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Showing posts with label SME. Show all posts
Showing posts with label SME. Show all posts

Monday, June 20, 2016

Promoting women entrepreneurs; mind your finances


Do we need specific initiatives to help female entrepreneurs? Some say no, because men and women face similar obstacles in business. However, there can be no denying that women face challenges not experienced by their male counterparts.

LAST May, the SME Association of Malaysia organised a talk on women entrepreneurship at its regular SME Club get-together. We were worried that the topic would not be interesting, but to our surprise, the event was well received.

About a hundred people participated in the talk.

When we told the SMEs that we were going to have a talk on women entrepreneurship, some of them asked: Why talk about women entrepreneurship? Does it matter? Why bother?

After all, business is a men’s world. The place for women is at home.

Others said there was no need to differentiate women entrepreneurs from entrepreneurs in general, as many of the barriers faced by female-owned SMEs were similar to those faced by male-owned SMEs.

To this, I would say: Yes and no.

While male and female entrepreneurs may face similar constraints in general, women face specific barriers and challenges not experienced by their counterparts.

While women make up about 50% of Malaysia’s population, less than 20% of the SMEs are owned by women. Even though the number for women entrepreneurs is small, it’s nonetheless encouraging as it shows that women no longer buy the stereotype of business being a male domain.

There are several key reasons for women to get into business. Running your own business provides flexibility in managing career and domestic responsibilities.

Also, it gives some degree of personal freedom to women who are dissatisfied with “fixed” employment. Job flexibility, like work hours, office location, environment, and the people they work with, is appealing to many women.

Other reasons for women to start a business include income security and career satisfaction. Some women become entrepreneurs due to some personal circumstances, like being laid off, divorce, or the retirement of their spouse. They start a business to improve or maintain their social or economic status.

Some women who do not have any previous work skills or experience start a business in order to prove that they can be productive and useful.

The majority of women-owned businesses are smaller outifts than those owned by men, and they are mostly concentrated in the service sector (about 90%). Many of these businesses are likely to be unregistered micro-enterprises operating in the home or on temporary premises, with few employees and limited capital for expansion.

Access to financing is one of the biggest challenges. They are less aware of the options relating to loan and grant opportunities. In addition, women usually lack the collateral required compared to men, stemming in part from restrictions on asset ownership.

Women entrepreneurs are also less likely than their male counterparts to have a history of interaction with formal financial systems, lowering their credit-worthiness and potentially raising interest rates on loans assumed.

They also encounter obstacles in accessing opportunities to acquire knowledge and skills that underpin successful entrepreneurship. This may be due to impediments in access to education, training and job experience. These are usually compounded by the demands of domestic responsibilities.

Time constraints further limit women entrepreneurs’ formal networking, which, in turn reduce access to skill and capacity-development opportunities. Formal networks, such as business associations, provide a wealth of information on business opportunities, access to government officials, grants and support programmes, as well as credit credentials and access to loan packages, to name a few.

Good networks provide good access to information and resources. First-hand information allows entrepreneurs to move one step ahead and grab the opportunities. A good pool of resources would help entrepreneurs to survive in bad times and to expand more effectively.

The Government needs to take a proactive role in promoting women entrepreneurs. We need to put in place gender-responsive policies and capacity-building initiatives to address the structural, institutional and socio-cultural inequalities.

It would perhaps be best to start by enhancing their access to finance, which is essential in building a good business foundation.

By Datuk Michael Kang who is the national president of the SME Association of Malaysia.

Mind your finances


Up to 36 of business failures are caused by inadequate financial management, according to a report by the ACCA. —123rf.com

IN GENERAL, more than 50% of startups fail within five years, and up to 36% of business failures are caused by inadequate financial management, according to a report by the Association of Chartered Certified Accountants (ACCA) entitled “Financial management and business success - a guide for entrepreneurs”.

The report says many entrepreneurs are not equipped to make informed and effective decisions about their financial resources.

“Having the right financial capabilities remains vital throughout the life of a business, whether you are just starting out, have an established business or are looking towards a final exit from a firm,” explains Rosana Mirkovic, ACCA’s head of SME policy.

“Businesses are changing and innovating more rapidly than ever, and the financial management needs of organisations must continue to evolve alongside their developments. Recognising the right financial management capabilities is therefore imperative to their success,” she explains.

Mirkovic adds that understanding financial information is vital for offsetting the risk of business failures as it reveals the early warning signs of impending problems.

The report by ACCA addresses the financial literacy skills gap, potentially serving as a guide to those starting their own businesses and are new to financial management.

Business planning plays a critical role at every stage of the business, says the report.

“Preparing a business plan pushes you to identify and assess the opportunities and threats facing your business. It helps ensure that you have an in-depth understanding of your market, the competition and the broader business environment,” it elaborates.

Effective planning takes into account long-term goals, objectives, strategy, tactics and financial review.

ACCA also advises startups to seek good financial advice and involve their accountants or individuals with financial expertise at the planning stage to take full advantage of their expertise in areas such as business planning, raising business finance, tax planning and setting up financial management systems.

Significant financial expertise may be needed to understand and evaluate the different financial options entrepreneurs may have. This includes knowing the company’s financial strength, financing cost, financial flexibility, business control, financial risk, personal finances and business strategy.

“Good financial control offers far more than just keeping track of purchases and sales. Rather than approach financial control as a chore to be left to the bookkeeper, your aim should be to see how the right capabilities can improve your business,” the report advises.

