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SME Definition
What are Small and Medium Enterprises?
There is no internationally recognized definition of Small and Medium Enterprises (SMEs). The European Commission (EC) differentiates SMEs into three different types: a micro enterprise as a company with less than 10 employees and turnover less than € 2 million, a small enterprise as a company with less than 50 employees and turnover less than or equal to € 10 million, and a medium enterprise as a company with less than 250 employees and turnover less than or equal to € 50 million. Micro enterprises account for over 90% of all SMEs. The United States has currently no official definition of a SME, but does recognize “small businesses” as being different from other larger companies. The term Small and Medium Enterprises is the most widely used name for these types of companies, but in some parts of the world, especially the United States, SME is used interchangeably with Small and Medium Business (SMB). At IFoSME we adhere to the EC’s definition, but offer our services to anyone who can benefit from their use, including larger businesses.
SMEs and the Global Economy
SMEs play a huge role in the global economy. Officially, the EC states that there are 23 million small and medium-sized enterprises in the 25-country European Union representing 99.8 % of all EU enterprises and employing more than 90 million people. However, our research indicates that this number does not include primary sector (agricultural) enterprises or freelancers. Including these categories puts the total estimate between 31-35 million SMEs in the EU, employing much more than 90 million people. Accurate SME data for the United States does not exist, but our estimates indicate that there are upwards of 40 million SMEs in the country. SMEs also play an integral and ever increasing part in the economic development of low- and middle-income countries.
Despite their large numbers and employment across the globe, SMEs are severely underrepresented politically, due to the dominance of larger firms, whose multi-million dollar lobbying budgets and expensive political consultants are beyond the financial reach of SMEs. In recent years the establishment of several national and international organizations dedicated to the support of SME interests brought hope that finally these enterprises would get the respect and help they deserve. Sadly, in reality little has been accomplished.
IFoSME’s Role
In response to the failures of the market and political systems to serve the needs of SMEs, the International Federation of Small and Medium Enterprises (IFoSME) was founded in the United States in 2003. Our founder, Sven Fischer (b. 1964), has 25 years of experience working internationally for a family-owned SME, and therefore knows first hand how large the obstacles are that SMEs face in the global business environment. IFoSME hopes that through its online International Business Directory as well as the use of its other services, SMEs will have access to the tools they need to gain global economic and political notice and representation.
For more details about IFoSME’s vision, please see our Principles and Goals.