Small & Medium Enterprise PDF

Small & Medium Enterprise MR. AIMAN ALANBOORI What are SMEs? S M E Small Medium Enterprises  "The National Economy of a country is in fact based on small and medium industries... these are the fundamentals, the foundations of all national econom...

Small & Medium Enterprise MR. AIMAN ALANBOORI What are SMEs? S M E Small Medium Enterprises  "The National Economy of a country is in fact based on small and medium industries... these are the fundamentals, the foundations of all national economies.. ‘Qaboos Bin Said’  Speech of His Majesty - May Allah the almighty rest his soul in peace - during a meeting with leaders and seniors of the Interior and Central governorates at Saih Alshamkhat dated January 27, 2013  " We are aware of the importance of the small and medium enterprises sector and the entrepreneurship sector, especially projects based on innovation, artificial intelligence and advanced technologies, and training and empowering young people to take advantage of the opportunities offered by this vital sector to be a basic building block in the national economic system ". (Haitham Bin Tareq) February 23, 2020 Oman 2040 Vision helps to accelerate the plans implementation to make the Sultanate a global hub for technological companies as well as SMEs. What are SMEs?  The definition of SMEs varies from country to country depending on the criteria selected for the business.  Classify of the company can be categorized according to the: ❑ Project properties ❑ Number of employees ❑ Capital and revenues ❑ Technology level ❑ Annual sales and Production Level ❑ The assets depending on government classification ❑ Annual budget ❑ Size of the market or sector. The importance of setting a national definition (classification) for SMEs  Facilitate the collection of data, statistics and analysis on these companies.  Facilitating the provision of facilities and features in tax, banking and credit.  Establishing a national strategy for development and support.  Identifying the problems of these companies and methods of dealing with them. The most important international classifications for SMEs ❑ Italy, Japan and Ireland built their rankings on the fixed assets index. ❑ Belgium focus on the budget size index. ❑ France classifies as the owner who directly undertakes the financial, administrative and technical responsibilities by himself. ❑ In Egypt, there are 14 classifications, but most of them are focus on number of employees. ❑ European classifications and South-East Asian countries. Some conclusions…  There is a difference between countries for classification of small and medium enterprises.  There is a difference in the classification in the same country according to governmental or supportive organizations whose deal with SMEs.  Many countries mix two or more standard as a model for classification. Some conclusions…  Small and medium enterprises are characterized by: ❑ Low capital ❑ Small number of workers that they use ❑ Small volume of sales ❑ Lack of energy required to operate ❑ Dependence on locally available raw materials. Enterprise concept  Most countries use Enterprises term , not Industries.  More comprehensive.  For examples: ❑ (General Motors) for the automotive industry depends on more than 32,000 small companies to supply parts and supplies and rely on their sales on more than 11,000 intermediary agents.  SMEs classification according to Oman government  Classification of SMEs in Oman is derived from the Ministry of Commerce, Industry and Investment Medium Small Minor promotion according to the: ❑ Number of workers Number of workers ❑ Annual revenues Annual revenues Number of small and medium enterprises according to the size of the enterprise The importance of SMEs in developing countries Like Oman  Helps to create an economic and industrial balance between cities towns.  Meets the needs of large industrial projects to provide spare parts and raw materials.  Contribute to providing job opportunities and solving the unemployment problem.  No require much experiences.  Increase economic and social development. The importance of SMEs in developing countries Like Oman  Flexible with the market and government.  gives safe opportunities to entrepreneurs to develop their individual talents and capabilities.  Provide suitable products and services for the local consumer directly.  High ability of innovation and initiative.  Creating diversification of income and reducing dependence on oil. Challenges in the SME sector  The financing challenges: ❑ Scarce financing. ❑ Banking conditions and laws. ❑ The high cost of interest rates. ❑ Tax system. Challenges in the SME sector  The management challenges: ❑ Establishment procedures. ❑ The accounting problems. ❑ Lack of its knowledge of the methods of dealing with the official administrative side. ❑ Weakness of information and statistics at these companies. ❑ The inadequate training to entrepreneurs. ❑ the human resources development. Types of business In general business can be divided into five types: 1- Manufacturing Business A manufacturing business is one involved in using different raw materials to make a product /s needed by the society. For Example: manufacturer of furniture, sweets, shampoo etc  Types of business 2- Wholesaling Business A Wholesales business are buys goods in large quantities from manufacturer and resells them in small batches to the retailers. Wholesales are also known as middlemen, distributers or intermediaries because they provide the link between the manufacturers and retailers. For Example: Markaz Al Jumlah in Muscat, China Market in Barka Types of business 3- Retailing Business A retailing buys goods, usually form wholesalers and resells them directly to the consumers, who are the final buyers. For Example, Groceries, Supermarkets. Types of business 4- Service businesses A service business provides services to customers for a fee. It provides a wide variety of professionals, technical and every day service that people need and want. For Examples, Car Wash, Barber shop and housecleaning. Types of business 5- Franchise a right to sell a company's products in a particular area using the company's name. For example, Mac Donald’s and KFC. Keys to Success 1- Idea Generation 2- Funding 3. Marketing 4. The business plan 5. You, the entrepreneur Idea Generation it should be: ❑ Attractive ❑ Achievable ❑ Valuable ❑ Safe ❑ Affordable for your target market Funding Capital for new enterprises comes from three resources:  Self-financing sources: The individual, family and friends.  