Stats show that from Israel to Chine to America, SMEs – small and medium sized enterprises – make up over 95% of a country’s economic activity.

Last night, I moderated the monthly meeting of the Jerusalem Business Networking Forum. Over the past 20 months, this group has seen new businesses expand, secured employment for members, garnered contracts for attendees, and much more. The classic use of a small network group!

Last night’s meeting was no exception. The event was hosted by Paula Stern, the CEO of Writepoint, who spoke about the commercial potential of social networking. Twitter or join LinkedIn or prepare this blog, for most of us these are vital tools today in marketing strategy.

What specifically impressed me was the dynamism of the participants. The world is in the depths of a recession, and Jerusalem is part of that economic cycle. Each and everyone of those present is in the process of creating something new, all staring at the level of SME.

A visitor from Canada is launching a mobile advertising solution on the net. An American has created a small team, successfully involved in mining raw materials in Israel. A new immigrant had launched a photography business which is thriving despite private incomes being cutback. And there was a senior rep of a new foreign currency trader in Herzylia.

My message is simple. In order to create wealth in a recession and in order to enter commercial food chain, a necessary ingredient is the initial dynamism of the founders of an SME.

My question is: If most of us in social networking and outside know that, why has the Israeli government and the Finance Ministry missed this basic point? 

(Disclaimer: I am an associate of the Institute of Independent Business, whose Business Support Programme is designed to offer practical advice and support to senior execs of SMEs).