SMEs

Why are Small and Medium-sized Enterprises (SMEs) important?

In Europe, 99% of companies are SMEs, so anything that affects SMEs affects virtually all companies. Half have less than 10 employees. Yet despite their small individual size SMEs account for more than half of GDP and employment, so any change in their collective prosperity has a bigger impact than changes affecting the big hitters.

SMEs are very different in nature, ranging from start-ups and highgrowth ‘gazelles’ to traditional enterprises, including craft sector, micro-enterprises, social enterprises and family SMEs. Some seek rapid growth and bigger markets; others are only active in local or regional markets. This diversity has to be reflected in policy-making, in public sector interventions, and in B2B marketing and investment.

An SME classification system

While SMEs are indeed diverse, they nevertheless exhibit fundamental behaviour patterns that can be represented as a taxonomy. Unfortunately, the methods used in the past to describe SMEs, usually based on size and industry sector, failed to provide a meaningful system as they do not differentiate between SMEs in a way that will map onto behaviour patterns.

Neil has designed a system that enables SMEs to be classified based on the three elements that most influence their behaviour. This system can be used as a descriptor, an analysis tool, or as a proactive tool for designing and targeting schemes for SMEs as it allows objective and transparent selection. For more details see the links opposite.