ACCA notes that business owners should gradually develop the capabilities of their in-house financial team.

“Choosing the right solution for your particular business takes careful planning. Your overall investment in financial capabilities — whether you are paying for additional employees, higher salaries for more skilled employees, training costs, use of external providers or upgraded systems — must be affordable and offer value for money,” it adds.

But financial management is at its most powerful when used to drive improvements in business.

Moreover, for many entrepreneurs, it could also lead to a successful business exit. Preparation for a successful exit typically begins far in advance of its final date.

Effective exit planning needs to start early and take into account a whole range of issues like timing, succession, management systems and tax efficiency.

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Wednesday, December 17, 2014

Startups sharing ideas and seeking validation from others to progress and gain benefits - final part 10

Start building relationships with investors

ENTREPRENEURS are naturally protective of their ideas. Understandably, they keep their ideas to themselves to avoid having them stolen.

Don't keep it to yourself Tell your idea to as many people as possible and seek their opinions. Talk with people you trust and whose opinion you value.

While it is important to protect proprietary information from being copied, entrepreneurs can also gain valuable insight and perspective from feedback before investing heavily in a product that only looks good conceptually.

A startup’s journey is very much akin to running a series of experiments before it finds a path to sustainable growth. A product or an idea should be subjected to validation before it can be tweaked and scaled up to form a viable company.

And what better way to get some form of early validation than to share your ideas with like-minded people for constructive input.

While entrepreneurs are more willing to share and discuss their ideas these days, this culture of sharing is still new in the local scene.

Seasoned entrepreneurs have found bouncing ideas off other people to be more helpful than harmful. Apart from getting feedback on their ideas, they note that more often than not, sharing connects them with other people who can help fill the gaps and turn ideas into reality.

Additionally, sharing ideas and resources could also help accelerate innovation in a field.

For example, American electric car manufacturer Tesla Motors recently announced that it will be making its patents available to other companies that want to use them.

Tesla chief executive officer Elon Musk explained that the move would help advance electric vehicle technology.


 Elon Musk, CEO of Tesla, unveils the dual engine chassis of the new Tesla 'D' model at the Hawthorne Airport October 09, 2014 in Hawthorne, California.

“Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day,” Musk had said.

By allowing the use of its patents, industry observers note that Tesla will be clearing the way for more collaboration with other electric car makers to develop new technologies and would enable the company to take a leadership role in developing standards for the industry and its value chain.

Entrepreneurs are increasingly being encouraged to share and collaborate to innovate and build better products.

And a beauty about being in the present time is that there are more ways than ever to tap into a support network that can provide startups with a platform to share and build on ideas and resources.

Some of these platforms include spaces such as incubators, accelerators and co-working spaces. Apart from being just a shared working station, incubators, accelerators and co-working spaces have evolved into collaborative work spaces that provide entrepreneurs with the opportunity to meet and collaborate on ideas with a host of other people to innovate better solutions.

Additionally, there are various forums as well as startup events and programmes that provide a conducive environment for entrepreneurs to network, share ideas and work together. There are also a number of agencies that are targeted at guiding entrepreneurs with developing their ideas.

Most entrepreneurs still worry about letting on too much on their ideas. But if they can overcome that fear, entrepreneurs stand to gain much from collaborating with one another.

Take advantage of the entrepreneurial community brought together by such platforms to innovate and rather than develop your ideas in silos.

■ This is the final article in a 10-part tie-up between Metrobiz and the Malaysian Global Innovation & Creative Centre (MaGIC) to explore startup ecosystems.

By Joy Lee The Star/Asia News Network

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Monday, July 16, 2012

Call for SME Masterplan custodian

NSDC says single agency should ensure implementation and track progress of the plan

PETALING JAYA: The National SME Development Council (NSDC) has called for a single agency to be the custodian of the SME Masterplan.

The NSDC said the agency should be accountable for ensuring the implementation of the plan and tracking the progress of the master plan's objectives.

“The role of SME Corp Malaysia has to be further strengthened, empowered and elevated to take on the lead role to implement the master plan,” it said, noting that “this may require some organisational restructuring and changes to the co-ordination mechanism to allow greater empowerment for the agency to function effectively in executing the plan.”

NSDC said SME Corp would need to be given sufficient authority and resources and have a more active role in the budgetary decision on SME development. Among the measures SME Corp should take is reviewing existing programmes with the ministries and agencies to rationalise those that overlap and remove those that have no significant impact.

It said SME Corp had to put in place a world-class monitoring and evaluation system where “evaluations would require accurate and credible firm level data which entails working together with the ministries and agencies to collate the necessary information from programme recipients”.


The council said SME Corp would be engaging the private sector to participate in the master plan, especially in the six high impact programmes through public-private partnerships.

“The role of industry associations, chambers and non-governmental organisations will be further enhanced in assisting in reaching out the programmes to more SMEs in the country, and in capacity building at the district, state and national levels,” it said.

A risk mitigation plan was among NSDC's recommendation, too, as the global economy will likely remain uncertain with volatility in the financial markets posing external risks to Malaysia's growth momentum.

As for internal risks, the council said that comprised policy changes on the macroeconomic front and issues associated with the implementation and operation processes of the master plan itself.

“This may include risks from resource constraints due to escalation in costs, delays in execution, lack of authority of the coordination agency in driving the policies and programmes, and challenges faced in coordination and alignment of the policies and programmes,” it said.

By LIZ LEE lizlee@thestar.com.my