Business Size Terminology | AccountingWEB

Business Size Terminology

To aid future discussions, here are the definitions of business size that were made in amongst a posting on another topic. In computing terms, these thresholds broadly correlate to stepping stones in the sophistication of the IT systems a business requires. These are based on the combination of:

(1) The EEC definitions, used for grants, R&D tax credits, etc. [NB - AWU stands for Annual Work Unit, being the annual equivalent of FTE - Full Time Equivalent]

(2) VAT thresholds


Sub-micro/Nano  **                      <£225,000 (VAT Flat Rate Scheme limit)
Micro                                             <€2m, <10 AWU (Cash accounting limit £1.6m GBP)
Small                                              €2m-€10m,  <50 AWU:
Medium (“Lower mid-market”)       €10-€50m, <250 AWU:
Upper mid market                          €50-€500m (also applies for US$ orgs)
Corporate/Large Enterprise          >$/€500m     

In addition, although some of the big IT companies (like Cisco) use definitions for SMEs (or SMBs) similar to those above, most are significantly higher::

  • Business Objects: up to US$1bn/5,000 employees
  • Dell: 500 employees (around $100m)
  • HP: Between SOHO (small office, home office) and “Large Enterprise”
  • IBM : 1000 employees (around $200m)
  • McAfee: As for IBM
  • Microsoft: 999 employees (around $200m)
  • Oracle: Small to $500m USD, Medium to $1bn
  • SAP: SMEs up to $500m/2,500 employees

So when Oracle or these other companies talk about “small” businesses, think twice!

** Anyone have any better suggestions for “Sub-micro”/”Nano” ?

John Stokdyk's picture

Thanks - useful reference points

John Stokdyk | | Permalink

Thanks Chris, this is a really useful clarification that I'll point to from elsewhere on the site. Regardless of the actual parameters of the definitions, I detest the industry's lazy use of the "SME" label. How many companies think of themselves as SMEs? Many of them might consider themselves small businesses (depending on criteria), but very, very rarely do people pin TLAs to their lapels as a badge of identity.

Use the acronym in internal marketing presentations if you must, but the first lesson of marketing is to put yourself in the customer's shoes and speak to them in terms they identify with. "Fast growing software house"/"Mature professional services firm" are definitions that more people are likely to respond to - even if they take up more room on the page.

Now I've got that off my chest, the very conundrum you pointed out struck me when I was editing the K2/SAP material, which does relfect SAP's definition of "SME" (ie, pretty substantial organisations to the likes of you and me).

One marketing truism that I used to subscribe to was that technologies (BI, ERP, mobile phones) started off at the corporate level and filtered down to the small business market as take-up increased and prices fell. I think the Cloud has subverted that dynamic, but we're so caught up in the turbulence that it isn't clear how the pattern will play out.

challisc's picture

A year on, I'm still looking

challisc | | Permalink

A year on, I'm still looking for a sensible term to describe a business in the 10k-500k Euro/Sterling range, i.e. the whole mid-market as above. "Mid-market" and "mid-range" refers more to the type of software than the business itself. "Medium" is officially only up to 50 million euros. Any suggestions to describe businesses in the whole mid-market?

And any suggestions for businesses under the VAT flat rate scheme limit, other than "Sub-micro" or "Nano"?


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