MSMEs typically have low revenue, but it should be noted that lower revenue does not necessarily translate into lower profitability. Established small-scale businesses often own their facilities and equipment outright, which, in addition to other factors, helps to keep costs lower than more leveraged businesses. Often, MSMEs employ smaller teams of employees than companies that operate on larger scales. The smallest businesses are run entirely by single individuals or small teams. A larger small-scale business can often get away with employing fewer than one hundred employees, depending on the business type. MSMEs generally have a smaller market area, though with digitalization this has changed to more niche marketing that can have a global reach depending on product delivery. Yet, in general, small-scale businesses serve a much smaller area than corporations or larger private businesses. The smallest-scale businesses serve single communities, such as a convenience store in a rural township. The very definition of small-scale prevents these companies from serving areas much larger than a local area, since growing beyond that would increase the scale of a small business's operations and push it into a new classification. MSMEs are often sole proprietorships, partnerships or limited liability companies. These forms of organization provide the greatest degree of managerial control for company owners, while minimizing the hassle and expense of business registration. MSMEs often operate only in a limited area. These firms are not likely to have sales outlets in multiple municipalities, provinces or countries, for example. A large number of small-scale businesses operate from a single office, retail store or service outlet or from home.
The MSME population is composed of very diverse businesses, in terms of age, size, ownership, business models, and entrepreneurs’ profiles, motivations and aspirations. It is increasingly becoming clear that firm heterogeneity matters in thinking about innovation, productivity, job creation and income, but it matters equally when thinking about the response and adaptation of economies to mega-trends.
Given the above, characteristics of MSMEs are evolving in the face of technology and innovation. The Internet with its social media platforms such as FaceBook offer online opportunities to set-up business homepages with little or no investment involved. Plus, the Internet has created and expanded the disruptive space for MSMEs to fill various gaps left by larger corporations. In addition, with COVID-19 causing the latest global shock, MSMEs are evolving in the midst of this economic uncertainty. Here digitalization can reduce overhead, increase online shopping and facilitate payment and thus expand the number of people who shop or procure services from the comfort of their own homes. Also, today delivery services such as Grab Food have opened opportunities and increased access for even the smallest vendors to provide products and services that were once mainly in the realm of large chains or big business.