Government Funding agencies: Funded by a local authority such as SME Development Fund and Oman Development Bank).  Private financing agencies: (Al Wathbah-Najahi) Bank Muscat, )Tumoohi) Oman Arab Bank, )Sharakah) and )Inma). Other Supporting Institutions and Entities  Oman Technology Fund  Riyada  National Business Center  Madayn Industrial Innovation Academy  E-services portal for SMEs  Formerly Eshraqa Entrepreneurship Academy “Tasees Program” Marketing  Problems related to Marketing: ❑ Dependence on random marketing ❑ Weak in marketing, pricing and promotion policies; ❑ lack of interest in the responsible units of marketing; ❑ Lack of marketing research units. The business plan  Good Planning Perfect Business  Some important aspects of the business plan: ❑ Marketing analysis:(market, Target segment and Competition analysis). ❑ Operation analysis. ❑ Legal analysis. ❑ Analysis of funding sources. ❑ Risks analysis You, the entrepreneur  The entrepreneur must have a set of elements, which are ❑ Self-assurance. ❑ Full-time work. ❑ Work hard for a long time during the day with the ability to stop working in suitable time. ❑ Previous knowledge of the nature of the products / services to be dealt with. You, the entrepreneur  In addition to some characteristics such as ❑ Health, good sense of time, confidence, innovation, independence, ethics, adaptability, good governance, future vision(the outlook). ❑ The age that plays an important role in working life, preferably between 30 and 50 years old. ❑ Professional experience in the field of business in which the average knowledge ranges from 13 years with the availability of administrative experience in order to be able to complete various administrative tasks. ❑ Strategy and delegation of routine tasks to authority. LEGAL FORMS OF INCORPORATION  Sole Trader: (A sole proprietorship) is commercial enterprise owned by one person and will be personally liable for any obligations of it.  Limited liability company (LLC): Is a trading company with a limited capital and divided into equal shares, and consists of a minimum of two persons and maximum of 40 persons of natural persons and legal entities.  General partnership company: Is a company that consists of two adults or more natural persons or legal entities for doing business under a specific trade name and the partners have full responsibility to pay company’s debts. LEGAL FORMS OF INCORPORATION  Limited Partnership Company: Is a trading company with a general partner or limited partner or more. General partner is responsible integration and solidarity for the debts of the company in all their money. Limited partner is liable for the company’s debts and obligations only to the extent of one’s capital contribution.  Particular Partnership Company: It is a trading company held between two or more natural persons or incorporeal person and legal ties arise between its members without being with no effect on third parties and do not have a trade name and commercial register. In-House Business activities:  Food preparation  preparation spices and coffee  Preparation and making of perfumes and incense  Cutting out and sewing women's clothes  Rental Wedding and party dresses  Assortment of Natural and artificial flowers  Gift wrapping  Detailing Sheila and Abaya and Handmade textile  Henna and hairstyle and beauty  Printing and photocopying documents  Packaging and filling dates What is a Feasibility study?  It is an analysis of the viability of an idea through a discipline and documented process  A feasibility study should be conducted to determine the viability of an idea BEFORE proceeding with the development of a business.  It is help in: ❖ evaluate opportunities and threats ❖ Define objectives ❖ Describe the current situation ❖ Define success criteria ❖ Evaluate costs The importance of the feasibility study  Accurately understand all aspects of the project.  The capital should not be wasted so that the disbursement is at the level of the project without increasing or decreasing.  To study all the different project alternatives and narrow it.  Identify any potential problems that may occur during the implementation of the project.  Determine if the project is feasible after considering all the important factors, i.e. it is worth implementing or not. The importance of the feasibility study  It assists the decision makers whenever they need alternatives development opportunities.  It allows the planner to outline their idea in a paper before implementing them.  Minimize project failure by figuring out any error before implementations  Take the realistic look at the positive and negative aspect of the business to decide whether to continue do the business or not. Types of business feasibility study  Marketing Feasibility Study  Technical feasibility Study  Legal Feasibility Study  Financial Feasibility Study Marketing Feasibility Study  Similar projects  Competitors and their strengths  Customers desire to obtain the product or service  Customers' financial capacity  Competitive advantage Technical feasibility study  Location and cost  Determine production capacity  Methods used in the production process  Determine costs and requirements for the project Legal Feasibility Study  Laws regulating the project such as ❑ Tax law ❑ Labor law ❑ Price control ❑ Environmental conservation. Financial Feasibility Study  Project establishment expenses  Operating and fixed costs  Measuring the profitability of the project  Funding sources  Knowing the financial expectations of the project for a period of 5 years The End