Difference between SMEs and other Enterprises

It has been forecasted by MENA Research Partners (2017),  that within the next five years Gulf countries are going to see a high growth in SMEs. Their estimation is that small and medium enterprises will grow around 156%, having worth of $920 billion, employing over 22 million people  (Arabian Business, 2017). Hence, it is very crucial to know the difference between SMEs and other enterprises for the academia as well as the industry Small and medium enterprises are mostly differentiated from other enterprises by some quantitative measures, such as number of employees, value of assets, etc. because, it is difficult to bring some qualitative measures for defining and differentiating between SMEs and other enterprises (Hatten, 2015).

SMEs vs Large Organisations

            Hatten (2015) stated that the main and most common difference between large and small-medium enterprises is of the number of employees working there. The employees of SMEs are limited in number but they have formed relationships among themselves and there is a negligible hierarchy in such enterprises, whereas large enterprises have a huge number of employees and they have to follow strict hierarchies of the organization. Furthermore, the employees of SMEs have strict guidelines and more burden of work, since CEO is aware of every activity and he will come directly to you whenever it is required. Often employees of SMEs have to say goodbye to their weekends and work as it is required by the higher authority but in contrast to that, the large organization has a certain diplomacy in their operations. Their CEO has no idea of the activities of individuals and this creates a safe environment for individuals to work in (Bean, 2017).

Another huge difference between smaller firms and the larger firm is of Human resource. Due to the huge human resource, large organizations are able to assess its external environment. Lack of resources bring a lot of hurdles for the SMEs but it also makes them seek innovative solutions for those hurdles and situations (Chesbrough, 2011).

Moreover, large firms and SMEs have very different role profiles for their employees. In large firms, employees are given a job description with a few objectives and your role is defined, employees wouldn't be obliged to do anything which was not in their job description or which was not stated to them during the interviews. They have certain processes which are to be followed but in small-medium firms, the scenario is very different. In SMEs, employees are seeing and doing anything and everything. Employees will work harder and they will learn faster as well. They get to know about the corporate life in depth while working in SME. They are client driven and they are having an on-demand hierarchy, as in the best individual for the job is going to get the job at the moment. In this matter, there are some cons of working in SMEs. Those cons include randomness, insecurity and having a lot of difficulty in performing better but there is one huge pro of working in SMEs and that is that you get to see and understand every aspect of managing a business. Due to that, working in SMEs is very beneficial for the individuals who want to start their own businesses (Bean, 2017).

 Furthermore, another huge difference between large organizations and small-medium enterprises is of the practice of open innovation. Chesbrough (2011), stated that the smaller firms have very limited resources and hence, they are not performing well in innovation but this also makes them seek better solutions. These organizations bring out of the box solutions for their business and problems related to their business. Small-medium enterprises and large enterprises have a difference in the impact of open innovation as well. They can go for innovations, which are associated with the higher risks, because of their small scale of operations. Whereas, larger enterprises do not have that feasibility (Spithoven et al., 2013)

            Pay (2017) stated that Small to medium enterprises are often focusing on a niche market whereas large organizations are mostly trying to offer a number of products and services to a more wider range of consumers. SMEs can sell a single product in a niche market and make their required profit whereas larger enterprises have to sell a lot of commodities and keep on increasing their products and services. Along with that, Investors in People (2016) stated that another huge difference between large enterprises and small to medium enterprises is of salary.

Entrepreneurs vs Small  to Medium Enterprises

Entrepreneurs and small-medium enterprises are two very important tools for transforming the economy of any country. According to Olusegun, (2012) entrepreneurship is the procedure of building small to medium enterprises. They discover then evaluate the available opportunities and then they start their enterprises accordingly. Whereas, SMEs are firms, organizations being administered by the individuals. Another major difference between entrepreneurship and small to medium enterprises is of risks involved in their operations. Entrepreneurs have usually a higher level of risk whereas SMEs are having lower risk involved in their businesses. Furthermore, it was stated in the Forbes article, written by Marks (2012), entrepreneurs think big and hence, they have big returns on their investments whereas SMEs think small and have relatively smaller returns in their business activities.  Along with that, entrepreneurs have an issue with the status quo. They can’t remain content, they are always striving and going for the next big thing. Entrepreneurs are also more technical than the small to medium enterprises.

SMEs vs startup

Small to medium enterprises and startup are two words, often used in the same situations and interchangeably but they have differences among them. While differentiating among SMEs and start-ups Steve Blank, stated that startups are built for having a scalable business model whereas the aim of SME is to gain profit.   Startups are new and have this intention of examining new opportunities, ideas or products. They usually take benefit of the technology. Some startups grow further but some become nonexistent as soon as they started conducting their business operations. Whereas, SMEs have mostly established their operations with existing products and services, mostly for the domestic market only. Furthermore, SMEs and startups have distinctive sources of funding (Raghu, 2017).