A small and medium-sized business (SMB) is a business that, due to its size, has different requirements and often faces different challenges than larger corporations. SMBs are businesses whose personnel and revenue numbers fall below certain limits. Generally, an SMB is a company with fewer than 500 employees and annual revenue of less than a few hundred million dollars. However, the definition of an SMB can vary depending on the industry and the country. For example, in the United Kingdom, a company is defined as being an SME if it meets two out of three criteria: it has a turnover of less than £25m, it has fewer than 250 employees, it has gross assets of less than £12.5m.
SMBs play a crucial role in the global economy as they provide a significant portion of the jobs and revenue that drive economic growth. According to the World Bank, SMBs account for approximately 90% of all businesses worldwide and create two out of every three new jobs. SMBs are also responsible for driving innovation and competition in many economic sectors. However, SMBs often have limited resources and face many operational challenges that larger corporations do not. They may also lack the budget and IT infrastructure to support large-scale technology solutions.
Some common characteristics of SMBs include:
- Size: SMBs often have a smaller workforce than larger corporations, with the majority employing 500 or fewer individuals.
- Revenue: SMBs typically have less revenue than larger corporations, with small businesses making less than $50 million annually and midsize businesses making between $50 million and $1 billion.
- Flexibility: SMBs are often more nimble than larger firms due to their limited resources, which requires them to be more creative and innovative.
- Buying process: The buying process for SMBs is often shorter and more straightforward than for larger corporations, with fewer people involved in every deal and less red tape to cut through to get approvals.
In summary, SMBs are businesses that fall below certain personnel and revenue limits and play a crucial role in driving economic growth and innovation. They often face unique challenges due to their limited resources but are more nimble and flexible than larger corporations.
