Small, medium and large businesses: what they are, definitions, differences

Small, medium and large businesses: what they are, definitions, differences. You can find many different forms of entrepreneurship on the market. Some of them are large in volume, others serve a small number of clients. And most importantly, some types of commerce themselves require development to a certain size. Small, medium and large businesses - what they are, what are the features and differences of each of them, we will tell you here.

Definition of concepts

Entrepreneurship is any independent systematic commercial activity. This means that it is initially aimed at making a profit for the sale of its goods, services, provision of property for use, and so on. Regardless of how the work is carried out, it must be registered in the manner prescribed by law.

The size of an enterprise determines many unique operating criteria. The state traditionally supports small firms by reducing taxes and other obligatory payments; it makes many demands on large ones, since they generate huge income. Naturally, it is important for young entrepreneurs to understand the difference between all forms in order to conduct their activities correctly.

Small business is by far the most common. It is easier to organize it, even with little or no work experience. Gradually, the size can increase to medium, due to an increase in annual turnover and the attraction of more resources.

Only a company that covers several regions of the country or has reached the international level can be called a large enterprise. It always has a large number of end consumers, which means demand exceeds supply.

According to the Constitution

The constitutional principle underlying the economic sphere is freedom of economic activity, where small and medium-sized businesses are the right of every citizen, unless this economic activity is prohibited.

It must be independent and is usually aimed at making a profit from the sale of goods, use of property, provision of services or performance of work. Small and medium-sized businesses are an active factor in market competition, where the main principle is to find a need and satisfy it.

Main characteristics of entrepreneurship

Each of the forms presented above has its own unique features and characteristics. But some of them unite commerce as a whole:

1. Any enterprise becomes a participant in market relations.
2. Companies in their work always face two main aspects: economic and legal. It is prohibited to conduct activities without taking into account organizational and legal standards.
3. The main function of any company is to participate in the economy of the country in which it is located and introduce the required innovations in order to constantly develop it. We are talking here about the use of new technologies, the search for alternative sources of energy, raw materials and other things. Organizations always depend on changes in the market for their services and sales, they must adapt to them so that the work cycle does not stop. All this is important for the enterprise, regardless of its size, number of clients, annual turnover.

What is the fundamental difference between small and medium businesses?

In order to give the correct answer to this question, it is necessary to carry out an analysis from a legal and economic point of view.

From the everyday level, this is, of course, a difference in the scale of doing business. From the point of view of economic indicators, a small business brings in at least 2.5 times less annual profit than an average one. But at the same time, the staff in a medium-sized business is much larger than in a small one.

It is according to these important criteria that one should distinguish medium-sized businesses from small ones. In addition, the legislation establishes various conditions for the creation of small and medium-sized businesses, quotas and criteria. We should not forget that the law also distinguished these concepts by rule of law.

What is it - small business

Contrary to popular belief, small businesses include not only individual entrepreneurs, but also small companies with a staff of about 50 people. The main features of this form are:

A small area. We are talking here not only about the area occupied by the company’s office, but also in the area of ​​customer service. Limited list of activities . Shops, travel agencies, small industries, dental or other small clinics, and private educational institutions specializing in courses can work on this principle.

Minimum set of checks

Supervisory authorities provide small companies with supervisory holidays, and when they end, the period of inspection activities does not exceed 50 hours per year. The status does not need to be confirmed by special means. It is determined by the annual turnover, a certain number of employees and the share ratio to the authorized capital. Medium-sized business: definition and characteristics. Such companies differ in their coverage area. They usually include an entire network that is capable of serving a large client audience. Strictly speaking, they don’t even have to conduct their work in the same city. Networkers can affect an entire region, but not enter the market of a neighboring region. Distinctive features can also be called:

• Slow adaptation to changing market conditions.
• Focus on improving the quality of goods or service to consumers.
• The staff ranges from 101 to 250 people simultaneously servicing the enterprise.
• Annual turnover is no less than 801 million rubles and no more than 2 billion.

As for areas of activity, this form of entrepreneurship is typical of network trading companies, construction companies, and large medical centers.

In the global economy, it is medium-sized organizations that play the largest role, bringing the state approximately a third of all income. However, no tax breaks or other supporting measures are carried out in relation to them.

