MARKETING FOR ENTREPRENEURS 2010

Marketing For Entrepreneurs 2010

Marketing For Entrepreneurs 2010

Introduction

Definition of terms

SME: small and medium enterprises that have more than 5 but less than 500 employees “Countries do not use the same definition for classifying their SME sector. Nor does a universal definition appear to be necessary. The definitions in use depend on the purposes these definitions are required to serve and the policies, which govern the SME sector thus, defined. The three parameters generally applied by most countries, singly or in combination, are:

“Capital investment on plant and machinery;

“Number of workers employed;

“Volume of production or turnover of business.

Despite the lack of universal quantitative norms, the SMEs as a class are clearly distinguishable in any country, developed or developing. The factors that set them apart are essentially qualitative and comparative. On the qualitative side are their internal management structures, decision-making processes, financial practices, trading styles, attendant risk factors, etc. Most SME's are one-person shows or are run by two or three individuals, usually relatives, friends or business partners, who take most of the decisions. There is usually no distinction between private and business assets, and subjective and personal factors play a large role in decision-making. The personal stakes SME entrepreneurs have in their businesses are much higher than those of corporate executives in their companies. This enhances the attendant risks and commits entrepreneurs even more strongly to the success of their ventures.

“The European Commission currently defines a SME as one with up to 250 staff” (Hibbert, 2002).

Forrester Research, Inc. defines Internet commerce as the “trading of goods and services in which the final order is placed over the Internet” (1998). Increasingly, SME's are tapping on to the Internet to expand and develop their business. Forrester Research Inc. reports that “online sales are booming, but such electronic commerce represents only a fraction of small businesses' use of the Internet”.

A relatively high percentage of industries in the economy have started to make use of the Internet as a means of “cost savings on purchasing, managing supplier relationships, streamlining logistics and inventories, planning production, and reaching new and existing customers more effectively” (U.S. Department of Commerce, 1998). “Information technology (IT) has made it possible for e-commerce and has enabled small, medium-sized, and home-based businesses to compete more effectively in the global market. E-commerce makes it possible for more people to start their own businesses”. The Department further reports that the “U.S. households that have a home-based business currently exceeds 12 percent. More than 13 million households spent an estimated $22 billion on technology in 1998. Home-based businesses represent about 18 percent of all homes with personal computers (PCs) and 22 percent of home businesses that have made an online purchase”. According to Forrester Research (1998), by 2003, “home-based-business technology spending is projected to be $30 billion, and 71 percent of those businesses will be conducted online”. And according to the National Federation of Independent Business (NFIB) Education Foundation, “the number of small employers that use computer equipment in their operations exceeds ...