At a conference recently, I overheard an interesting discussion about small and medium-sized enterprise (SME). A gentleman was asking if a start-up is considered an SME. It is surprising, at least to me that everyone seems to have a different opinion on this rather straightforward question.
To me whether the business is a one-man show or with a hundred employees, a one dollar revenue entity or a million-dollar company, aren’t they all SMEs? Strangely in today’s digital economy a start-up is not categorised as an SME but just simply a start-up. Well, I can’t say they are wrong since there have been a lot of new definitions created by mankind.
Therefore, a start-up is referred to as a startup and with this definition it is supposed to be more ‘atas’ or higher class than the SMEs. For the benefit of our readers, a start-up was previously defined by the former CEO of Magic (Malaysian Global Innovative and Creative Centre) as a business that has potential to scale exponentially.
It is obvious to note that most businesses in the technology (tech) space are naturally deemed as a start-up. So, does it mean that only businesses in tech have the opportunity to gain exponential growth? What about those in the retail or F&B (food and beverages) businesses?
Take for example, someone who is starting a nasi lemak or chicken rice stall. Will it not be known as a start-up simply because it doesn’t have a fancy business plan with a so-called five year projection to expand to five hundred stalls that is surely to impress others to raise funds? The answer is no. They are simply known as a micro SME. It may not be a sexy business but these nasi lemak or chicken rice stalls are usually businesses with a stable daily income that provide employment opportunities and are an integral part of the local community.
In case you are not aware, the world’s largest steamboat chain Hai Li Lao started from one shop and grew to be a billion dollar business. When it first started, it was not known as a start-up and it did not have a fancy business plan. Hence, whether it is a nano or micro enterprise or a start-up, it is just like fashion, there is no need for us to judge a book by its cover. They are all important businesses that forms 99% of total businesses in the world.
God bless MSMEs!