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Small Medium Business (SMB)


What is an SMB?

SMB is an abbreviation that stands for a small and medium-sized (or mid-sized) business. This business classification is usually defined by the number of employees a business has and its annual revenue - both need to fall within or below a specified limit. The reason for defining an SMB, as its own specific type of business, is to differentiate it from a large corporation, which has different governing standards, rules, regulations and potential funding opportunities. And to differentiate it from a microbusiness, which is a much smaller endeavor.

How to define an SMB?

The definition of what constitutes an SMB varies according to country and industry. That being said, in general, a small business is defined as being an organization that has fewer than 100 employees. Meanwhile, a medium-sized business is one whose personnel numbers between 100-999 employees. Sometimes, the amount of IT staff is also considered a defining characteristic of an SMB (between 1 and 3 IT staff).

The other defining characteristic of an SMB is its annual revenue. A small business tends to be defined as an organization whose annual revenue is less than $50 million. Meanwhile, a medium-sized or mid-sized business has an annual revenue of between $50 million and $1 billion.

In general a small medium business will have:

  • Number of employees: typically fewer than 500

  • Revenue that's lower than larger sized corporation

  • Independent ownership and operation

  • A less complex organizational structure

  • Close ties to the local community

  • More flexibility and adaptability to changes in the market and other external forces

Why SMB's are necessary

Small medium businesses play important roles within communities, both as employers and providers of products and services. Here are a few of the ways they're so important:

  • They contribute to job creation and economic growth

  • How they foster innovation and competition

  • Provide personalized and local products or services

  • Offer more agility and flexibility than larger corporations

  • Enhance diversity in the marketplace

Some SMB examples

In an SMB, the founder, owner and employee(s) may be the same person. Some SMB examples include:

  • Construction

  • Contracting

  • Professional cleaners

  • Florists

  • Caterers or bakers

  • Tutors or speech therapists

  • Consultants

  • Financial service providers

  • IT professionals

  • Content and marketing writers

  • Pet trainers/groomers

No matter the industry, all SMBs invest in offering goods and/or services that consumers want to buy. Each SMB also needs to ensure that there’s enough income to cover all costs and employee salaries to maintain operations and morale.


You may also be interested in:


How to start your own SMB

There are many aspects of starting your own small medium business. Of course, you’ll need a product or service to provide and you’ll have to have the wherewithal to produce said products. However, one of the most important parts of starting an SMB is creating a professional business website which enables people to find you. You can build your own website with tools such as Wix. You can find premade templates according to your business's industry to help you get started.

Advantages of operating an SMB

Obviously the smaller the business, the more constrained its budget, staff and resources are. While restricted financial resources may limit growth and investment potential, there are advantages to having and working in an SMB. For instance, unlike corporations or larger businesses that may have high costs and more competition or regulatory restrictions, an SMB tends to have more flexibility on what to create and where to market its product or services. Here are two main advantages that an SMB may have over larger companies or corporations:

  • More personal management style: As an SMB is often owned and managed by the same person, making the leader closely involved in daily operations. They tend to know each employee personally, and what management style works best to foster and maintain positive and productive working relationships.

  • Less bureaucracy: SMBs typically have one manager and a small number of employees, making for a more informal working environment. This tends to result in a more comfortable anWhat is d collaborative work, which inspires brainstorming and innovation. Such ideas may take longer to develop in a larger company.

Best practices for running a SMB

Starting and running a small-medium business demands a unique approach to running a business. With this in mind we've put together some tips to keep in mind when starting an SMB:

  • Focus on customer service and building relationships with clients

  • Create a strong online presence through your social media effort and your website

  • Offer personalized products or services that cater to the specific needs of your target audience

  • Cultivate a positive company culture and value your employees' contributions over the long term

  • Innovate and adapt to changes in the market while staying true to your brand identity

For more information on how to start a business:

Looking to start a specific type of business?

SMB's FAQ (Frequently asked questions)

What is the importance of SMB's?

As the main form of business in the US, they are a core part of the economy. They employ millions of people, and contribute to global economic growth. The taxes they pay also help to fund their local communities. They can often also work to encourage innovation and business creation.

What is the difference between an SMB and SME?


Related Term

Business Incubator

Related Term

Business Plan

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