Small and Medium Sized Enterprises (SMEs)
There is no globally recognised definition of an SME…
Definitions of SMEs differ across countries and industry sectors, and can be based on a variety of criteria, such as number of employees, invested capital and total value of sales. However, more important for policy considerations are the characteristics of these businesses, which typically include:
…although SMEs generally share some key characteristics.
- Personal ownership and management
- Few, if any, specialist managerial staff
- Not being part of a larger business enterprise.5
These characteristics mean that employees in small firms often need to be multi-skilled rather than specialists, with expertise in a diverse range of areas such as marketing, production and accountancy. They are also constrained in the amount of time and money they can invest in searching for, and using, assistance. These factors, together with a culture of self-help and independence prevalent amongst New Zealand firms, have implications for business development policy.
For the purposes of this report, SMEs employ 19 or fewer staff.
The above characteristics are typically exhibited by businesses with fewer than 20 employees. Therefore, for the purposes of this report:
- SMEs will be defined as enterprises employing 19 or fewer full-time equivalent employees (FTEs) unless otherwise stated;
- Small enterprises will be defined as those employing 0-5 FTEs; and
- Medium enterprises as those employing 6-19 FTEs.
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