial assets to scalability. It may be difficult to determine the best size for your small or medium-sized company, but with a little foresight and diligence, you can make the right choices. Taking the time to determine the right size is the only way to ensure your small or medium-sized company will flourish.