Criteria for small and medium-sized businesses

Today, small businesses have a number of benefits and privileges.
This is due to the fact that this type of business is directly involved in shaping the country’s economy and is a platform for it. It is small businesses that are involved in creating the majority of jobs in the country and the standard of living directly depends on them. The state has come to the following conclusions: the income of Russians directly depends on the extent to which start-up businessmen are supported. Therefore, it is beneficial for everyone. Starting in 2015, the state revised the criteria for classification as a small business: they were simplified and given clear characteristics. The differences affected:

• average number of personnel,
• shares in the authorized capital,
• revenue volume.

Definition 1
an abstract on this topic

State policy in the field of small business development. in more detail, small and medium-sized businesses are business entities (legal entities and individual entrepreneurs) classified in accordance with the conditions established by this Federal Law as small enterprises, including micro-enterprises, and medium-sized enterprises that meet a number of conditions.

Finished works on a similar topic

Coursework Signs of small and medium-sized businesses 420 ₽ Abstract Signs of small and medium-sized businesses 230 ₽ Test paper Signs of small and medium-sized businesses 200 ₽

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The share of participation in the authorized capital for non-profit organizations, foundations and the state should not exceed 25%; if we consider other legal entities (including foreign), then participation should not exceed 49%.

Small and medium-sized businesses are characterized by clear criteria for the average number of employees:

• Firms with fewer than 15 employees are called microenterprises.
• up to 100 people - small enterprises,
• from 101 to 250 - medium-sized enterprises.

If we consider revenue, then there are also certain restrictions. For micro-firms this amount is 120 million rubles, for small enterprises 800 million rubles. The revenue of a medium-sized enterprise should not exceed 2000 million rubles.

Today, the characteristics of small and medium-sized businesses have changed for the better. They have become quite profitable for beginning businessmen. The state has made adjustments to the deadlines for the transition of a small enterprise to a large organization.

Note 1

If for two years the organization exceeds the permissible level of revenue or number of employees, then the small business moves from the status of “small” to a “new level” and occupies the niche of a large organization.

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Big business

Large companies are those that produce a significant portion of all goods or services in their industry. Their volumes are noticeable in everything: the number of employees, the number of sales, the annual turnover. But most importantly, they work not within one specific territorial market, but in several regions of the country or at the international level. The signs of such enterprises can be considered: Large staff of employees (at least 251 people). Annual income from 2 billion rubles. Strict adherence to inventory procedures. Large retail areas. The most popular representatives of a large entity can be considered such venerable giants as Apple, Bosch, Samsung, Coca Cola, BMW. Since they have to work in many countries at once, they must adhere to global legislation and take into account the norms of each specific market. In addition, the shareholders of a company may include not only businessmen, but also the state. This gives some concessions in work, but at the same time imposes additional obligations. medium business Main advantages Each of the presented forms of entrepreneurship has its own advantages and disadvantages. Let's look at them separately to get the full picture. Excellence for small businesses is ensured by: Small initial capital. To open a company, it is enough to find financial resources, and then gradually increase the cash injections. Low maintenance costs and mandatory payments, including wages and tax deductions. The ability to quickly respond to changes in the country’s economy and adapt to them without losses. Quick reimbursement of expenses and profit. Depending on the field of activity of the company, this period can range from six months to one and a half years. A small business in the future can become medium and large, and therefore ensure the availability of new jobs. At the same time, a smooth entry into the markets allows young businessmen to feel comfortable. As for the average institution, its advantages can be considered: Creation of a large number of vacancies. High productivity and investment. Good profitability. Stability in competition. At the same time, at this stage, entrepreneurs face a large number of difficulties, but we will talk about them a little later. As for the advantages of large firms, they are fundamentally different. To begin with, it is such organizations that ensure the economic stability of their industry and the entire country as a whole. They can also constantly introduce new technologies into the business and change the overall picture of commerce. Disadvantages and risks of what is a small business As mentioned earlier, any form of entrepreneurship has its disadvantages. It is almost impossible to avoid them, so businessmen can only accept them and structure their work in such a way as not to feel the negative aspects. Small organizations are characterized by the following imperfections: High risk of failure, especially if the owner of the company does not have commercial experience. The professional level of both employees and managers is low, which is why the organization cannot reach the required level of development. Difficulties when it is necessary to conclude a loan agreement. To summarize, the main disadvantage is the manager’s inexperience and lack of useful connections. Having at least one thing, he can build a successful business without much difficulty. The disadvantages of medium-sized companies include the highest level of competition and the need for complex organizational work. Obtaining permits, attracting serious funds - all this can be avoided by small companies that do not begin their active growth. The disadvantages of big commerce include: Excessive concentration on the economy of the countries in which business is conducted. Narrow localization of economic relations. The inability to go beyond the confines of a particular company. If we compare all forms of entrepreneurship in terms of advantages and disadvantages, then the latter will still be in a more advantageous position, since its negative aspects are more than covered by huge income. How to determine how a small business differs from a medium and large one Difference between all types of business activities lies in the details. The most obvious way to present them is in the table. Distinctive features Small Medium Large Breadth of coverage One enterprise Network of firms in a city or region Network in different regions of the country or international Difficulties in obtaining a loan Any amount Large finances Absent Ability to adapt Easily adapts to changes Difficult and slow to adapt Often becomes the initiator of changes. Number of employees No more than 100 people. From 100 to 250 employees. Over 251 people. Annual income Up to 2 million rubles. Up to 800 million rubles. Up to 2 billion rubles. In addition to this, we can add one more difference between small, medium and large businesses. The state strongly supports small firms and huge companies of which it is a shareholder. At the same time, medium-sized businesses literally have to deal with all the problems on their own in conditions of fierce competition. When reaching this level of development, you need to be prepared for such difficulties. The basis of success The well-being of each company depends on many factors, but if we talk about the size of the enterprise, then there is some basis that should be followed in order to achieve maximum results with minimal waste of resources. For a small organization Employees, including those in leadership positions, and a clear, pre-prepared development plan are extremely important. If you follow it and observe the effective work of each employee, you can achieve very important victories and achievements. Medium-sized businesses need to learn to quickly respond to changing conditions. Thus, you can get rid of one of the main disadvantages. No less success can be achieved with effective management. It is the management team that can facilitate rapid adaptation. For long-term work, a large business needs a clear strategy that can function normally in a year, five or even ten years, that is, you should always think about the future. This will allow you to survive in the most difficult economic crisis, emerging from it without major losses.

