What is an SME?

We always take it for granted that people who are passing by the magazine racks know what an SME is in the first place — because otherwise, they may just approach our magazine with some puzzlement.

We don’t even categorically state its definition up front.

But since you are reading this, then most likely it’s because you do know that SME stands for small and medium enterprises. And the next question now is, just what exactly is a small or medium enterprise?

There are asset-based definitions and there are manpower-based definitions. For instance, there’s the rule of thumb that companies with 10 to 100 employees are small enterprises, while those with 100 to 200 are medium enterprises (Those with less than 10 are “micro,” while those with more than 200 are “large”).

And then there’s the Magna Carta for Small Enterprises, which states that small businesses have from 1.5 to 15 million in assets, while medium-sized businesses have 15 to 100 million (inclusive of loans but exclusive of land).

For our purposes, however, we take the above two rules as guidelines… but the bottom line is that we just know an SME when we see it. There are, after all, enterprises with say 30 employees… all of whom are engaged in making sewing rags by hand. And we have to say that they’re “micro” despite having more than 10 employees.

On the other hand, there are firms with just a handful of people but which handle millions and millions of pesos in assets. Asset-wise they may be medium-sized, but organization-wise they’re actually small.

So we look at asset size, manpower size, and organizational structure.

Sharp-eyed readers may wonder, “But you did feature Martha’s Cakes before… isn’t it more of a micro enterprise?” True, but we were looking at it also from the context of growth potential.

In other words, we won’t be too strict in our delineations — it’s more interesting that way! But then you won’t see us giving tips on how to start your own business by making your own handbags at home. Some other magazine would be better in that department.