What are the risks facing SMEs in a recovering economy?

Abstract

It is widely recognised that SMEs are playing an ever increasing role in the changing landscape of the econ- omy of European countries measured in output and employment (EC, 2005). But any analysis of this sector of the economy must consider the needs and dependencies of the various categorises of SMEs within the economy, particularly measured by their size. A common definition of SME is that adopted and sourced by the European Commission which is defined by three metrics: employment, total balance sheet value and total turnover. Tak- ing, for convenience, just one of the metrics the number employed, the definitions range from: micro entities 0-9 employees; small entities 10-49 employees and medium entities 49-250 employees. This definition indirectly acknowledges that the nature and needs of SMEs employing, for example, 1 employee as compared to 250 em- ployees will greatly differ (EC 2005). Not surprisingly the evidence suggests that the risks these business entities face will be an important influence in differentiation in terms of their size.