Businesses come in various sizes. I have earlier explained micro businesses and small entities. These firms are mostly unregistered. Even when registered most of them register as business names. In this article, let us consider medium size organizations.
Definition — What is Medium Size Business?
According to the federal ministry of industry, it is a small entity with an asset base of 5 million to 10 million Naira and a minimum number of employees to be 101 and maximum of 300. It can as well be defined as a type of size-base business that is bigger than a small business but smaller than a macro or large entity.
Key Explanations of Medium Size Entity
A small business. Medium size entities may as well be regarded as small business. Why? Generally, people recognize just two types of businesses — small or large. When the government is issuing grants and other benefits to small businesses, a medium size entity may fall under small entities. This is why they are mostly called MSMEs (Micro, Small and Medium size Enterprises) or SMEs (Small and Medium sized Enterprises).
Asset base. The physical or fixed asset should be a minimum of 5 million Naira and maximum of 10 million Naira. If it is below this, then it is a small enterprise. And if it is above this, then it is a large firm. The value of the asset base may change from time to time. Physical assets include Properties, Plants and Equipment.
Number of Employees. The employees base is also a criteria to know the size of a business. In Nigeria, a staff base of 101 and 300 is said to fall under this topic. Staff strength is an important aspect of every business. If employees are not well motivated high labour turnover may set in and may reduce the number of workers thereby reducing the entity to a small one.
Registration with CAC. A medium size entity can register with the corporate affairs commission (CAC) as either a business name or a company. In most cases, these businesses are registered as companies. This can be a private limited company or a public entity.
In summary, a medium size firm is one smaller than a large business and bigger than a small business. In Nigeria, its fixed asset is less than 10 million. And its employee base is between 101 and 300 staff. Also, most of them fall as private limited liability companies.