They are private organizations, called this way because their annual assets do not exceed 2 million dollars and their payroll does not exceed 50 employees, although these figures may vary depending on the state where the company is located. Due to their size, they are not predominant in the markets in which they operate, but this does not mean that they are not profitable when it comes to making profits.
Usually when a person makes the decision to start their own business it is because they already have a product on hand to offer in the market and with which they think they could make a profit, the need to generate extra money and the desire to create their own company can be other motivations that lead entrepreneurs to make that decision.
These types of companies are characterized by using direct labor, although there are cases where they are modernized with state-of-the-art machinery, which increases the production of the product sold. It competes with organizations of the same caliber and that generally offers the same services and products, which is why the quality of the product that the company offers is of the utmost importance, since through competition it fosters its growth, which is sometimes faster than that of medium and large companies. It requires a higher organizational level than the microenterprise at the input level and also in the financial area, also in the division of labor, since as the organization increases its level, the functions are increasing and thus its complexity.
The creation of a company is very complex mainly because of the financing that they require and that few financial institutions support these entrepreneurs in their early days, that is why they are forced to invest the money they have saved in order to start with its objective being to produce the product to be sold, to which it can be added that its level of negotiation with input suppliers is relatively low in comparison with large corporations (their purchases are much smaller), which limits them to a more local market.
Despite the complexity involved in the creation and development of this type of companies, they have advantages that perhaps large companies do not enjoy, such as: they are more adaptable to the demands that are presented in the market, provides sources of employment to people who perhaps lacked one, which benefits the economic development of a country and there also lies its importance.
