Small and Mid-Sized Business

(SMB)

Glossary of HR Terms Small and Mid-Sized Business (SMB)

What is a SMB?

Small and Mid-Sized Business (SMB) is a category of organizations that are smaller than large enterprises but larger than micro-businesses. The exact definition varies by country and industry, but SMBs typically employ between 10 and 1,000 people and generate revenues below a defined threshold (for example, under $1 billion in the U.S. context).

Why it matters

SMBs are vital to global economies, often driving innovation, job creation, and community development. In HR, SMBs face unique challenges compared to enterprises: smaller budgets, leaner HR teams, and a need for flexible, cost-effective solutions. At the same time, they can often implement new HR technologies and processes faster due to their agility.

Where it fits in the HR stack

SMBs typically adopt a lightweight HR stack focused on essential functions like payroll, benefits, and compliance. Many use all-in-one platforms that combine HRIS, payroll, time tracking, and benefits management. As they grow, SMBs may add ATS, performance management, engagement tools, or LMS platforms to scale with their workforce needs.

Common use cases/Examples

  • Using integrated HRIS + payroll platforms (e.g., Gusto, Zenefits, Rippling) to streamline core HR functions.
  • Automating onboarding and benefits enrollment to save time for small HR teams.
  • Leveraging SaaS solutions that scale as headcount grows.
  • Outsourcing certain HR functions through PEOs (Professional Employer Organizations).
  • Offering flexible perks (remote work, wellness stipends) to stay competitive with larger companies.

Examples of SMBs:

  • Tech startups with under 500 employees using modern HR SaaS tools for rapid scaling.
  • Professional services firms (e.g., accounting, legal, consulting) with small but specialized teams.
  • Retail and hospitality SMBs using workforce management and payroll tools to manage hourly staff.

FAQ

Both mean small to medium-sized businesses, but SME (Small and Medium Enterprise) is more commonly used outside North America. The definitions are largely the same.

SMBs often prioritize affordability, ease of use, and scalability in HR software, whereas enterprises need complex integrations and compliance for large global workforces.

Limited budgets, small HR teams, compliance complexity, and competing with larger companies for talent.

Yes. SaaS-based HR tools are designed to be affordable and scalable, making advanced HR capabilities accessible to SMBs.

Many SMBs partner with PEOs or outsourced HR providers to manage payroll, benefits, and compliance cost-effectively until they scale further.