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Glossary of Terms - Small & Medium Enterprise

A small & medium enterprise is a business in which the number of employees or the turnover falls below a certain level. The definition of these size parameters for a small & medium enterprise varies quite widely by country. In the UK the commonly accepted definition is that a small & medium enterprise is a business with less than 250 employees and or a turnover of less than £10 million. The average turnover for a UK small & medium enterprise is £820k (source - The Small & Medium Enterprise Statistics for the United Kingdom)

The European Union also now defines a small & medium enterprise as consisting of less than 250 employees. The term SME is also frequently used to describe a small & medium enterprise.

In the UK there are about 4 million small & medium enterprises and they constitute by far the largest percentage of businesses within the UK economy. As a whole, small & medium enterprises are also the largest employers in the UK economy. The UK is therefore often considered to have a small & medium enterprise based economy. In recognition of the importance to the economy of these businesses to the UK they often face simpler business regulations and lower taxes.

Small & medium enterprises often face rather different business challenges compared to larger businesses. 31.2% of small & medium enterprise businesses in the UK described their major problem as a lack of turnover or business (source – NatWest S.B.R.T. Quarterly Survey of Small Business in Britain). Marketing is therefore of even more importance to a small & medium enterprise than to a large business. 17% of small & medium enterprises sought marketing advice last year, however only 7% considered that this marketing advice had been successful (source – as previous). Small & medium enterprises often find acquiring suitable business funding rather harder.

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