If you are first entering the world of business, you may have come across the term SME. An SME is a small to mid-size enterprise. To define which businesses would fall into this category you will need to look at the revenues, employee numbers, and assets that this business owns. The numbers of these will need to fall below the ones set by the country the company is based in for it to be considered an SME.
While every country has SMEs there is no global application of the term. In fact, each country and international organization may have completely different definitions of what an SME is. In part, this is because each country has completely different economic capabilities and business standards. For example, in countries within the European Union, any business that has 250 employees or less would be considered an SME. In the United States, the upper employee limit for an SME is 1,200 employees.
These numbers are vastly different and under the U.S. definition, almost 99% of US businesses according to the Small Business Administration (SBA) were small businesses in 2018.
SMEs can actually exist in any industry and there are reasons why they are considered to be different types of businesses. For the most part, these reasons relate to financing and taxation, since SMEs are usually taxed under a more favorable taxation regime.
If you would like to learn more about SMEs and some of the most common problems that they face you can click here.
How do SMEs work in key locations?
SMEs in the United States
SMEs in the U.S. are able to get government contracts that have better terms. They are also eligible to receive targeted funding. For a business to be considered an SME it still needs to have a limited number of employees and revenues. On many occasions, these limits may vary based on the industry that the SME specializes in.
SMEs in Canada
SMEs in Canada is a term used for businesses with 500 employees or less. There are also micro-businesses which is a term used for those companies that have a maximum of 5 employees.
SMEs in the European Union
In the EU, SMEs need to have a maximum of 350 employees and small businesses specifically need to have a maximum of 50 employees. There is also a maximum limit on SME’s balance sheet total. Revenues are not used as a limit only the balance sheet is.
SMEs in China
In China SMEs and their limits will be different depending on the industry that the company specializes in. The limit on an employee could vary from 200 to 1,000 depending on the industry that the business is in. This is in some ways similar to the U.S. system.
If you are considering starting your own SME you can findon the main pageon the key elements that you will need to consider before starting your business.
