Owning small and mid-size enterprises (SME) is not as easy as it appears to be. SMEs can be likened to startups; they require time, resources, strategy, and effort.
Even when the enterprises do kick-off, staying in the market and being part of economic development is another cause of worry for small business owners.
Like Guy Kawasaki, Co-founder of Alltop, quotes, “Ideas are easy. Implementation is hard.”
But everything about SMEs is not about woes. Although small in size, SMEs play a vital role, especially in an emerging economies. They outnumber larger firms substantially, employ vast statistics of people, and are generally entrepreneurial, helping to shape innovation.
What is SMEs
Small and mid-size enterprises (SMEs) maintain revenues, assets, or several employees below a certain threshold. It is important to note that each country has its own definition of what constitutes an SME.
Roles of SME
The role of SMEs cannot be overemphasis because they play a key role in the State economy by providing products and services, creating value in an economy, driving industrialization, developing skills for managers, creating wealthy nations, and Employment.
Below are some analyses of the roles SMEs play in the economy; in a way, SMEs keep the economy thriving despite all other odds.
Generate value in the economy
Entrepreneurs establish companies, start a business, acquire or change management resources, accumulate them and expand their business.
There is a mounting acknowledgment that the market economy starts by launching small and medium-sized enterprises and then is industrialized by developing the SMEs vigorously. The activities of SMEs embody a big driving force behind the development of a national economy.
SME firms are likely to choose extremely specialized markets or innovative niches that in most cases exist in the home country and foreign markets.
Also, to target fewer customers and avoid competitors, niche marketing strategies are characterized by building long-term relationships, filling customers’ needs that mainstream businesses often ignore, developing a strong reputation, using word-of-mouth references, and focusing on specialized, high-quality products and services.
The niche market has the latent to be lucrative than mass markets. SMEs using niche marketing tactics can meet the needs of the subclass market better than a corporation casually selling to the same market segment, and therefore, charge a higher price.
Small firms are said to be job generators. SMEs tend to create more jobs in low-income countries than high-income countries. They also contribute significantly to the establishment of industrious employment opportunities, the generation of income, and, eventually, poverty reduction.
Contribute to Innovation
SMEs are innovative. They are often the driving force behind the sort of thorough innovations that are essential for economic evolution since they can work outside of main archetypes, take advantage of technological or commercial opportunities that have been abandoned by more established companies, or empower the commercialisation of knowledge that would otherwise remain uncommercialised in universities and research organisations
SMEs Innovation is principally influenced by knowledge spillovers, access to networks, and opportunities to partner with other players. Globalisation has augmented the reputation of cross-border collaboration in innovation – both in obtaining inputs for innovation (ideas, finance, skills, technologies) from abroad and in exploiting its outputs (products and services, patents, licenses, etc.) in foreign markets.