#1: What is an SME?
SME (Small and Medium Enterprise, Small and Medium Enterprise) Or Small and medium-sized enterprise) generally understood as small and medium-sized enterprises. These companies maintain annual revenue, net worth, and number of employees below a certain threshold, depending on regional or national regulations.
The term SME is often used by organizations such as the World Bank, the United Nations or the World Trade Organization (WTO).
Each country or economic region has its own rules on how to define an SME. Some countries are further subdivided into small and medium enterprises, small enterprises and micro enterprises.
According to the European Commission, a small business is a business with less than 50 employees, and a medium-sized business is a business with less than 250 employees.
In Vietnam, the regulations on small and medium enterprises are as follows:
– Micro enterprises: have only formal employees 10 people
– Small business:
+ Agriculture, forestry, fishing and industry: the number of formal employees must not exceed 100 persons
+ The field of trade and services: the number of official employees does not exceed 50 people
– Medium-sized companies:
+ Agriculture, forestry, fishing and industry: the number of formal employees must not exceed 200 people
+ The field of trade and services: the number of official employees does not exceed 100 persons
#2: Characteristics of SMEs
SMEs constitute the majority of businesses in operation in most countries and generate more than 80% of all new job opportunities in developing countries.
The fastest growing SMEs include:
– Law firms
– Fitness and entertainment centers
– Dental clinics
– Private clinics
– Hotels and motels
– Wine and beer shops
– Beverage stores (alcoholic and non-alcoholic)
– Technical services
– Beauty salon
– Veterinary services
SMEs are not the same as start-ups.
SMEs are strong in terms of creativity, innovation, adaptability and competitiveness. However, they encountered difficulties in raising the capital necessary to maintain their operations. In many countries, governments and international organizations are conducting business training programs and expanding SMEs’ access to government loans and financial support.
#3: The role of SMEs
The main roles of SMEs are:
1. Maintain economic stability
Over the years, the rapid development of industrialized countries has been driven by SMEs.
2. Be the backbone of the local economy
Small and medium enterprises often appear in localities across the country, contributing to total production, total budget revenue, and total new jobs for localities.
3. Make the economy dynamic
SMBs are small and medium enterprises, so they often have the ability to change and update with flexibility.
4. Create an important industry and ancillary services
Small and medium enterprises often focus on producing unfinished products; parts and details used to assemble finished products. These companies are therefore an important supporting industry.
5. Contribution to national GDP
Although SMEs are small, medium or micro in size. However, these companies constitute the majority of the total number of companies operating in each country. The total contribution to GDP is therefore not insignificant. This number can reach 50%.
#4: Create an SME
Are you considering starting your own SME? One of the biggest challenges here is the fear of failure. Once you get started, you’ll probably constantly ask yourself questions like: “Why isn’t my business growing as fast as expected?” », « How to manage financial problems? “, “How do I manage my business to achieve this? »
The truth is that no matter the size of your business, you will encounter some challenges. When you create an SME, you are confronted with problems of consumption, transport, finance, administration and a small workforce.
1. Define the vision
Determining the right vision helps you set specific goals, get a baseline picture of your business operations, and motivate you through the business process.
2. Clearly define the product/service
This is one of the most important steps when wanting to start a business. What product/service do you want to sell? Why do you want to sell these products/services? How will you run the business? What problems might you encounter in running your business? Once you can answer these questions, running the business becomes easier.
3. Identify investors and sponsors
It’s about identifying and finding ways to maintain the capital of the business.
4. Find out about competitors in the market
Learn about market competitors, their strengths and weaknesses. From these strengths and weaknesses, you can develop appropriate business development plans to gain a foothold in the market.
5. Find customers
Customers are of course a very important factor for any business. You must develop strategies, business and marketing plans to attract the attention of customers, to interest them in your business, from which they want to use your products/services.
6. Build Relationships
Finding connections and building relationships helps companies reach more investors and potential customers, or recruit talent.
Exhibitions, fairs and seminars are a good opportunity for you to share ideas, experiences, knowledge and connect with other SMEs. In addition, your company can also participate in associations, groups as well as local events, programs organized by the government. From there, potential customers will know about the products and services offered by your business.
Image source: Internet.