Small and Medium-sized Enterprises (SMEs) are defined differently across different countries globally, but it is safe to say that SMEs can be any enterprise that meets the threshold of employee count and turnover. The threshold and turnover vary across sectors, depending on whether they belong to trading, manufacturing or service sectors. The definition can be further modified based on the size of the enterprise-micro, small, or medium. The size of the enterprise is further determined by a number of traits such as annual sales, number of assets and employees, and so on. Globally, there are more than 400 million SMEs that have become the backbone of the economies of their respective countries, by providing 60-70% employment opportunities.

MEs are considered to be the engines of economic growth and development as they foster entrepreneurship, employment and innovation. This is mainly due to the flexibility that the SMEs can afford. While large companies mostly focus on improving old products and services to produce in large quantities, SMEs have the choice to innovate and come up with new products and solutions. This allows the SMEs to adapt quicker to the changing market requirements. This is also attributed to the fact that decision-making is faster and simpler in SMEs. Due to the lack of official hierarchy, changes in the markets are followed through and decisions are made quickly without being delayed by a multitude of approvals. Furthermore, this flexibility and easy decision- making also let SMEs create more competition in the market in terms of product, price, and efficiency, thereby creating a healthier economy by challenging large companies and preventing them from holding a monopoly in the market.

As opposed to large companies and corporates, a notable advantage of SMEs is the heightened team spirit that is fostered within them. Large enterprises with multi-floored offices do not allow one-to-one interaction of employees, office politics and differences in departments being the reason for this. This lack of directness and ease of working together create a chasm between the employees and indirectly affects the performance of the company. In the case of an SME, the person in charge acknowledges each employee, their contribution and importance. Additionally, the employees in SMEs are cross trained, which ensures that the work happens even in the absence of someone, giving the employees more freedom and time to breathe.

The scope for direct involvement is noticeably high for SMEs as compared to a larger company. The products and services in an SME are scrutinized at the initial stage itself, and issues are rectified before the damage is huge. Moreover, this direct involvement comes handy not just for product improvement, but also for customer interaction. It is easier for SMEs to reach out directly to their customers, be it for promotion of new products, or to get feedback. This ease of access to the customer cuts down the cost of advertisement, and makes the whole process cost effective. Additionally, there are many cost-friendly professional solutions available for SMEs to promote their products. Owing to the huge role they play in the economy, SMEs also enjoy recognition by governments. They are offered regular incentives like easier loans and better tax treatment. This is a cherry on top of the wide variety of reasons why SMEs are the driving force of economy and healthy market space