The Advantages of SMEs


The abbreviation "SME" refers to small and medium-sized business enterprises. The exact technical definition of SMEs can vary from country to country. In the United States, the Small Business Administration Size Standards Office sets the definition of Small and Medium Industries. The term "size standards" is used to indicate the maximum size an organization can reach and still be considered a small or medium-sized business.

Definition of SMEs

The specific guidelines for different industries vary. The general guidelines are that there should not be more than 500 employees in the case of manufacturing/mining industries; for wholesale trade companies, this number is 100. Retail and service industries should not have more than $7 million in receipts; for general and construction industries, the maximum annual receipts can be $33.5 million. Special trade contractors whose receipts are below $14 million qualify as SMEs, while agricultural industries must have no more than $750,000 in receipts to qualify for the SME tag.

Lower Capital, Governmental Aid

A small or medium-sized business enterprise does not require a huge amount of capital. In addition, entrepreneurs who want to start a small or medium sized business can get financial assistance and support from various banks, governmental schemes and plans -- such as those offered by the U.S. Small Business Administration. This financial assistance can range from aid to set up a new business to financing to make the business more eco-friendly, or even recovery from a natural disaster.

Adaptability to Trends

By virtue of its small size, a small or medium business can adapt easier to trends in the market, or change in demand. A bigger organization will need more planning, more financial input and greater organization. In the case of bigger enterprises, their size becomes a handicap, reducing their flexibility.

Simplified Management

Running a small business is often simpler than running a bigger one. A person who runs a small enterprise does not have to delegate to various people; hence, it is simpler for him to get a holistic picture of the business, and this helps him with decision-making. Small businesses tend to be more efficient and productive, because they cannot afford to waste resources.

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