I do not like the term SME (Small to Medium-Sized Enterprise). It sounds derogatory when some people say it, and far too broad to provide any value to anyone for anything. In Canada 98% of businesses are SMEs. What is the value of a category if nearly every business is included?
There are 1.1 million SMEs in Canada, and of those 1.6% (17,600) are mid-sized, which means that the vast majority (1,082,400) are small. Importantly, those small enterprises employ about 75% of the entire Canadian private sector workforce. They also create 78% (100,000) of all new jobs every year, and 95% of every new job created in the last decade.
Small businesses can become mid-sized businesses and then large businesses, however only 50% of SMEs survive more than 5 years. If that failure rate could be improved even a little it would make a significant difference to our economy. SMEs deserve our respect and attention and obviously they need our support.
The pre-pandemic world of “fintech lending” has been “shaken up” and the future of quick and easy online business financing is uncertain. However, there are plenty of traditional funding sources available that are known to work. This year it is more important than ever that we all take the time to help business owners with their financing challenges regardless of their size.
If you are in an origination role then you need to know the difference between business development and sales. Building a pipeline of up-and-coming business is important to achieving long term success. The SME you help today may be the large deal you get to do down the road.
