If all the Small & Medium sized Enterprises (SMEs) in the world were taken away today - the economy would fall flat on its face. And indeed it would be a hard fall at that. At present SMEs make a huge majority of firms and provide employment opportunities for a vast number of people. Despite this, many people still don't believe understand how important SMEs are and fail to understand how they can be a very viable way to earn money. Furthermore, all governments should get involved in supporting this vibrant and promising sector.
First of all, what is an SME? This definition varies, but in most countries it can vary from fewer than 5 to 20 employees. SMEs have unique attributes compared with big business, which once was seen as the more influential of the two in terms of contribution to the economy.
Although there are now many avenues for assistance with business start-up and venture capital, many of these avenues are not directly visible to a number of minority groups. Often, these organisations are only available to those who have already been in business for a period of time. It is really important to seek advice in this area as it differs from country to country. Slowly but surely there are more and more avenues in receiving help as governments are realising the economic potential of SMEs.
There are also social implications for these minority groups, because, as discussed above, often access to assistance is limited despite their contributions to the SME sector. For some people it can also be difficult to receive finance for their company start-up as they may not have a good relationship with their bank. Often people ask family or friends to financial help in this situation.
The social contributions that can be seen are in the opportunities to support family groupings with their own firms. Also, to have the opportunity to embrace their cultural heritage and use of language in their own unique working environment.
A further social contribution of the SME sector is the opportunity they provide to women wishing to start their own business. Researchers have that:
“… women-owned businesses are critical to economic prosperity. A higher level of participation by women in the economic arena is associated with higher standards of living. It should be noted however that the greatest barrier to starting a business is confidence, (McGregor & Tweed, 2000), and this is more so for women. If governments were more involved in supporting SMEs then women could receive more direct guidance. There needs to be more visible access to receiving guidance and support in the nascent entrepreneur period, and once again, the government should take up this responsibility.
No matter who is already in a small business, SMEs are growing at a very fast rate. SMEs are also imperative to an economy as they provide a means of entry into business for new entrepreneurial talent; that is being the seedbed from which large companies grow to challenge today's industry leaders. These challenges to large corporations result in a more competitive market, which is beneficial for everyone.
With the age of globalisation, these seedbeds are often created from employees made redundant from larger companies downsizing. SMEs provide a breeding ground for new industries, especially in the wealth-creating high technology, high added-value sector of the economy, for example computer software, telecommunications and biotechnology. Large corporations are downsizing their labour forces to maintain profitability in the face of global competition. These redundancies have pushed many into becoming opportunity entrepreneurs.
As the SME sector has grown - so has its contribution to the economy. In the face of a more globalised marketplace SMEs, due to their low overheads and innovativeness, have had a major role to play in helping economies to compete more effectively. SMEs have a vital economic and social role to play. Rather than being seen as a sign of backwardness and decay, a robust SME sector is accepted as a manifestation for a dynamic and innovative economy.
This is certainly a sector of industry that is only going to grow stronger. For those who are wishing to start up their own business, it would be advised to seek good advise and go for it!
