Business segment term used differently in different countries,
sometimes differently in different industries in the same
country. In the US, any firm from a small-office home-office
(SOHO) to a large corporation may be called a SME. More
specifically, firms included in Russel indices such as Russel
2500 index and Russel Midcap index are classified as SMEs.
In European Union, a firm with (1) 50 to 250employees, (2)
annual turnover of Euro 7 to 40 million, (3)total assets
less than Euro 27 million, and (4) not more than 25 percent
ownership by a large corporation, may be classified as a
SME. The International Chamber Of Commerce (ICC) defines
a SME as having 100 to 2000 employees.
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.
Europe
EU
Member States traditionally have had individual definitions
of what constitutes an SME. For example, the traditional
definition in Germany 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. Furthermore,
SMEs are defined as firms with either a turnover of €10-50
million or a balance sheet total of €10-43 million.
United States
In
the United States, 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).
India
In
India,
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.
