Understanding What Is Small and Mid-size Enterprise (SME) And The Examples
There are so many businesses around us. However, did you know that each business has its own type? These businesses can be categorized based on the amount of income or the number of employees. One of the most common types of business done by some young entrepreneurs today is small and medium enterprises because it is considered easy to start and relatively requires a small amount of capital. Learn more about SME here!
Definition of Small and Mid-size Enterprise (SME)
Small and medium enterprises (SMEs) are privately owned businesses with assets, employees and capital below a certain amount. This amount is based on the national provisions of each country. Each country has different categorizations. Some refer to the basis of the investment, changes according to the industry, the number of employees, turnover, and balance sheet total, and even refer to the regulations of the Ministry of Trade.
The Characters of SME
The main characteristics of SMEs include limited investment requirements, as the capital needed is relatively small. SMEs typically do not rely on heavy or advanced machinery, opting instead for labor-intensive techniques. Another notable characteristic is the relatively small number of employees, as the scale of operations is smaller compared to large companies that require a larger workforce to operate.
Additionally, SMEs tend to focus on local operations and management, as building consumer trust in a specific area is easier for them. Despite their size, small and medium-sized enterprises (SMEs) contribute significantly to the economy, generating approximately $6 trillion in revenue and employing around 60 million people. This plays a crucial role in reducing unemployment rates. SMEs are also recognized as a major source of innovation and job creation, making them vital for driving economic growth.
Example of Small and Medium Enterprises
The categorization of Small and Medium Enterprises (SMEs) varies from country to country, resulting in different examples of popular SMEs. For instance, in the United States, SMEs are typically defined as businesses with fewer than 500 employees.
According to the Small Business Administration, there are over 30 million small businesses in America. The examples include healthcare and social assistance, accommodation and food services, scientific and technical services, retail trade, and professional services in the construction industry.
In comparison, most Asean countries are developing countries. The most popular and easily found examples of SMEs are those in the investment sector that focus on property and housing for urban areas, and agriculture for tropical countries, the education business sector, creative businesses, online businesses, and tourism. All of these examples were matched with the total income, the needs of the people and the natural conditions in the Asean countries.
Understand About Small And Medium Enterprises?
In conclusion, a business can be categorized as a small and medium enterprise if it has all the categories defined differently by each country. However, the most common rules and characteristics used by each country are the number of employees and the limit on the amount of investment. Examples of businesses around the world are also varied because it refers to the needs of the people, the amount of income, and usually the state of nature as well.
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