SMEs (Types, Characteristics, Advantages, Disadvantages and Examples)

For some time now, much has been said about the term SME, SME or simply SME. It is known with this acronym to Small and Medium Enterprise and groups profit-making and entrepreneurial organizations.

It can be added that they are independent companies with a great presence in the commercial and services field. More not so much in large industry, since they do not usually handle a large amount of economic resources.

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Their turnover is limited as is the human talent employed in them. Generally, the jurisdiction of each country is the one that establishes these values, in many of them they tend to conceptualize SMEs as companies with one to 250 workers.

From what has been seen above, it can then be said that they are commercial organizations. Almost exclusively commercial, barely related to the industrial sector and limited in their amount of human and financial resources.

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The creation of an SME generally begins with the concern of an entrepreneur, the enthusiasm for increase your economic income and a business idea that you consider viable to achieve your goal of

profit.

In part, this is one of the reasons why it is not very common to see this type of business initiative go to the next category and become a large company, however SMEs can be classified into several types.

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In this article you will find:

Types of SMEs

Following the classification criteria according to the number of employees, SMEs can be of three types:

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Micro-businesses: they are the SMEs with the least amount of human talent, these can vary between 1 and 10 workers, their annual turnover is also usually the lowest of all
Small companies: they follow the previous ones regarding the number of workers they employ, which do not exceed a maximum of 50 people, but not less than 10, their annual turnover is average
Medium businesses: They are the category of the largest SMEs, they can hire from 50 to 250 people, frequently they are the ones that bill the most annually

It is important to mention that some authors tend to use the term Mipyme to also include microenterprises, the acronym of MIcro, Small and Medium Enterprises.

On the other hand, these organizations are also usually classified according to the amount of resources that manage, as well as with the participation they have within their branch in the market, in this sense They may be:

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Autonomous: these are the most common of all, they are completely independent, they do not participate in other companies, other companies do not have participation in it and, if they were, it would not exceed 25% of participation.
Associates: in this case, SMEs have at least 25% participation in another company or another company would have no less than that percentage of participation in it, however it would not be directly linked to her.
Related: they are generally represented by franchises, an SME can be classified within this group if any of the related companies meets any of these conditions:

Greater voting rights.
You can revoke or nominate a majority of the other company's board of directors.
It has a decisive influence on the hiring of the other.
It controls the voting rights of shareholders and partners of the other company.

However, this classification may vary from country to country, as parameters and criteria may govern. different depending on their monetary income per year, their volume of production or the number of employees who possess.

Characteristics of SMEs

Roughly speaking, SMEs are characterized by being companies:

With a reduced number of employees, no more than 250 workers.
From diverse and heterogeneous sectors.
Independent
With a very important role in the economic life of any country.
Generally and relatively they have a low level of investment.
They have the ability to act and make life within the same branch or sector.
There are few examples of SMEs that have participation in international markets.

Advantages of SMEs

Among the most outstanding advantages of this type of company we can mention:

Flexibility: Compared to large companies, SMEs can adapt more easily to changes in the market, they can also adjust their production much faster than these before such variations.
Closeness: they interact much more with their customers, their relationship with them is much closer with them, this favors know their wishes, tastes and needs widely, so they can also offer them a much more treatment personalized.
Simplicity: both in its infrastructure and in its organizational structure, it also allows to adjust to changes quickly, even the fact of changing branches, market niche and until decision making they are more expeditious.
Agility: they do not present as much bureaucracy as large companies, the decision process is fast
Occupation: they take advantage of unoccupied market niches, which are not so interesting for large companies because they are not very profitable.
Focused: on the satisfaction of your client portfolio, are oriented to it.
Versatility: they have the ability to identify new opportunities and open their way to them to take advantage of new business opportunities.

Disadvantages of SMEs

Despite the great advantages of SMEs, some disadvantages can also be mentioned, some of them are:

They have less competitive, technological, advertising, economic capacity and access to financing than large companies have.
Its investment in r & d, work teams and human talent is low.
Low-skilled human talent cannot offer the same development opportunities to its staff as large companies do.
Its expansion capacity is very limited.
They can hardly undertake large businesses since they generally do not have financial backing.
Less organizational control compared to large companies.
Weakness in the standardization of products and chain work.
They find it difficult to compete with the prices offered by large companies.