SMES stands for Small and Medium Enterprise.It is an acronym frequently used to classify the size of a company that is made with small number of workers. This type of company has an important place in the economy of the countries for creation of jobs opportunities.
The size classifications of the companies vary according to the market sector.
INDUSTRY
- Microenterprise – up to 19 employees
- Small Business – from 20 to 99 employees
- Average Company – from 100 to 499 employees
- Large Company – 500 or more employees
TRADE AND SERVICES
- Microenterprise – up to 9 employees
- Small Business – from 10 to 49 employees
- Average Company – from 50 to 99 employees
- Large Company – more than 100 employees.
SMES in the Economy
The SMEs worldwide, represents 80% of businesses in an economy. In this sense, the importance of this is very important for the generation of jobs, and sustainable management of the economy.SMEs comprises micro, small and medium enterprises which is operated by a legal person under some form of organization.SMEs are important in the economy of a country because they participate in the generation of jobs and contribute to production, which i positively influenced in gross domestic product (GDP).
Advantages And Disadvantages of SMES
Advantages of SMEs
- Ability to create jobs.
- Greater adaptability and flexibility to adapt to the new market modalities due to its size.
- Greater involvement of workers, thanks to its closeness to the company.
- Service and personalized service and close to customers.
Disadvantages of SMEs
- Vulnerability to the oscillations of the economy (devaluations of the currency, for example).
- Limitations on economic capacity and, consequently, the ability to compete.
- Less possibility of expansion.
- Dependence of State aid (financing) to make the necessary investments for its growth, personnel and work tools.
Types of SMES
Three types of SMEs are considered, depending on their workforce and their turnover or balance sheet. They are the following:
Microenterprise
Company of up to 10 workers. Companies with a turnover or annual balance of less than 2 million euros.
Small company
Company of between 10 and 50 workers. Companies with a turnover or annual balance of between 2 and 10 million euros.
Medium company
Company of between 50 and 250 workers. Companies with an annual turnover of between 10 and 50 million euros or an annual balance between 10 and 43 million.
