Size of a Business:

Micro: fewer than five employees

Small: 5-19 employees
Medium: 20-199 employees
Large: 200+ employees

Small to Medium Enterprises (SME’s): Fewer than 200 full-time equivalent employees
and/or less than $10 Million turnover.

Common Characteristics of an SME:

Indendently
operated
personalised Independentl
service y owned

Manufacturin
g companies: Closely
fewer than controlled
100 by owner
employees

non-
manufacturin
SME not dominant
in the
g companies: industry
fewer than 20 (holds a small
employees market share)

Owner
basically
Locally
responsible
based
for decision-
making
Reliant on Bulk of
internal capital
support provided by
services owner
Role of SME:
 Employ about 70% of all the people working in the private sector
 Produce approximately 50% of all the products produced each year
 Generate an increasing amount of our total exports
 Account for 20 per cent of all money spent on R&D
 Provide a wide range of products used by large businesses
 Earn more profits and pay more taxes than large businesses.

Snapshot Questions: Otaris Marketing:

1. Melanie’s choice to start her own business was motivated by her ability to have
more flexibility and creativity in her marketing activities, with faster and more visible
results. Increased flexibility, however, was her main motivator, as she has “the
flexibility to get the very best out of each productive mood as she is not locked in to
a strict 8 am–6 pm schedule.”
2. Melanie prefers to keep her business small in order to build the company and life
she desires. Her target market is small businesses, so by keeping her business small,
she can “provide them with a great product at a reasonable price is to cut out as
many overheads as possible. And, when I think about getting ‘big’, all I think about is
increased overhead.” Keeping her business small also means that Melanie can
provide customers with a more personalised experience. Through this, she can
devote more time to each client and really get to know their needs in order to tailor
her service and offerings to suit each client’s requirements. This enables her to
develop long-term relationships with her clients and thus secure repeat business.
3. The benefits of remaining small are:
a. The smaller you are, the less need for expenses, space and resources,
b. being small allows owners to put profits back into the business, rather than
using it to pay employees or rent.
c. Overall cost will stay down as profits increase

Exercise 10.1 Revision:

1. The letters SME stand for “small to medium enterprise”.
2. Quantitative measures are those based on statistical calculation. An example of this
is that devised by the Australian Bureau of Statistics (ABS) to determine the size of a
business. On the other hand, Qualitative measures are those based on personal
observations and a description of the business. For example, manager observations.
3. As below:
a. A business with fewer than 20 employees is classified as a small business
b. A micro business has fewer than 5 employees, including the owner
c. A medium business has between 20 and 199 employees
d. A business that has more than 200 employees is classified as a large business
7. It is difficult to provide an accurate number of SME’s operating in Australia for two
reasons. First, there is no universally accepted definition of an SME. Second, the SME sector
is extremely dynamic and changing daily, meaning that the number fluctuated often.