TOPIC 3: BUSINESS PLANNING
Small to medium enterprises
- definition
- role
- economic contribution
- success and/or failure (see critical issues)
Definition and Role of SMEs
Small-Medium Enterprises tend to be private companies and unincorporated businesses (eg partnerships and sole traders). The owners are usually also the hands-on managers, making the day-to-day decisions for the business. Formal definitions of SMEs vary country to country and even from institution to institution with countries. The table below shows the different SME definitions for APEC economies (www.apec.org.au/docs/iss1.htm).
At the beginning of this course, right at the start of Topic 1, it was said that businesses involve the following:
According to the Cambridge Preliminary Business Studies textbook (p.169):
- profit
- employment
- incomes
- choice
- innovation
- entrepreneurship and risk
- wealth and quality of life
According to the Cambridge Preliminary Business Studies textbook (p.169):
- 8.4% of SMEs are in Agriculture
- 14% of SMEs are in Service and Construction
- 80% of Construction employees are with SMEs
- SMEs tend to be more labour intensive than larger businesses due to the expense of large equipment and machinery
- Changes in the economy have a greater impact on SMEs than larger businesses
- About 99.7% of all businesses in Australia are SMEs
- Two thirds (2/3) of theses businesses have no employees
Economic contribution of SMEs
- 46-57% contribution to GDP
- Generate profits
- Profits are taxed which the government returns to the economy
- Export goods and services
- Provide employment
- Provide opportunities for entrepreneurs and innovators
- Provide new goods and services that improve living standards
TASK: Write a 300-500 word newspaper article or produce a slide show about the importance of SMEs to the Australian Economy. You may want to consult with students who are studying Economics to help you.
Success and/or failure
READ: Why Small Businesses Fail in Australia (The Huffington Post) and Reasons for Small Business Success (Chron)
TASK: Outline the factors that lead to the success or failure of an SME.
The critical issues that determine success or failure will be examined in further detail later.
TASK: Outline the factors that lead to the success or failure of an SME.
The critical issues that determine success or failure will be examined in further detail later.