Proper automation is an important part of success!

Regulatory regulation

In our country, any business activity is regulated by dozens of legislative and regulatory acts. The most important among them are: Civil Code, since we are talking about civil law relations. Law on the protection of the rights of legal entities and entrepreneurs, which guides supervisory authorities. The Tax Code is one of the key documents. Law on Entrepreneurship Development. In addition, it is necessary to follow local regulations that apply in the territory where the business is conducted. This means that large firms often have to look back at international laws and regulations. To comply with all the nuances, you should enter a lawyer’s salary into the staffing table. It is enough for small companies to ask for help periodically, but medium and large ones need a permanent agreement. Evaluating efficiency The main indicators by which the success of a particular enterprise is traditionally assessed are profitability and profitability. But there are other important aspects on which the final outcome depends. They can be divided into 3 key groups:

A coefficient characterizing how well the costs of production and investment are repaid. A parameter expressing the overall profitability of sales. Indicators that determine the return on capital. Correlating all the coefficients into one scheme and calculating the real profit is not so difficult, but the process requires painstaking work.

If profitability is below the level the company hoped for, some changes should be made to operations.

You need to calculate the budget in this way several times a year: in each quarter, and then in the final report. Large and medium-sized enterprises must also keep separate records for each of their offices to see real changes and weaknesses.

Features of large business

This term refers to companies whose activities cover entire countries or the whole world. These are well-known companies, the media talk about them, they are discussed.

Large businesses can afford to show commercials for their products on popular TV channels during rush hour. A large business opens its branches in different countries, providing jobs for hundreds of thousands of people.

Almost any company that everyone knows about is a big business. As an example, we can cite manufacturers of equipment used throughout the world: Apple, Samsung, Nokia, Phillips. Food manufacturers: Nestle, Danone, Kraft Foods. Automotive corporations and popular billion-dollar clothing brands are also big players.

The basis for the success of large-scale operations is effective business models. They are built in such a way that after decades, they continue to work, surviving in constantly changing conditions and generating profits amounting to hundreds of billions of dollars.