Jan 18, 2015 Lahore

 In USA employees fewer than Five hundreds (500) are considered as SMEs.  In case of European Union, businesses having less than 250 employees are deemed as small and medium business.  In Pakistan, according to Small and Medium Enterprise Authority (SMEDA) provided definition, SMEs are defined as enterprise having up to 250 employees and paid up capital up to Rs. 250 million and annual turnover of Rs. 250 million.

 In any economy, the role of SME sector is considered as the engine of growth, employment and income distribution, ultimately leading towards poverty reduction. They nurture entrepreneurship and innovation. The contribution of the Pakistani SME sector to total GDP of Pakistan is around 30%, employing more than 70% of the countries non-agricultural labor force, contributing 25% to export earnings of Pakistan.  WE have selected TWAKAL TILAPIA FISH HATCHER as our organization as it is SME in Muzaffar Garh

 3.2 million business units in Pakistan  Over 99% business units employ less than 99 persons i.e million SMEs  Generate 78% of non-agri sector employment  Direct Contribution to GDP over 30%  Generate 25% of Manufacturing Export Earnings  Contribute 35% in Manufacturing Value addition

Introduction Established In Initial Area of Farming: 04 Acres Current Area of Farming: 200 Acres Commercial Farming Total Number of Ponds: 60

 Fish Production Farm: 1995  Fish Carp Hatchery: 2000  Chaudhry Fish Traders: 2006  Metro Supplies: 2007  Tawakkal Logistics: 2012  Tilapia Hatchery: 2013  Green & Marine: 2014

 It was established in  Its land was 20 acre  Having 10 employees  Capital of 1000,000  Small transport system, having 2 trucks  After a good work and a good managemt it grows well and now it is on a good stage and is on the highest level in punjab and also in pakistan, After 2010  They started production of different kinds of fishries  started breeding of fishries.

 Process by which the fish seed production is done

Tawakal Tilapia Fish Hatchery

 Founded in 1932 with 33 members, SME was originally named the Society of Tool Engineers.  A year later, it was renamed the American Society of Tool Engineers (ASTE).  From it was known as the American Society of Tool and Manufacturing Engineers (ASTME).

 It became the Society of Manufacturing Engineers (SME) in  In 2013, the use of its full legal name, the Society of Manufacturing Engineers, was discontinued and the organization became known as SME

 Financing  Inflation  TARIFF ANOMALIES  RISK MANAGEMENT  LOW PRODUCTIVITY  Economical and Technological Issues  Management Issues  Corruption Issues  Political instability

 Difficult entry and fear of entering  Lack of competences  Lack of entrepreneurial skills, education and characteristics  Lack of intellectual capital and infrastructure  Energy crises  Lack of implementation  Production-based economy to a knowledge- based economy

Financing is still a major constraint for SMEs in Pakistan Larger share of SMEs in a bank’s lending portfolio is expected to enhance banks‘ returns and is necessary to diversify risk Pakistan Chamber has always supported SMEs with financial and non-financial issues Our dedicated business support unit has SMEs training programs, credit rating and events organization to support segment growth Pakistan Chamber support and train young local Pakistan entrepreneurs Challenges and Way Forward

Financial Sector Contributing 8% Investment Source: Gallup Survey of 1000 Industries in 2002 covering 12 cities & 8 sectors

Supply Side Banks remain cautious about lending to SMEs sector due to: o Lack of credit information on SMEs o Risky and costly lending to SMEs o SMEs lack of business and financial skills o Lack of guarantees or collateral availability Primary Constraints to SMEs Financing

Demand Side Pakistan SMEs access to bank finance is constrained due to: o High transaction and setup costs. o Unclear borrowing requirements. o Lack of awareness on being ‘bankable’ o SMEs are offered the most expensive mode of financing such as the overdraft and the credit line Primary Constraints to SMEs Financing

 Most SMEs operate through Self-Financing or Retained Earnings  SMEs do not make use of Trade Finance for Expansion  Fear of regulations discourage them to come in the formal fold  Access to formal credit is strongly correlated to firm size & age of the firm

