The shocking truth about SMEs

Why would anything about an SME be shocking? Mainly because there are two distinct definitions of what an SME is that are used interchangeably by many business professionals. Even more important is the shocking truth that many people don’t know the two definitions and how they are linked.

For some people when someone refers to an SME they are talking about the Small-to-Medium Enterprise. They use the term to distinguish between large service providers and suppliers and smaller, boutique organizations that deliver a similar service. While this definition is suitable there is more to the story.

For others, the term SME typically refers to a Subject Matter Expert and is used to identify a person or group of people that are viewed as highly skilled and specializing in a particular area or topic. The Subject Matter Expert, unlike the Small-to-Medium Enterprise, can thrive within a small, medium or large business and is not necessarily constrained by the size of the company. I would argue this definition carries more weight. After all, don’t we really want the most knowledgeable people working on our projects?

When organisations like the UK Government, for example, state that they want to develop a more competitive landscape for SMEs vs. dependence on large suppliers, what are they really saying?  Is it that they recognize that the Small-to-Medium Enterprise companies also offer something more unique, specialization in something specific that larger suppliers may not be focused on; in other words, subject matter expertise? Or is it mainly that they want to make it fair and equitable for other companies to compete regardless of specialization? Perhaps the safe answer is yes to both but I have heard differing views and maybe you have also.

This is where the link comes in between the two types of SME definitions. When companies seek to leverage an SME they must first define why this makes sense. In almost every case the one thing that companies want more than anything else from an SME is their expertise and not necessarily the bragging rights of saying they used a smaller company to provide a service for them.

In the world of professional services and consultancy, the SME, in terms of size of company, is often the SME, the subject matter expert, in a chosen field. They have a core set of working principles and topical focus and recognize that to be generic or even ubiquitous dilutes their value proposition and their ability to compete with larger, more established players.

The SME thrives on doing a few things really well vs. lots of things good just to compete for a share of the business. Both types of SMEs are inextricably linked and to view them separately really misses the point of why they are valuable and relevant. Large suppliers do have subject matter experts in certain areas for sure but they are also inclined to be spread thin over time, attempting to be a one size fits all answer.

What are the things we should look for in both types of SMEs?

  • Dedicated focus to a specific field, topic, segment
  • Investment in their clients and in their own people
  • Focused on learning and education and not just utilisation and revenue
  • Thought leadership that is relevant and makes a difference
  • Proven results in delivering their service (happy clients)
  • Capable of serving the client needs – SMEs come in many shapes and sizes and they must be able to scale and service well

SMEs are often the catalyst for entrepreneurship, innovation and needed change to how we work or have learned to work. We must not miss the invaluable link between the two definitions especially as we consider who will serve our needs best.

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