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Glossary of Terms - SME

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

The European Union also now defines an SME as consisting of less than 250 employees. The term SMB is also sometimes used which means small & medium business.

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

An SME will often face rather different business challenges compared to a larger business. 31.2% of SME 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 an SME than to a large business. 17% of the SME sector sought marketing advice last year, however only 7% considered that this marketing advice had been successful (source – as previous). An SME will often find acquiring suitable business funding rather harder than a larger business.

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