 SHUT DOWN BUSINESS  DECREASE PROFIT  INCREASE PRICES  BUT GLOBAL COMPETITION !!! UNDESIRED

 MANAGEMENT ACCOUNANTS TECHNIQUES:  MARKETING STRATEGY  PRICING STRATEGY  TRANSPORTATION MODELING  LINEAR PROGRAMMING

LACK OF KNOWLEDGE OF:  TAXATION LAWS  GLOBAL MARKET INFORMATION MANAGEMENT ACCOUNTANTS ROLE: TAX CONSULTANTS MARKETING MANAGERS  GLOBAL INFORMATION BUT LOCAL WISDOM

 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

36% SME FAIL WITHIN 5 YEARS !!!!! MAJORITY IS NOT GETTING GOOD RETURN…. MANAGEMENT ACCOUNTANTS: “USE OF TRADITIONAL METHODS OF COST REDUCTION ”

 SME Business reliant on Support System  SMEs are insecure – Quick Response Support System absent i.e. Access, Timeliness & Legal Support  Lack of specialization in Banks  Small Enterprises – Lacking attention  Characteristics: Little knowledge, inadequate collateral, Less affordability and likelihood for success – high rate of failures  Often confused with Medium Enterprises  No special Policy attention or Support  Considered a case for directed or subsidized credit – has to regain its Reputation

 Govt. Policy Risk  Cushion for Policy shock – Public sector responsibility  International Competition Risk  Impact of globalization on Markets, Investment Decisions  Exogenous for SMEs – Policy support for financing economic activity adjustment e.g. Korean Corporate Restructuring Fund  Commercial/ Management Risk  Capacity building of SMEs - roles of support institutions SMEDA, EPB, PVTC, PITAC, PCSIR etc.

 The inflation in Pakistan is highest among Asian countries. This ultimately affects the buying power of customer.  Consumer avoids getting services or purchase products in recession period of economy. This led to low demand of product and services and makes an effect on SMEs business in Pakistan.  The other economic problem include the high tax rate impose by government.

 The managerial expertise influences the performance of the firms.  SME sector possess less managerial expertise.  The managers in SME are not much aware about knowledge how to manage their financial matter which results in under utilization of business resources

 The corruption has many definitions. According to international transparency, World Bank and ADB, “corruption is abuse of public office for private gain”.  Extensive corruption in Pakistan is well reveal in the large number of cases which are investigated by the National Accountability Bureau.

 The final internal obstacles for SMEs firms in Pakistan are training related issues.  Mostly the employee’s training in SMEs firms in Pakistan are informal because the formal training is costly and out of approach to SMEs sector.  The bigger problem to SMEs sector is formal training because smaller firms are relative to large firms are less likely to provide external training, to all grades of workers

 In any country SMEs sector is major contribution in economy.  Infrastructure of country plays a vital role for properly enhancing the growth of SMEs sector, Poor infrastructure cannot support effectively for the development of SMEs firms

 We identified that SMEs in Pakistan have major challenges such as difficult entry and fear of entering and performing well in foreign markets.  Due to lack of competences, SMEs do not able to compete in national as well as international level.  Therefore, SMEs have fierce challenges for their survival in competitive environment.

 SMEs in Pakistan have major challenges such as lack of competences.  Due to lack of competences, SMEs do not able to compete in national as well as international level.  Therefore, SMEs have fierce challenges for their survival in competitive environment.

 We observed that the major challenges for the success of enterprises are the lack of entrepreneurial skills, education and characteristics.  In addition, they argued that in Pakistan there is a lack of concept of proper training and basic education before starting the business.  The deficit of training and education is the main cause to be the failure of these enterprises.

 Energy crises are the general and serious threats,which are facing SMEs adversely.

 We argued that SMEs in Pakistan have serious shortage to implement the concept of performance management system (PMS).  Due to lack of implementation of PMS the SMEs are less competitive and efficient.  In addition, we identified that SMEs do not apply human resources policy in recruitment, generally purse tradition methods for selection.

 Now the world is moving from a production- based economy to a knowledge-based economy.  In a knowledge-based economy, intellectual capital is a key driver for the success of the organizations.  A Knowledge-based economy is transferring the ideas into products and services.  The knowledge workers are prerequisite for the generation of new ideas, products and services to take competitive advantages.

 We emphasized that in the 21st century; the knowledge worker productivity will be the biggest managerial challenges for the organizations to achieve the competitive advantages.  Knowledge productivity is mainly based on the organizations ability.  Knowledge workers are the main sources for the organizations ability.  In the same way, we stated that in a knowledge-based economy intellectual capital is appeared as the critical factor for the success of organizations.