Opportunities for SMEs

Small- and medium-scale enterprises (SMEs) are businesses that operate on a small scale for years. These are usually locally established businesses that generate enough profit for its company owners. Generally, SMEs are described in 5 distinct characteristics. The following are as follows.

1. Revenue and Profitability

SMEs revenue is not comparable to large-scale businesses. According to the global research study commissioned by FedEx Express, SMEs in Singapore that export to overseas markets generate the highest average annual exporting per- company-revenue of US $2.21 million compared with the global average of US 1.5 million. Though some SMEs gain the lower revenue, it doesn’t mean that it has lower profitability. Local-based SMEs usually owns their facilities and equipment which keeps their cost at a lower rate compared to others.

2. Employees

Being operated in a small scale also entails smaller team composition. Depending on a business type, the number of employees working in small- and medium-scale businesses is fewer than one or two hundred.

3. Market Area

Compared to large corporations and businesses, SMEs only caters a much smaller market area. Generally, SMEs only serve single communities or neighbouring countryside such as local market, local department store or local trade fairs. The larger the market area, the larger the cost of business operations. The scale of operations for SMEs is very limited on its geographical location because increase the scale or market coverage means reclassification of the business.

4. Ownership and Taxes

SMEs ownership is designed for sole proprietorship or partnerships only. Unlike large companies that work in a corporate form, SMEs prefers limited liability where company owners are provided with greatest degree of managerial control while minimizing the hassle-free registration. Aside from this, SMEs enjoys exemption of taxes. Only company owners file the business income tax and expenses on personal tax returns.

5. Locations

Having a limited market area also means having limited locational area. SMEs do have sales outlets in multiple cities or countryside like how large corporations are. Generally, SMEs only operate in one office like a retail store. In some cases, SMEs’ workplace is an extension of your residential area run by a single or small group of people.

Although SMEs have these very distinct characteristics, they represent a portion of the country’s economy. Apparently, unlike large corporations, SMEs can access to several finance and funding support. There are a number of programmes and R&D grant that specifically target SMEs. Foreign agencies that are offering such grants include the European Union (EU) and United States (US). Government funding is also available to SME. Each country has its own requirements and qualification to comply for.

What do they need to do? SMEs just have to check and qualify for the programmes’ or the institutions’ qualifications or eligibility restrictions, R&D grant process and the maximum coverage of the grant. Supporting documents are also being requested for validation. A monitoring and evaluation process will also be conducted once grant has been awarded.