Small-and-Medium-Sized Enterprises and Sustainable Economic Development: Fast Facts

LeadershipOn Friday, 16 July, the Business Innovation Research Center (BIRC) of the Charlton College of Business, University of Massachusetts at Dartmouth hosted a one day seminar entitled “Sharpening the Competitive Edge of Small-and-Medium-Sized Enterprises (SMEs) in the South Coast of Massachusetts”. The purpose of the seminar was to introduce owners of local SMEs to the BIRC services available to them pro-bono to support their growth and financial well-being.

In general SMEs are defined as businesses with less than 500 employees. There is no official guideline or consensus for how to distinguish between the levels of SMEs (micro-enterprises, small and medium) but in general micro-enterprises employ between 1 and 9 people, small enterprises employ between 10 and 99 people and medium enterprises employ between 100 and 500 people. A subset of micro-enterprises, called non-employer SMEs, consisting of owner-operator single person enterprises makes up the majority of businesses classified as SMEs. In 1993, consultants from McKinsey & Company coined the term “Born Global” to describe opportunistic internationally oriented SMEs, mostly involved in hi-tech industries, who operate globally from inception. This categorization applies to a majority of the SMEs launched within the past decade.

Fast Facts regarding the importance of SMEs to the U.S. economy:

– There are an estimated 29.6 million SMEs in the U.S.

– 79.73 percent of all SMEs in the U.S. are one person owner-operator enterprises

– 76.67 percent of the 6 million SMEs with employees beyond the owner-operator are micro-enterprises with 9 employees or less.

– SMEs represent 99.7 percent of all employer firms in the U.S.

– SMEs employ just over half of all private sector employees

– SMEs pay 44 percent of total U.S. private payroll

– SMEs have generated 60 to 80 percent of net new jobs over the past decade

– SMEs employ of 41 percent of all high tech workers

– 53 percent of SMEs are home-based businesses and three percent are franchises

– SMEs create more than half of non-farm private gross domestic product (GDP)

– SMEs make up 97.3 percent of all identified exporters

– SMEs produce 30.2 percent of all known export value

– SMEs produce 13 to 14 more times patents per employees than do large firms

– SMEs serve as the engine of economic growth in most countries, including the U.S.

– SMEs tend to be more flexible and responsive to business opportunities, in general, and global business opportunities in particular

– Less than 1 percent of total U.S. SMEs export (estimated at 240,000 of 29.6 million U.S. SMEs)

– Of the exporting SMEs, 59 percent export to one market (1st Canada, 2nd Mexico)

– In 2007, U.S. SME exports totaled $306.6 billion

– Services account for 79 percent of SME employment

If you own or work for a SME, thank you. Fostering the development and economic well-being of our SMEs and the entrepreneurs who launch them needs to become a priority for universities and business schools. Establishing and supporting micro-enterprise incubators to encourage entrepreneurial endeavors is one highly visible and tangible way that universities can promote sustainable economic development in their communities. We can’t afford to wait passively for better economic times – the need to foster growth in SMEs is now.

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