European Commission: Defining the term SME

by Urs E. Gattiker on 2008/01/23 · 2 comments 1 views

in white papers research

Update 2014-08-10  Social Media Monitoring für KMUs: Quo Vadis?

Update 2012-05-01: 90% of jobs in S Korea are with SMEs and in 2011, 250,000 job openings in SMES could not be filled because youngsters want to land a chaebol job instead.
Update 2012-04-10: 99.6% of all firms in Switzerland (300,000) are SMEs.
6000 firms or 2% of Swiss companies are what is called mid-size firms (i.e. have b/w 51 to 499 full-time employees).
97.6%, 294,000 or small-sized enterprises, i.e. have b/w 1 to 50 full-time employees.
Switzerland has the highest number of Global 500 companies per person – about 15 of these have their headquarters there.

Update 2011-08-23: Self-employment, i.e., operating one’s own business regardless of its legal form has the largest share of small businesses in the USA.
99% of all companies have 250 or fewer full-time employees in the EU. In the USA, 96% have 100 or fewer full-time employees.

Get more interesting tidbits we collected for you. These are listed at the bottom of this post, check it out, you will be surprised!

SMEs play a vital part in Europe’s economcy. Do you know how one defines the term SME when looking at the number of employees, turnover as well as balance sheet?

We give you the definition and links to other documents regarding defining the term SME.

Article source – European Commission:  Defining the term SME?

Incidentally, if you want more material about important economic stats that affect your business,  you should sign-up with your e-mail with our blog – 1 post each week.

Small and medium enterprises sometimes also called small- and medium-sized enterprises (SMEs) are considered important drivers of innovation and change in Europe.

Nonetheless, it is not always clear what is an SME and what is not.

However, the European Commission (formally the Commission of the European Communities) has defined the term using as criteria the following:

– number of employees,
– annual turnover or
– annual balance sheet.

Table – How does the European Union classify Small- and Medium-Sized Enterprises (SMEs)?

Head Count Annual Work Unit (AWU) 1

Annual turnover


Annual balance sheet

Medium-sized enterprises

< 250

≤ €50 million

≤ €43 million

Small enterprises

< 50

≤ €10 million

≤ €10 million

Micro enterprises

< 10

≤ €2 million

≤ €2 million

Note.This definition is taken from the COMMISSION RECOMMENDATION of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises [notified under document number C(2003) 1422] (Text with EEA relevance) (2003/361/EC) (May 20, 2003).

On 6 May 2003 the Commission adopted a new Recommendation 2003/361/EC regarding the SME definition which replaced Recommendation 96/280/EC from 1 January 2005.

1 Anyone who worked full-time in the enterprise or on its behalf during the entire reference year counts as one AWU. Accordingly, part-time staff, seasonal workers and those who did not work the full year are treated as fractions of one unit.


Micro, small and medium-sized enterprises are socially and economically important, they represent 99 % of an estimated 23 million enterprises in the EU and provide around 75 million jobs representing two-thirds of all employment. SMEs contribute up to 80% of employment in some industrial sectors, such as textiles, construction or furniture.

International Finance Corporation: Micro, Small, and Medium Enterprises: A Collection of Published Data (MS Excel file, 17 May 2005)

A rethorical question for sure but considering the importance of these enterprises it is surprising how little if anything is done serving their needs in the social marketing space. For instance, most benchmarks or social marketing metrics discussed are extremely cumbersome for SMEs to follow and/or implement.

Nonetheless, this group of firms requires tools and social marketing metrics as well as advisories or best practice suggestions that are easy to implement and result in substantial improvement regarding the firm’s security posture.

We will continue to address these SME related matters in upcoming weeks and months here.


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Update 2011-08-23: People often need basic facts and figures about small business. Here are some about the USA.

In the USA, the The Offce of Advocacy defines “… a small business as an independent business having fewer than 500 employees.”

Ninety-nine (99) percent of employing businesses are “small” under prevailing definitions. This looks as follows:

– 60 % of all businesses that employ people other than the owners have 1 to 4 employees; another
– 20 %  have 5 to 9 employees; and yet another
– 10 %  have 10 to 19 employees.

– Nearly 40 % of small businesses are owned by women.

Businesses employing fewer than 100 people (excluding the self-employed who employ no one but themselves) constitute 96 percent of all employers (Source: calculations by NFIB Research Foundation from data published by the Office of Advocacy, U.S. Small Business Administration – great source for statistics.)

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