Small and medium enterprise
Encyclopedia
Small and medium enterprises or small and medium-sized enterprises (also: Small and Medium-sized Enterprises; acronym in the plural: SMEs; small and medium businesses or small and medium-sized businesses, acronym: SMBs; and variations thereof) are companies whose headcount or turnover
falls below certain limits.
The abbreviation "SME" occurs commonly in the European Union
and in international organizations, such as the World Bank
, the United Nations
, and the WTO. The term "small and medium businesses" or "SMBs" is predominantly used in the USA.
In most economies, smaller enterprises are much greater in number than large companies. SMEs are often said to be responsible for driving innovation and competition in many economic sectors.
had a limit of 255 employees, while, for example, in Belgium
it could have been 100.
In July 2011, the European Commission said that it would open a consultation on the definition of SMEs in 2012. In Europe, currently there are three broad parameters which define SMEs — micro-entities are companies with up to 10 employees; small companies employ up to 50 workers, whilst medium-sized enterprises contain up to 250 employees.
, the Small Business Administration
sets small business
criteria based on industry, ownership structure, revenue, and number of employees, which in some circumstances may be as high as 1500 though is typically capped at 500.
Both the US and the EU generally use the same threshold of fewer than 10 employees for small offices (SOHO).
,
i. A micro enterprise is an enterprise where investment in plant and machinery [original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide its notification No. S.O. 1722(E) dated October 5, 2006 does not exceed Rs. 25 lakh
;
ii. A small enterprise is an enterprise where the investment in plant and machinery [original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide its notification No. S.O. 1722(E) dated October 5, 2006] is more than Rs.25 lakh but does not exceed Rs.5 crore
; and
iii. A medium enterprise is an enterprise where the investment in plant and machinery (original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide its notification No. S.O. 1722(E) dated October 5, 2006) is more than Rs.5 crore but does not exceed Rs.10 crore.
The definition of MSMEs under the services sector is as follows:
i. A micro enterprise is an enterprise where the investment in equipment does not exceed Rs.10 lakh;
ii. A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs.2 crore; and
iii. A medium enterprise is an enterprise where the investment in equipment is more than Rs.2 crore but does not exceed Rs.5 crore.
The Indian Micro and Small Enterprises (MSEs) sector plays a pivotal role in the overall industrial economy of the country. It is estimated that in terms of value, the sector accounts for about 39% of the manufacturing output and around 33% of the total export of the country. Further, in recent years the MSE sector has consistently registered higher growth rate compared to the overall industrial sector. The major advantage of the sector is its employment potential at low capital cost. As per available statistics, this sector employs an estimated 31 million persons spread over 12.8 million enterprises and the labour intensity in the MSE sector is estimated to be almost 4 times higher than the large enterprises.
the term is SMME for Small, Medium and Micro Enterprises. Elsewhere in Africa, MSME is used for Micro, Small and Medium Enterprises.
Turnover (employment)
In a human resources context, turnover or staff turnover or labour turnover is the rate at which an employer gains and loses employees. Simple ways to describe it are "how long employees tend to stay" or "the rate of traffic through the revolving door." Turnover is measured for individual companies...
falls below certain limits.
The abbreviation "SME" occurs commonly in the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
and in international organizations, such as the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
, the United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
, and the WTO. The term "small and medium businesses" or "SMBs" is predominantly used in the USA.
In most economies, smaller enterprises are much greater in number than large companies. SMEs are often said to be responsible for driving innovation and competition in many economic sectors.
Europe
EU Member States traditionally have had individual definitions of what constitutes an SME. For example, the traditional definition in GermanyGermany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
had a limit of 255 employees, while, for example, in Belgium
Belgium
Belgium , officially the Kingdom of Belgium, is a federal state in Western Europe. It is a founding member of the European Union and hosts the EU's headquarters, and those of several other major international organisations such as NATO.Belgium is also a member of, or affiliated to, many...
it could have been 100.
In July 2011, the European Commission said that it would open a consultation on the definition of SMEs in 2012. In Europe, currently there are three broad parameters which define SMEs — micro-entities are companies with up to 10 employees; small companies employ up to 50 workers, whilst medium-sized enterprises contain up to 250 employees.
United States
In the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, the Small Business Administration
Small Business Administration
The Small Business Administration is a United States government agency that provides support to entrepreneurs and small businesses. The mission of the Small Business Administration is "to maintain and strengthen the nation's economy by enabling the establishment and viability of small businesses...
sets small business
Small business
A small business is a business that is privately owned and operated, with a small number of employees and relatively low volume of sales. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships...
criteria based on industry, ownership structure, revenue, and number of employees, which in some circumstances may be as high as 1500 though is typically capped at 500.
Both the US and the EU generally use the same threshold of fewer than 10 employees for small offices (SOHO).
India
In IndiaIndia
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
,
i. A micro enterprise is an enterprise where investment in plant and machinery [original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide its notification No. S.O. 1722(E) dated October 5, 2006 does not exceed Rs. 25 lakh
Lakh
A lakh is a unit in the Indian numbering system equal to one hundred thousand . It is widely used both in official and other contexts in Pakistan, Bangladesh, India, Maldives, Nepal, Sri Lanka, Myanmar and is often used in Indian English.-Usage:...
;
ii. A small enterprise is an enterprise where the investment in plant and machinery [original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide its notification No. S.O. 1722(E) dated October 5, 2006] is more than Rs.25 lakh but does not exceed Rs.5 crore
Crore
A crore is a unit in the Indian number system equal to ten million , or 100 lakhs. It is widely used in India, Bangladesh, Nepal, and Pakistan....
; and
iii. A medium enterprise is an enterprise where the investment in plant and machinery (original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide its notification No. S.O. 1722(E) dated October 5, 2006) is more than Rs.5 crore but does not exceed Rs.10 crore.
The definition of MSMEs under the services sector is as follows:
i. A micro enterprise is an enterprise where the investment in equipment does not exceed Rs.10 lakh;
ii. A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs.2 crore; and
iii. A medium enterprise is an enterprise where the investment in equipment is more than Rs.2 crore but does not exceed Rs.5 crore.
The Indian Micro and Small Enterprises (MSEs) sector plays a pivotal role in the overall industrial economy of the country. It is estimated that in terms of value, the sector accounts for about 39% of the manufacturing output and around 33% of the total export of the country. Further, in recent years the MSE sector has consistently registered higher growth rate compared to the overall industrial sector. The major advantage of the sector is its employment potential at low capital cost. As per available statistics, this sector employs an estimated 31 million persons spread over 12.8 million enterprises and the labour intensity in the MSE sector is estimated to be almost 4 times higher than the large enterprises.
South Africa
In South AfricaSouth Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
the term is SMME for Small, Medium and Micro Enterprises. Elsewhere in Africa, MSME is used for Micro, Small and Medium Enterprises.