What is an SME?
An SME is a business defined by the number of staff members it employs and its total annual turnover.
Although the precise definition of an SME does vary from country to country, the UK Government’s Small to medium sized enterprise (SME) action plan (2023), defines an SME as ‘any organisation that has fewer than 250 employees and a turnover of less than €50 million or a balance sheet total less than €43 million.’
There are different categories within this definition and the plan goes on to breakdown the different organisation sizes as follows:
| Turnover or balance sheet total | Headcount | Business size |
|---|---|---|
| Turnover less than €50 million, or balance sheet total less than €43 million | Fewer than 250 | Medium sized |
| Turnover less than €10 million, or balance sheet total less than €10 million | Fewer than 50 | Small |
| Turnover less than €2 million, or balance sheet total less than €2 million | Fewer than 10 | Micro |
The majority of SMEs across the UK are classed as ‘micro-businesses’, meaning they employ fewer than 10 people. Inevitably, these businesses won’t have big budgets for promoting job vacancies, so you will need to be more proactive in identifying them. You’ll explore how to do that in more detail in Week 2 of this course.
NOTE: Within the microbusiness category, you’ll find many ‘sole traders’ – people who have started their own business and are operating alone. We’re not covering that option here as there are many courses available specifically about starting your own business or being an entrepreneur. One example, created by the University of York, is Enterprise: Everybody’s Business
The role of SMEs and their significance to the UK economy
According to a 2024 House of Commons library research briefing, as of January 1 2023, there were 5.5 million SME businesses across the UK.
There are several ways in which SMEs contribute to the UK and our economy.
- Boosting the economy – recent government data shows that SMEs contribute 52% of the UK private sector’s total turnover.
- Innovating – SMEs are often at the forefront of innovation, competing to bring new ideas and skills, and to develop new products and services.
- Creating jobs – 61% of UK jobs are provided by SMEs – a significant source of job creation.
- Bringing the high street back to life – as large retail companies move away from our high streets, pop-up shops and small businesses are arriving to fill the space.
- Contributing to local communities – SMEs often have a local or regional emphasis, providing products or services to their local communities, and supporting local suppliers.
The picture in North Yorkshire
Data shows that in North Yorkshire, there are approximately 32,800 businesses. This breaks down as follows:
- Large businesses: 0.3%
- Medium businesses: 1.3%
- Small businesses: 8.9%
- Micro businesses: 89.5%
Businesses are predominantly in the hospitality sector due to the region’s international reputation as a visitor destination, with two national parks and three Areas of Outstanding Natural Beauty.
Other sector strengths are agritech, food and drink, and renewable energy. Localised specialisms across the region include financial and professional services, advanced manufacturing, logistics, digital and life sciences.
Graduates into Work: Understanding and Interacting with SME Employers
Graduates into Work: Understanding and Interacting with SME Employers
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