What Are SMEs and Why Are They Important?

On this occasion, we will discuss a topic of great importance today: micro-enterprises, and small and medium-sized enterprises, also known as SMEs.

In the midst of this accelerated process of changes in the international economic arena, the development and promotion of small and medium-sized companies constitute the foundation of the transformation of the private sector in a country like ours, precisely because this sector is an of the main forces of economic development.

For America, the promotion of SMEs is a priority. Supporting SMEs means, in strategic terms, stimulating private activity and also the development of entrepreneurial skills. Both elements are essential to achieve productive and commercial competitiveness and —due to the particularities of the international market— a basic condition for SMEs to be able to effectively adapt to the dynamics of supply and demand, especially if we also consider the levels of demand by part of the consumers.

Being an unquestionable reality that SMEs represent a significant percentage within the structure of the American industrial park and, therefore, an important source of employment, SMEs are bearers of numerous benefits for society. They help diversify economic activity, contribute to employment growth and improve competitiveness.

They also moderate the positions of large corporations. They can function in the American market as a vital sector for entrepreneurial and innovative activities, without forgetting, of course, their relevant role in providing services to the community and their contribution, equally strategy to regional development programs.

SMEs are strategically fundamental for the social development and economic growth of America. Since the interest of the State is a priority for it to be a dynamic sector with a significant presence in exports, we recognize the need to increasingly strengthen the instruments legal, as well as support in terms of infrastructure, financing and training.

SMEs are characterized by the following:

• They have capital provided by one or two people who set up a “partnership.”
• The owners of these companies are the ones who direct the march of the same. Its administration is empirical.
• The number of workers employed in these businesses grows from 16 to 250.
• They use more machinery and equipment, even though they are based more on labor than capital.
• They dominate and supply a broader market, although they only sometimes work for local or regional clients. They can expand their production for the national market and even for the international market.
• They are constantly growing. The small tends to be medium and seeks to be large.
• They gain tax advantages from the State depending on their sales and profits.

An SME, according to its income, can count on the support of the State, reducing some tax payments.

Types of SMEs

The types of SMEs are the following:

• Microenterprise:  These companies have a payroll of 10 or fewer workers and a turnover or balance sheet of less than or equal to two million dollars.
• Small businesses: These are companies with a payroll of fewer than 50 employees and an annual turnover or balance equal to or less than ten million dollars.
• Medium-sized company: Medium-sized companies must be at most 250 employees, and the turnover must be at most 50 million dollars or an annual balance of 43 million.

Although there are also three other types of companies, which differ according to the relationship they maintain with other companies, for example:

• Autonomous. These companies are independent of others; they do not have shares in other companies, or their participation is less than 25%.
• The other types of SMEs establish financial associations with others as long as none exercises control over the other. The participation of these companies is greater than or equal to 25% but less than 50%.
• The other type of company is controlled by another, directly or indirectly, or exerts influence over another. This control or influence is given by the majority of rights or by the economic situation of each of the companies.

Small and medium-sized enterprises are of great importance due to their influence on national economies, both for their contributions to the production and distribution of goods and services also for the flexibility to adapt to technological changes. And the great potential for job creation, in addition to being a great representative and an excellent means to promote economic development and improve the distribution of wealth.

SMEs are as important for a region or country as a large company or industry can be since, due to their flexibility, this figure is much easier to establish, which allows it to offer a large number of jobs and economic income to the State.

HJR Global — leveraging SMEs’ potential

It was in 2016 that Harrison Rogers established HJR Global.

HJR Global has been one of the U.S.’s fastest-growing private companies every year since 2016.

HJR Global is always on the lookout for promising acquisition targets that provide valuable goods or services but could benefit from more sophisticated back-end operations.

Because of HJR Global’s well-developed back office, its investment firms can function with the efficiency of a startup while displaying the level of expertise normally associated with much larger corporations.