SME ‘s has an of import function in the development of an economic of a state ( both development and developed states ) . They bring tonss of benefits like employment coevals, exports, foreign currency, investing, income and wealth distribution. These benefits lead to an economics growing of a state and many states has been promoting the puting up of little and medium concern.

Organization like World Bank Group approved more than $ 1.5 billion to SME support plan in 2002 as it is believed that SME drama and contribute to future enlargement of an economic system.

SME ” s is one of the most of import economic pillars in Mauritius. The chief function of SME ‘s in Mauritius is to make occupations so as to cut down unemployment rate. Not to bury that in early 1980 ‘s, when there was economic sciences recession in Mauritius consequence in large unemployment rate, it was specified that SME ‘s could make 10 % of occupations. As this was cogent evidence of the importance of SME ‘s The Government of Mauritius have come and supply new installations and assist to these companies by doing handiness of finance at low involvement rate and revenue enhancements lowered on export, machinery and parts besides. A particular organisation has been found by the Government called SMEDA to help the little and average house to turn and set up them self. Most of the SME ‘s generate fund internally or by taking loans. SME ‘s usage a combination of long term beginnings of finance which is called capital construction.

Fiscal instrument SME ‘s normally use ;

Micro Credit

Government loans and grants

Renting

Loans from fiscal houses

Personal nest eggs

There are some internal and external factor that affect little, micro and average house, viz. :

Competition from bigger house.

Financial resource restraint.

Access to research and development tool.

Aid for new thoughts and creativeness.

Liability issues.

Fluctuation in the economic system.

Difficult to obtain important market portion.

Government jurisprudence and policy.

“ Narain, 2004 ” : SME ‘s are born out of single enterprises and accomplishments, offer low cost merchandise, production flexibleness and can follow new engineering and innovate and export, have high employment orientation, use locally available human and material resources and cut down regional instabilities.

SME differentiation:

Autonomous house ( either a owner, partnership or linked endeavor )

Partner house ( which does non do job in ownership and determination devising )

Linked house ( has a little portion in the house and few authorization )

Micro house

Definition:

Micro houses form portion of little house and are frequently unregistered. They normally individual proprietor and hold no employees and are by and large immature.

Micro house green goods and distribute goods in unregulated but competitory markets. These houses are normally independent, mostly household owned, employ low degree of accomplishments and usage low and low-cost engineering and are extremely labour intensive.

Micro house provide income and employment to a sensible proportion of people in a state by bring forthing goods and services for the population

Small house

Definition:

Small house are normally a concern that is in private owned ( corporations, partnership or exclusive owner ) and have a low volume of gross revenues.

One of the most used definition of little houses: “ one with a comparatively little portion of market, one that is managed by its proprietors in a individualized and independent manner, i.e. free from outside control in determination devising. [ Stanworth ( 1991 ) ] .

These little houses are non normally dominant in the market and are non a large menace to big and quoted houses

Medium house

Definition:

Medium house are usually engaged in industrial and more complex activities that little and micro houses and are registered companies. They normally import and export goods.

Small, Micro and Medium house can get down or commerce activities on a low budget and can be managed easy on a full clip or portion clip footing. Decisions are take freely and there is no intervention in the work done.

Demarcate between Micro, Small and Medium house.

Harmonizing to OECD, Small and Medium house are normally defines harmonizing to the figure of employee, capital, plus, gross revenues volume and production ability to bring forth equal goods. The distinction standard varies from state to state like the employment standard which is normally used to demarcate hem, for illustration a state may restrict medium employee to 300 when others may restrict it to 200 employees.

As per SMEDA Act, it definition include all Enterprise in the economic sector and they use turnover standard to demarcate them.

Medium house are define individually from little house as they have different demands and aim. They normally are more sophisticate houses and good engineering averse while little house are normally in a developmental province.

Normally there are three standards to distinguish Micro, Small and Average houses from each other:

Staff head count

Annual turnover

Annual Balance Sheet

Comparing these 3 standards allow you to find the type of the house, i.e. Micro, Small or Medium.

Staff head count.

The figure of employee is an of import factor to find in which class SME the house falls. It include full clip, portion clip and seasonal employee.

The employees head count is expressed in one-year work unit. Full clip staff is count as 1unit whereas portion clip and seasonal worker are count as a fraction of 1 full clip worker.

Annual turnover and Balance sheet.

The one-year turnover is determined by ciphering the income of the house during its fiscal twelvemonth after all debt has been paid.

Employee turnover should non include VAT or any indirect revenue enhancements and the Balance sheet should mention to the value of the signifier chief assets

You are independent when no other people have engagement in ur house or you in other house.

Categorization of SME:

Mauritius

Micro house Small Firm Medium

Turnover N.A & lt ; Rs 10 million & lt ; Rs 50 million

Balance Sheet N.A & lt ; Rs 10 million & lt ; Rs 50 million

Employees N.A 0-10 0-250

Europe

Micro house Small house Medium

Turnover & lt ; 2 million & lt ; 10 million & lt ; 50 million

Balance Sheet & lt ; 2 million & lt ; 43 million & lt ; 50million

Employees 0-10 10-50 50-250

To measure up as an SME, both staff and ownership standards must be satisfied, and either the turnover or the balance sheet standards, i.e any of these two standards must be meet in order to measure up.