SMALL & MEDIUM ENTERPRISE (SME)

Presenter:

Aamir AliStage III

Institute of Cost & Management Accountants of Pakistan

Turning Potential Into Profit . . .

Why SME

SME In Pakistan

Obstacles & Solutions

The Step To Future

WHY SME ?

SME IS NOT A SECTOR OF ECONOMY

BUT

IT IS A CATEGORY OF ECONOMY

SME IS THE BEST REVIVER !

POTENTIAL OF SME

Creates Large Scale, Low Cost Employment Opportunities

Uses Locally Available Inputs

Mobilizes Small & Scattered Savings

Develops Entrepreneurship

SME IN PAKISTAN

SME POLICY DEFINES SME AS:

Business Category With :

. EMPLOYMENT SIZE up to 250 PERSONS

. CAPITAL `` Rs. 25 MILLION

. SALES `` Rs. 250 MILLION

SME & EMPLOYMENT

1 < 5 6 <10 11< 50 51< 100 101 < 150 151 < 200 201 < 250 251 <MORE

% OF FIRMS ACCORDING TO EMPLOYMENT SIZE

SME: GDP & EXPORTS

COUNTRY % OF GDP % OF EXPORTS

PAKISTAN 40 25

BANGLADESH 30 55

GLOBAL 40 - 50 --

OBSTACLES

FINANCING

INFLATION

TARIFF ANOMALIES

RISK MANAGEMENT

LOW PRODUCTIVITY

OBSTACLE: FINANCING

COMMERCIAL BANKS GAVE LESS THAN

12% OF TOTAL LOANS!!

GRAMEEN BANK’S EXPERIENCE

MANAGEMENT ACCOUNTANTS: POINT OUT LESS RISKY BUT MORE PROFITABLE BUSINESS

OBSTACLE: INFLATION

SHUT DOWN BUSINESS

DECREASE PROFIT

INCREASE PRICES

BUT GLOBAL COMPETITION !!!

UNDESIRED

INFLATION…

MANAGEMENT ACCOUNANTS TECHNIQUES:

MARKETING STRATEGY

PRICING STRATEGY

TRANSPORTATION MODELING

LINEAR PROGRAMMING

OBSTACLE: TARIFF ANOMALIES

LACK OF KNOWLEDGE OF:1. TAXATION LAWS2. GLOBAL MARKET INFORMATION

MANAGEMENT ACCOUNTANTS ROLE:

TAX CONSULTANTSMARKETING MANAGERS

GLOBAL INFORMATION BUT LOCAL WISDOM

OBSTACLE: RISK MANAGEMENT

45% DON’T ALLOCATE BUDGET FOR R&D

PHILOSOPHY: PRODUCE, SALE AND EARN

DON’T MAINTAIN FINANCIAL DISCIPLINE

MANAGEMENT ACCOUNTANTS ROLE:

BUSINESS ANALYSTS BUSINESS RISK MANAGERS

OBSTACLE: LOW PRODUCTIVITY

36% SME FAIL WITHIN 5 YEARS !!!!!

MAJORITY IS NOT GETTING GOOD RETURN….

WHY?

MANAGEMENT ACCOUNTANTS:

“USE OF TRADITIONAL METHODS OF COST REDUCTION”

COST REDUCTION APPROACHES

MANAGEMENT ACCOUNTANT’S

TRADITIONAL

Reduce Unnecessary Process from Production

Reduce Parts of Production

Reduce Inefficiencies Hire Cheap Labor

Effective Utilization of Material Use of Sub-standard Material

Accounting Fixed Cost and Capacity Determination

No Such Concept

Effective Pricing Strategy Not as Efficient as Management Accountants can do

THE STEP TO FUTURE

CHALLENGES CAN BE MET PROFITABLY!!

“ IF STRATEGIC LEADERSHIP OF MANAGEMENT

ACCOUNTANTS” IS GIVEN THE TASK OF POLICY

MAKING AND MANAGING ECONOMIC AFFAIRS… TO

REVIVE THE ECONOMY.”

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