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Now, Small SME better than big companies

Amjad KAssem - CEO    

 Editor: Wisam Al Mousfi

 2016/08/10   Business   246 visit(s)

small sme en

Small and Medium Enterprises (SMEs) play a major role in most economies, particularly in developing countries.  Formal SMEs contribute up to 45 percent of total employment and up to 33 percent of national income (GDP) in emerging economies. These numbers are significantly higher when informal SMEs are included. According to estimates, 600 million jobs will be needed in the next 15 years to absorb the growing global workforce, mainly in Asia and Sub-­Saharan Africa.  In emerging markets, most formal jobs are with SMEs, which also create 4out of 5 new positions. However, access to finance is a key constraint to SME growth; Without it, many SMEs languish and stagnate.

 

 During the recent past years, with the increasing risks of doing business in the Middle Eastern markets, The Medium and Small businesses and companies proved their ability to withstand much more than Large sized and Brand companies which differ in their participation rate in the national economy of the country they are located in....

 

In the large-sized companies that do not have fixed assets, it became so difficult to keep large numbers of employees, where these companies started suffering from huge expenses and costs associated with huge rents and asset's maintenance figures, in addition to being affected with political decisions more than ever before, due to their different nationalities....

This is because of several points :

  1. High overhead or so-called operational costs, which will be added to product's cost calculation and become unable to compete.

  2. High insurance rates on customer accounts or even discontinuance of this type of insurance, as a result of economical risks in the Middle East countries, making the sales volume drop very sharply. Cash sales became more predominating.

  3. Low government spending on strategic projects, due to global oil prices drop, as it is well known, most countries rely on oil in the Middle East region as an essential item in budget revenues.

 4. The political changes in the region which lead to governments' interference in commercial companies' work, their sales policies, and the quality of goods shall be used. So the solution was to reduce the large number of employees and workers laying them off arbitrarily and immediately, in addition to moving the company to lower cost place; or even move or relocate in another country which holds in terms of labor cost competitive advantages; and in some cases, shutting down the company which is much better than continuing in such circumstances.

In all difficult working conditions , small and medium-sized companies have kept their employees, they even increased employment rate up to 22 % over the past two years depending on the essential principles of their work, which large companies went to and have reduced their activities, namely:

  1. Assigning several tasks to one employee, this leads to reduce costs and administrative procedures, meantime reduce transaction execution and process time.

  2. Relying greatly on outsourcing principle, in contracting and shipping companies, or Internet site management.
  1. Adapting the e-commerce which started in 2013 as the basis for the beginning of trading new era in this region.

  2. Employee's desire to work with this kind of companies because of the possibility of getting fix salary and commission which might be better than other available opportunities existing in large companies.
  1. The possibility of company closing out quickly and at any time without having any complications.
  2. The possibility of changing the company's activity and the flexibility to work within it allows many people to establish this type of companies.
  3. Business incubators often work to help the growth of this sector without burdening such institutions with any extra expenses.


As for the difficulties that face the small and medium enterprises are often lie in:  

 

  1. Financing difficulties by banks and the lack of adequate guarantees at SME-s. 
  1. Cannot be audited by financial institutions to get the facilities of major companies.
  2. Subject to big change of employees’ number.
 Source: Kassem-IT





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