We explain what SMEs are and the things they can afford thanks to their sales. Also, its main advantages and disadvantages.

SMEs are independent and have a high prevalence in the market.

What are SMEs?

It is understood by SMEs or PyMEs (acronym for Small and Medium Enterprises), for-profit organizations, that is, entrepreneurs, that operate independently and have a high prevalence in the market, but without being part of the large capitals who run it. These limits are, of course, set in a conventional manner by the jurisdictions of the different countries.

The distinctions between small, medium and large Business They have to do with the number of personnel they hire, with the monetary mass they handle and with the segment of participation in the local market that corresponds to them.

In this way, state They can organize and personalize their monitoring, benefit or appraisal mechanisms to collect taxes from wealthy companies and benefit small ones or insurgents, promoting economic growth and fighting oligopolies.

SMEs play a vital role in the economies of different countries, usually employing almost 70% of the workers from countries belonging to the Organization for Economic Cooperation and Development (OECD). This is because their size and sales volume allows them, among other things:

  • Offer personalized products instead of massively standardized ones, such as large business chains.
  • They are subcontracted by larger companies to carry out work that would occupy a lot of their plant personnel.
  • They allow the emergence of alternative forms of organization, such as cooperatives, which require a small number of members.

Advantages and disadvantages of SMEs

The growth of young SMEs is usually rapid during their early stages.

Small and medium-sized companies have the following benefits and drawbacks:

Advantages:

  • They find new market niches. Especially if they advance to the rhythm of the innovations technologies and the new needs of the global world.
  • Adaptability. By owning structures Smaller, they can be more productively flexible, and that's often the difference between weathering a crisis or collapsing in it.
  • They offer direct care. They may have a less anonymous and standardized relationship with their client than the massive business chains.
  • Quick emergence. The growth of young SMEs tends to be rapid during its early stages, as they take over a market niche that does not represent a competence worrisome for larger companies.

Disadvantages:

  • Difficult financing. As they have fewer assets and are generally young and not too stable projects, they tend to have more difficulties when it comes to finding the financing required to innovate or grow.
  • Labor rigidity. They tend to prefer employees with previous training, since they do not have the capital and structures for their training, which makes them more fussy when it comes to hiring.
  • Low innovation. Since they do not have large capital quotas, it is more difficult for them to invest in research and innovation, although they can quickly take advantage of outside innovations.
  • Little access to large markets. While the globalization It seems to put this into question, the truth is that the largest companies dominate the international market and do not always allow SMEs to agree to compete on equal terms.
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