The power of MSMEs and how they boost the economy
Micro, small, and medium-sized enterprises account for 90% of the world’s business ecosystem and 50% of the global GDP, and they’re the largest group of employers worldwide, providing jobs for 70% of the population.
On World Micro-, Small, and Medium-sized Enterprises Day, it’s very important that we learn about the vital role small businesses play in the global economy.
To support entrepreneurs and growing businesses, at MAPFRE we want to highlight the role these businesses play and their contributions to building a stronger economy and more sustainable future.
What are MSMEs?
Businesses are classified as micro-, small, or medium-sized enterprises (MSMEs) depending on their size.
They’re the smallest enterprises in this classification. They generally have less than 10 employees, and their annual billing and revenue are limited.
They’re a bit larger than micro-enterprises, and the number of employees varies by country, but it generally ranges from 10 to 50 workers. They also have higher billing or revenue than micro-enterprises.
They’re the largest of the MSMEs. They have more employees, reaching over 200 depending on the country, and their annual revenue is also higher when compared to that of micro- and small enterprises.
MSMEs, driving forces behind the economy
Micro-enterprises and SMEs are the heart and soul of any economy, regardless of their size or location. On the global scale, they account for a large proportion of existing businesses, as mentioned previously, in addition to generating employment, spurring innovation, and stimulating economic growth.
These companies are fundamental to any country’s economic fabric, as they not only create jobs, but also support economic diversity and resilience in general. The ability that micro-enterprises and SMEs have to adapt rapidly to market changes and consumer demand gives them a unique advantage in terms of innovation and competitivity.
Prime movers of innovation
The agility and responsiveness of micro-enterprises and SMEs lets them play a key role when it comes to innovation. These companies usually have agile and flexible structures, allowing them to make quick decisions and take on calculated risks.
Micro-enterprises and SMEs are often the ones that venture to explore new ideas and market approaches, developing innovative and breakthrough solutions. Given that they have a closer relationship to consumers and local needs, these companies can identify opportunities that large corporations might miss.
Their ability to innovate and adapt to technological and social change is key to economic progress.
Key players in sustainability
Against the current backdrop of climate change and concern for the environment, micro-enterprises and SMEs play a key role in building a more sustainable future.
These companies produce a smaller environmental footprint in comparison to large corporations, making them the key players for promoting responsible business practices and reducing their negative impact on the planet.
Many micro-enterprises and SMEs are leading the way when it comes to adopting renewable energy and energy efficiency, as well as cutting down on waste. Having a local focus and being capable of implementing change at a rapid pace makes them central to the transition to a green economy.
In addition, by boosting local production and minimizing long supply chains, these companies help reduce carbon emissions and promote the circular economy.
How can we help micro-, small, and medium-sized enterprises?
Financial institutions, governments, and large corporations have a key role to play in supporting these businesses, through the creation of funding and training programs.
Collaboration between large and small companies can also be mutually beneficial, since micro-enterprises and SMEs can usually bring agility and a breath of fresh air that larger companies can use for their own transformation and innovation. It’s equally important to encourage collaboration among micro-enterprises and SMEs by promoting building networks and associations that let them share knowledge, resources, and opportunities.
At MAPFRE, we offer insurance solutions that are adapted to the needs of micro-enterprises and SMEs, guaranteeing their continuity and protecting them from any risks they may face.
It’s vital that we recognize the important role these companies play, both in the economy and in protecting the planet. They’re driving forces behind the economy, prime movers of innovation, and key players in building a sustainable future.