Why The Size Of Your Business Matters

If you are an in the business world, then you have probably met people who asked you about the size of your company. Those who ask this question are always interested in the number of employees you have rather than the number of customers or amount of revenue you generate. They simply want you to tell them whether your company is an SMB, an SME, or a Large Enterprise. But does the size of a company matter? Conventional wisdom says that size does not matter and that everyone has equal chances of making it in the world of business. But that’s not true. In the real world, the size of your company matters.

Understanding how people classify your business can be very helpful especially when it comes to choosing a technology solution and strategy that compliments your company’s needs and wants. Is your company an SMB, an SME, or a large enterprise? It’s important to note that there are several factors and key definitions that determine the category into which your company falls depending on the person you ask. The most used definition of each category is based on the number of workers and gross revenue.

Buying habits and business technology also influence the category into which your organization falls. This is because many technology solutions are developed with these categories in mind or at least come with features and pricing that correlate to the business categories. The IT service firms and business solution providers usually pay attention to size of the businesses run by their clients. When selling to SMB’s, business solution providers, for instance, offer products and services that address their unique needs, and these products are usually significantly different from those offered to SMEs and large enterprises. Knowing which class your company falls into can define your goals, specify your strengths, and then match them with the right technology solutions.

Want to know where your business falls? Here are some characteristics of the various business categories.

Small and Medium-sized Businesses (SMB)

• Employees- If an organization has 0 to 100 employees it is considered a small-sized business. If a company has 100 to 999 employees, it is a medium-sized business. However, these size specifications may be defined differently by some organizations that use the size specification when giving loans to small businesses.
• Annual revenue- If a business generates $ 5 to $10 million yearly, it is an SMB.
• IT personnel- SMBs usually have one or a few IT experts.
• IT skills –Employees usually learn IT skills on the job.
• Location- SMBs have limited geographical boundaries. Most of these businesses may have more remote employees because of outsourcing.
• They usually have limited CapEx.
• These businesses go for the pay-as-you-go subscription model when buying software.
• There are 28 million small businesses in the US that account for almost 54% of the country’s sales.

Small and Medium Enterprises

SME, also known as the ‘Mid-Market,’ is a more popular term than SMB. It is the official market term for universally based enterprises such the World Bank, United Nations, European Union, and the World Trade Organization.

• Employees – The European Union defines an SME as a legally independent organization with 101-500 employees.
• SMEs generate $10-$1 billion annually.
• IT personnel- They have a small group of IT specialists or several of them.
• Location- These companies have more than one office location and more remote workers.
• They have some CapEx.
• SMEs considerer capabilities, functionality, and reporting when purchasing technology.
• If the mid-market were a country, its GP would be the fourth-largest in the world.

Large Enterprise

• Employees- Large enterprises have over 1000 employees and require to establish an effective team that focuses on attaining a collective goal.
• Annual revenue- These enterprises generate over$1billion annually.
• IT personnel- A large enterprise has full-time IT teams with several specialists.
• IT skills- Large enterprises have a wide variety of IT skills because thy focus on bringing specific skills on board.
• Location- Theses companies serve many clients. Thus, they have several office locations domestically and internationally.
• They have large CapEx.
• The main considerations for software purchase include advanced features, guaranteed uptime, and safety.
• In 2012, large companies employed more than nine million people in the US.

The category you fall into influences many things such as how you will make your financial decisions, the way your technology needs are framed, and how technology-solution providers treat you during the sales process. When choosing a technology solution, ensure you go for a cost-effective option that is easy to manage regardless of your classification. More importantly, compare at least four technology solution vendors before you decide which solution suits your business.

 

by: Sia Hasan

Tags: article, business, Size of Business Matters

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