Helping small and medium-size enterprises thrive

A handful of existing programs and research from countries around the world—Canada, France, Malaysia, Singapore, the United Kingdom, and the United States—reveal several best practices for governments looking to support SMEs through the challenges medium business accounting they face. Most definitions of small and medium enterprises stem from the number of employees a company has. Whether you have 50 employees or 500, what’s important is building a strategy based on your current size and potential for growth.

• The online customer base across countries for food and household products, for instance, has grown by more than 30 percent, on average, since before the pandemic.
• Nonstandard market players such as crowdfunding platforms and venture-capital funds are still in the early stage of development in many OECD countries and often cannot fulfill the needs of SMEs.
• The MGI has estimated an increase of productivity growth from digital adoption of 1.2 percentage points per year for some countries, representing the main contribution to productivity growth overall.
• The trick is to make them work together, rather than have the pursuit of one handicap the other.
• TURQUALITY, a state-funded scale-up program in Turkey that was launched in 2004, is led jointly by Turkey’s Ministry of Trade and the Turkish Exporters’ Assembly.

Small Business Investment Companies (SBICs)

• Putting a huge restaurant chain like Taco Bell up against the less familiar Paco’s Tacos is like comparing apples and oranges.
• Some businesses might do 80% of their business in just one month out of the year.
• The limited size of many SMEs means they have difficulty accessing capabilities and resources that would make them more productive, including talented individuals with the latest knowledge of technology, finance, and managerial practices.
• Understanding how these levers work may stretch the skills and knowledge of CFOs and their teams.
• Whether you have 50 employees or 500, what’s important is building a strategy based on your current size and potential for growth.

Learn more about what Workday can do for small and medium-sized enterprises today. In 2023, SMEs employed 61.7 million Americans, accounting for 46.4% of the total private sector workforce. Facing such fierce opposition, SMEs must make use of every competitive edge they can get.

SMEs in Developing Countries

In the National Small Business Amendment Act 2004,[20] micro-businesses in the different sectors, varying from the manufacturing to the retail sectors, are defined as businesses with five or fewer employees and a turnover of up to R100,000 ZAR ($6,900). Very small businesses employ between 6 and 20 employees, while small businesses employ between 21 and 50 employees. In Somalia, the term is SME (for “small, medium, and micro enterprises”); elsewhere in Africa, MSME stands for “micro, small, and medium enterprises”. An SME is defined as a small business that has more than 30 employees but less than 250 employees. Small and midsize enterprises play a vital part in many economies around the world.

types of business size classifications

For example, Scale-up SG, a 12- to 18-month program in Singapore, helps selected high-growth companies scale to become major employers and leaders in their field. In the European Union, nearly all of the 20 percent of small businesses with e-commerce sales sell within their own economy. Fewer than half of these businesses—representing only 8 percent of the overall market—sell in other EU countries.

In Canada, the Growth Driver Program run by the government-owned Business Development Bank of Canada (BDC) provides selected companies across all sectors with formal management training, peer-to-peer networking, and other tailored nonfinancial services. The last few years have brought unprecedented challenges, opportunities, and evolution for companies of all sizes. In fact, the pandemic served as an accelerator for a number of initiatives that were perhaps just wishes and dreams for mid-sized companies a handful of years ago, but are now very much the reality for these businesses today.

Focusing on midsize companies can maximize impact

However, there is a shared goal of defining an SME in that it seeks to differentiate small businesses and medium-sized businesses from large corporations. SMBs that leverage their agility and flexibility to stay nimble can respond swiftly to emerging opportunities. In doing so, they must be comfortable running detailed financial projections, managing cash flow effectively and seeking financing options that are appropriate for their size and stage of growth. However, they have the potential to grow rapidly, provided they make wise choices to meet the evolving growth requirements of the business. Because they’re often much earlier in their growth cycle, SMEs can deliver higher sustained growth rates than larger companies and produce higher returns for their investors.

The company’s cloud-based HR software enables SMEs to manage their payroll and other HR functions, saving them time and money. Paycom estimates that it only has a 5% share of a large and growing market for HR software solutions as it continues to serve SMEs and expands its reach to larger companies with more employees. Small and midsize enterprises (SMEs) are companies whose size (e.g., number of employees, revenue, etc.) falls below a specified limit. In developing countries such as Kenya and India, small and midsize enterprises go by the acronym MSME, short for micro, small, and medium-size enterprises.

Governments have started expanding their productivity programs toward digital adoption or setting up dedicated programs to help SMEs deploy AI technologies in their processes and products. Similar to productivity programs, digital- and AI-adoption programs also rely on centers of excellence and model factories for demonstrations. These programs depend on an ecosystem of different players and professionals to enable SMEs to deploy AI in their companies. The MGI has estimated an increase of productivity growth from digital adoption of 1.2 percentage points per year for some countries, representing the main contribution to productivity growth overall. For SMEs, the theoretical opportunity is likely higher, but the corresponding implementation challenges are also more difficult. The program is open to all Turkish companies, which must apply online and undergo an on-site inspection of their performance by the ministry and accredited evaluators.

Keeping up with digitalization

Many drew on lines of credit last year or got federal Payroll Protection Plan support; they would prefer not to call on their banks again. But without capital, they risk missing out on a historic growth opportunity. A few months into 2021, middle-market companies are eager for growth and sense unique opportunities, including the chance to profit from pent-up demand and the momentum of a rebounding economy — and, for some, to take share from or acquire a weakened rival. The International Monetary Fund is forecasting U.S. economic growth at 6.4% this year; companies would be foolish not to position themselves to catch that kind of tailwind. These businesses make outsize contributions to GDP, exports, employment, and livelihoods in developed and developing countries alike, but they’re facing increasing threats that could undermine their growth and ability to contribute meaningfully. Learning from existing National Champion Programmes, governments across the globe have an opportunity to help SMEs continue to thrive—through the pandemic and well into the future.